Critical Condition

NRO’s health-care blog.

Vermont’s Health-Care Petri Dish


While the rest of America steels itself for the onset of Obamacare — or hopes the Supreme Court puts a stop to it — little deep blue Vermont is well on its way toward installing its own Canadian-style single-payer health-care system.

“Single payer” refers to a universal taxpayer-financed government-managed health-care system that replaces private health insurance. Under Green Mountain Care, the emerging Vermont version, a newly-appointed government board will ensure that by 2017 all covered Vermonters will receive “affordable and appropriate health care at the appropriate time in the appropriate setting.”

Republican Governor Jim Douglas held Vermont’s single-payer forces at bay from 2003 until his retirement in 2010. In that year, five qualified Democrats sought their party’s nomination for governor. The single-payer forces declared they would not support any primary candidate who failed to unequivocally endorse installing single payer as a first order of business. All did. The winner (by 197 votes), was Senate president pro tem Peter Shumlin, who was elected governor in the general election. In his first year as governor Shumlin pushed through to passage — in a legislature with better than two-to-one liberal majorities — the blueprint for installation of the historic new plan.

To its enthusiasts, the emerging Green Mountain Health Care plan will finally deliver on their long proclaimed assertion that “health care is a human right”; that is, everyone has a right (of unspecified origin) to have the government force someone else to provide them with health-care services. The providers of these services — doctors, dentists, nurses, hospitals, nursing homes — will be remunerated at rates established by the five-member Green Mountain Care Board. The costs of this sweeping program — over twice the present state general-fund budget ($1.3 billion) when it’s implemented in 2017 — will be covered (its backers hope) by Medicaid, General Fund revenues now paid to cover state employees and retired teachers, and above all, new taxes. The menu of new taxes was thoughtfully scheduled to be revealed in January 2013, after Governor Shumlin’s expected reelection. It will presumably include some mix of payroll, income, and sales taxes.

The governor believes that single payer is the only hope for “cost containment.” With government standing athwart the only money pipe paying out to all health care providers, government can tell them which treatments are “inappropriate” for which patients, and how much they will be paid for their services. The single payer system will, it is said, also curb duplicate billings, prevent fraud, rationalize the technology available for treatments, and end the dead weight waste that results from multiple insurers promoting their products and pocketing profits.

The 2009 legislature hired Dr. William Hsaio of the Harvard School of Public Health to explain how to install a single-payer system. Dr. Hsaio is well known for designing the Resource Based Relative Value System used to control costs under Medicare.

A key feature of Dr. Hsaio’s proposal was the importance of keeping the Green Mountain Care Board independent of office-holders and political pressures. When the governor made his five appointments to the powerful new Board, its chair turned out to be Anya Rader-Wallack, Governor Shumlin’s special counsel for health-care reform. Queried about how Green Mountain Care will be paid for, Rader-Wallack (who holds a PhD in “social policy”), replied “We can move full speed ahead with what we need without knowing where the money’s coming from.” At the board’s first meeting, assistant attorney general Cliff Peterson explained, “You’re charged with improving the health of Vermonters, reducing the rate of growth in health-care costs, enhancing the patient and health-care professional experience, recruiting and retaining high-quality health professionals, and achieving administrative simplification both in financing and in delivery of health care. You can, for example, set rates for health-care professionals, for manufacturers of drugs, for medical-supply companies, and the like, and for other companies providing services.” He added wryly, “That’ll be done by Friday.”

By 2014, according to the Obamacare law, the state must establish a health-insurance exchange. Shumlin has asked the current legislature to require that 98 percent of Vermont’s small businesses (those with up to 100 employees) be allowed to purchase coverage only through the exchange, from no more than the two surviving health insurers in the state. It’s likely that there will be only one left, Blue Cross Blue Shield of Vermont, since 1990 a virtual ward of the state.

Shumlin’s proposed Vermont Exchange law also provided that all plans must have at least what Obamacare calls a “silver” actuarial value: at least 70 percent of coverage provided by the insurer. This provision would have killed off the high deductible Health Savings Account-eligible policies now enjoyed by thousands of Vermont families.

On February 6, in the face of a rare business uprising, the governor was forced to retreat. For the first two years, the governor explained at a news conference, companies with 51 to100 employees would not be forced to purchase coverage through the exchange. He neglected to mention that these businesses were precisely the ones that led the rebellion against being swallowed up in the Exchange, after they learned that their premium rates would increase by 18 percent. The governor also agreed to allow “bronze” plans (60 percent of actuarial value) to be sold on the exchange, thus reversing the legislative death sentence imposed in 2011 on popular high-deductible plans that are coupled with health savings accounts. The Shumlin Democrats have always detested such plans because they encourage individuals to make rational choices in their own interest, instead of acceding to the common good.

Before House passage of the governor’s Exchange bill on February 25, the badly outnumbered Republicans sought to allow small businesses with 50 or fewer employees to purchase their own health coverage outside of the Shumlin Exchange. Representative Michael Fisher, the chair of the House committee on health care and an “outreach social worker” by trade, opposed the amendment. He stated that allowing people to choose to remain outside the exchange was a “mystifying” concept, saying, “I can’t see any potential value that can be gained outside the exchange.” The amendment went down 57–80.

Shumlin has made it clear that the exchange will only be temporary. If he can obtain a host of waivers from Obamacare — highly doubtful — he intends to fold Obamacare’s promised premium tax credits into the huge pot of money needed to pay for Green Mountain Care when it springs full blown in 2017.

Meanwhile the Green Mountain Care Board is laboring to produce the many policy and price-control decisions required by the Vermont law. Its decision to hire a public relations consultant to explain its workings to citizens produced a tempest. Governor Shumlin, supposedly far removed from the “independent” board, publicly disapproved. The Board members expressed their independence by grumbling as they reversed the decision. During the single-payer debate, the outgunned critics argued that Green Mountain Care will quickly degenerate into Quebec-style rationing, waiting lines, maddening bureaucracies, demoralized doctors and nurses, shabby facilities, obsolete technology, declining quality of care, and economy-wrecking taxation. There is little reason to believe otherwise.

As the enormous difficulties inherent in creating such a system become ever more apparent, some are speculating that at some point the governor will bail out. At a business meeting in Rutland last year he said “We will only go ahead [with Green Mountain Care] if we’re convinced together as a state, that the system is better than what we have, that it costs less, it’s going to help create jobs, and we’ve got the cost-containment system right. If we can’t do that, we’ll take our marbles and go home.” If this comes to pass, it will mark the end of yet another costly failed experiment from little Vermont, long notorious for being the nation’s petri dish for foolish and expensive collectivist schemes that end badly.

John McClaughry, a former Vermont state senator, headed the free-market Ethan Allen Institute for eighteen years.


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