Single Payer Health Care Reform Vermont Style Leonard Rodberg, PhD Urban Studies Dept., Queens College/CUNY and NY Metro Chapter, Physicians for a National Health Program February 22, 2011

Health Care in Vermont – Basic Facts VT #VT%US Total Population613,9000.2% US Population Living in Poverty73,50012%20% Health Spending per Capita$6,069$5,283 Uninsured Population59,00010%17% Annual Growth in Health Spending9.7%8.6% Average Family Premium – Employer-based Insurance $14,558$13,027 Uninsured Children6,6005%10% Medicaid Enrollment25%19% Overweight or Obese Children26.7%31.6% Adults who Visited a Dentist75.4%71.3% Source: Kaiser Family Fundwww.statehealthfacts.org

Vermont's Path to Single Payer Reform Howard Dean's Dr. Dynasaur - "universal health care for children" using state funds Health Care Authority created to propose single payer plan and a "regulated mutli-payer" plan. Collapsed in 1995, with Dean opposing single payer advocates Medicaid waiver creates Vermont Health Access Plan (VHAP), expanding eligibility Governor vetoes publicly-funded Green Mountain Health for uninsured, to be expanded to universal coverage Catamount Health - subsidized private insurance Blueprint for Health - chronic care coordination through primary care medical home and multi-disciplinary community team Health information technology fund created Act 128 passed - move toward single payer through consultant study and legislative action For two decades: PNHP (esp. Deb Richter) activism

No An act relating to health care financing and universal access to health care in Vermont. Sec. 2. PRINCIPLES FOR HEALTH CARE REFORM Access to essential health services for all Vermonters Health care costs must be contained Transparency, efficiency, and accountability to the people it serves Preservation and enhancement of primary care Free choice of provider Respect for the professional judgment of providers and the informed decisions of patients Fair and equitable financing

No An act relating to health care financing and universal access to health care in Vermont. Sec. 6. HEALTH CARE SYSTEM DESIGN AND IMPLEMENTATION Consultant to propose at least three design options for creating a single system of health care which ensures all Vermonters access to affordable, quality health services: (1) Government-administered and publicly-financed single-payer health benefits system. (2) Allow individuals the choice of private insurance or a public option (3) A third option designed by the consultant, according to the principles in Sec. 2 of this act. Sufficient detail to allow the Governor and the General Assembly to adopt one design in 2011, and to begin implementation by July 1, 2012.

Haiao Study Design Principles No overall increase in health spending — any new funds needed have to come from savings Maximize federal revenue for Vermont Maintain average current benefits of Vermonters No reduction in income of physicians, hospitals and other providers Sustain and increase supply of physicians and other providers Eliminate the perverse incentives of fee-for- service system through risk-adjusted capitation plus performance bonuses and integrated delivery systems

Hsiao’s Overall Strategy Build a single payer system that can: Provide universal coverage and everyone covered with a standard benefit package Produce significant savings to fund the uninsured and under-insured Control health cost escalation Move Vermont toward an integrated health care delivery system Use payroll taxes as an equitable way to fund single payer benefits

Identified 15 Hurdles that Must be Overcome Fiscal: No additional overall spending for health care. Legal: Medicare, Medicaid, ERISA, PPACA Political: Major stakeholders’ positions Operational: Smart card, uniform electronic operational systems, common procedures

Essential Benefit Package Cover every resident with at least 87% of medical, 77% of drug expenses (the average private policy) Expand coverage for dental and vision care Exclude nursing home and home care Emphasize prevention and primary care Modest, capped copayments for outpatient services (no copayment for preventive services) Deductible, coinsurance for inpatient services Supplemental coverage available via private carriers

Three Reform Options 1. Publicly-financed, government-administered single payer system -- Essential benefits (87% actuarial value) -- Comprehensive benefits (98% actuarial value) 2. PPACA plus public option 3. Publicly-financed, privately-administered (by stakeholder board) single with “essential benefits” Recommended Option 3, “Public-Private Single Payer” “Most likely to be acceptable to major stakeholders, will produce most savings, should rely on market when possible, minimize political interference, gain transparency and accountability”

Source: Gruber Microsimulation Model

Costs and Savings for Option 3 Additional Costs for Essential Benefits Covering the uninsured and poorly-insured 5 % Adding primary care and community hospitals 1 % Dental and vision benefits 2 % Total New Cost 8% Savings Reduced insurer & provider administration 8 % Reduced fraud and waste 5 %* Integrated delivery system (PCMH, ACOs) 10 %* No-fault malpractice system 2 %* Total Savings 13-25* % Net Savings 5-17*% * Highly uncertain! Note: Reduced cost-sharing for “comprehensive benefits” would add 11% to the cost; long-term care benefits would add another 4%.

Revenue Requirements for Option 3 (Payroll Tax, for Illustrative Purposes) Essential Benefits Comprehensive Benefits Employer Contribution 9.4%13.6% Employee Contribution* 3.1%4.6% Total 12.5%18.2% * Excludes wages below 200% of Federal poverty level Note: Assumes $340 million receipts (6.4% of total) through PPACA

Hsiao Study Conclusions Vermont can fix its broken health system A new system can control health cost escalation while provide universal coverage A single payer system can reduce 8-12% of the health care cost immediately and an additional 12-14% over time A single payer plan is an effective instrument to establish integrated delivery of health care Vermont can show the way forward for the USA

Goals of Shumlin Bill "The creation of a single-payer health care system to provide affordable, high-quality health care coverage to all Vermonters and to include federal funds to the maximum extent allowable under federal law and waivers from federal law." Control health care costs Meet PPACA requirements for health insurance exchange to get federal money Lay foundation for “single payer exchange” Make a clear commitment to multi-year reforms that will lead to a “real” single payer No funding specified: To be proposed by administration January, 2013

Vermont Health Reform Board (2011) First step: Payment reform/cost control Five-person board employed by state: chair, health policy expert, practicing physician, representative of hospitals, employers, consumers. Work toward consistent provider reimbursement across all payers, global budgets, uniform payments methods Develop and approve payment reform pilot projects Establish cost-containment targets for each sector of the health care system. “ensure reasonable payments to health care professionals …that the amount paid to health care professionals is sufficient and distributed equitably”

Vermont Health Benefit Exchange (2014) (“single payer exchange”- Hsiao’s "single pipe") Purpose: to facilitate the purchase of qualified (private) health plans while providing a means of moving toward a single-payer system All (not just uninsured!) individuals and small (< 100) employers, state and local government employees, Medicaid and Medicare recipients Self-insured employers potentially can choose to stay outside the exchange because of ERISA Would offer Medicaid and Medicare benefits as well as private insurance (if waiver obtained) Collect all premium payments, administer all benefits Unified, simplified claims administration and billing, common payment methods and levels

What an Exchange Looks Like:

Leading to a List of Options:

…And Select your Plan

Green Mountain Care (2017) "Public-private single payer system" Implemented upon receipt of PPACA waiver All Vermont residents eligible to enroll Private insurers prohibited from duplicating coverage. May be administered by private insurance carrier (cf. Medicare fiscal intermediary, Blue Cross interest/support) Will seek waiver to administer Medicare and Medicaid with Green Mountain Care as secondary/Medigap carrier. Budget set each year by legislature, special fund is the "single source" of all health care spending. Cost sharing (co-pays) set each year by Vermont Health Reform Board, waived for primary and preventive care, chronic care management. Run by Dept. of Vermont Health Access, with Consumer and Health Care Professional Advisory Board.

Conclusions A single-payer plan is feasible for Vermont Achieving it will require overcoming numerous significant political, financial, and organization hurdles between now and 2017 To offer support for single payer advocates in Vermont, go to