Vermont Could Be First In Line for Single Payer

By Joanne Kenen for Politico

Most governors are, at best, slogging their way through the world of health reform implementation. Vermont’s Gov. Peter Shumlin is hurtling through it.

Vermont is the only state to have set itself on a path to a single-payer health care system, using the national health care law as a jumping-off point.

Shumlin can’t get there by 2014. He may not get there by 2017, when states get more flexibility under the health law to design their own health care systems. He may not get there at all.

But he believes that even small states must aim big.

“It’s a mistake for our public policymakers to think we can nibble around the broken system,” he told POLITICO in an interview at the Democratic National Convention in Charlotte, N.C. He says he wants change and believes that it’s actually easier to bring big change to little states, which he sees as less beholden than larger states and national politics are to special interests.

The rest of the United States has no interest in single payer, of course, not now nor in the near future. Not only did the 2010 health law reject single payer or a public option, its rules and structures prevent a state like Vermont from going single payer, at least at the outset.

But Shumlin’s ready to go — and he doesn’t want the health care law to stand in his way.

“This Vermont boy wants to implement that single-payer health care system tomorrow, and I don’t know why you guys want to stop me from doing that,” Shumlin said at a recent POLITICO health policy panel. “It’s the right thing to do. The rest of the world has figured it out. Let’s grow up and join them.”

The Vermont Legislature and his administration are working on setting up a state health insurance exchange under the health care law. It isn’t single-payer, although it’s often described that way. It’s an exchange. But Vermont is designing its exchange in a way that could be a platform for a state-based single-payer system.

Shumlin argues that his vision is as pragmatic as it is progressive. The efficiencies of a one-payer system will slow health care spending, freeing up dollars for jobs and economic growth, he says.

But a lot of things have to fall into place. To get to single-payer, even by 2017, Shumlin acknowledged that he would need an unprecedented slew of exemptions, tweaks or workarounds from numerous federal health programs and laws — including waivers from Medicare, Medicaid and the Affordable Care Act itself. He has to figure out what to do about big businesses that operate in Vermont and other states whose health plans are regulated not by the state, but by a federal law known as ERISA.

And the Legislature has to agree on a way of paying for it — one that won’t stir so much opposition in the business community that the whole thing falls apart.

Shumlin’s opponent in the governor’s race, underdog Republican Randy Brock, says the so-called single-payer plan is “vague, undefined” — and undesirable.

“Down that path lie higher taxes, reduced choice, price controls and rationing of services,” Brock says in his health policy plan. “That’s the path we are on now and the road ahead makes the future for our children less bright and less prosperous.”

But Shumlin and the Democrats are all but certain to retain control in November. In 2013, they plan to start trying to fill in the gaps in the single-player blueprint, including the payment challenge.

The business community isn’t all on board, although businesses are talking and trying to work things through, said Betsy Bishop, president of the Vermont Chamber of Commerce. Under both Vermont and federal law, small businesses — with fewer than 50 employees — don’t have to cover their workers. But if they choose to cover them, they have to go into the exchange in Vermont. Small business plans won’t be sold outside of them.

The businesses want more options.

“We do not know how much it’s going to cost. We don’t know what our premiums will be, how much our employees will have to pay in. We don’t know the coming finance mechanism, we don’t know what the plans are,” Bishop said. “It’s hard to know whether it will be helpful to us.

“What we’re looking for is to have the health insurance exchange as an option for businesses — and allow business to still have choice,” she added.

But letting businesses opt out could hamper the exchange or dilute any potential savings. It’s a small state, and the exchange would need a certain number of people in it to make the insurance pool work and create efficiencies of scale.

Shumlin remains determined. He has his own small business, which runs community service-oriented travel for high school kids. Once the exchange is open, he said, he’ll stop offering his employees coverage on the job, give them all a raise, and let them choose a policy in the Green Mountain Health plan, as it will be known. They’d be part of a much larger insurance pool, and depending on their income, may qualify for federal subsidies.

‘I’ll raise your wages and divorce health care from employment,” Shumlin said.

Ideally, Vermont would like to bring into the exchange everyone on Medicare and Medicaid, state and municipal employees, individuals, everyone who works in a small business and nonprofits with fewer than 50 employees. The state wants to put all the money for all the premiums — including individuals’ contributions and federal funds — in one pool, which would then become the “single payer” for health care.

But getting all that money into one “pot” is the challenge. Neither Medicare, Medicaid nor the health care law’s subsidies are set up that way. Vermont is negotiating waivers and flexibility with Health and Human Services, but the outcome is uncertain, even if President Barack Obama is reelected.

And, of course, Vermont would have to rethink and quite possibly scrap the whole concept if Mitt Romney were to become president, HHS lands in Republican hands and Republicans repeal the health reform law.

But Shumlin thinks his plans will grow on Vermonters — particularly as health care providers in a rural state look at the spending and payment trends and decide this is a better way.

“It’s not sustainable,” Shumlin said of the current system. Without big change, he said, Vermont’s doctors and hospitals “know they are toast.”