Vermont Leads on Health Care Reform

Vermont Leads on Health Care Reform

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Having spent part of my childhood in New Hampshire, I always thought there was something a little different about those Vermonters across the river. Now I’m sure of it: The state legislature in Montpelier is considering a  single-payer health care system, as proposed by Democratic Governor Peter Shumlin as soon as he took office earlier this year.

This is something to watch. The system Shumlin promises to sign into law as soon as the legislature is finished with it was designed by a consulting team led by William Hsiao, an economics professor at Harvard’s School of Public Health. Hsiao, who has also worked on China’s health care system, among others, is perfectly clear in his assessment: The most fiscally responsible way to get all Vermonters insured is by way of universal health care coverage. (No, he’s not afraid of using the term.)

As planned, Vermont would move toward a single-payer system in three stages. In the first, a five-member board (independent of the executive and legislative branches) would integrate the state’s disparate insurance structure as it now stands; in the second, a health benefit exchange would consolidate and simplify insurance purchasing. Universal health care would be realized by 2015.

At that point, Vermont would start to look more like the rest of the advanced world than the U.S. does now. But, you ask, who’s going to pay for this? 

It’s a good question, and Shumlin is considering options. Hsiao’s plan calls for an employer and employee payroll tax that would take the place of insurance premiums. The tax would be progressive: Earn more and you pay more. In the bargain, payments to providers in such programs as Medicaid will be raised to more realistic levels, bringing the reimbursement system closer to what’s going on in the market. 

It’s interesting for a couple of reasons. For one thing, it is all but certain to pass. It went through the state’s lower house on a 92-to-49 vote a couple of weeks ago. The state senate is holdings hearings this week, and even the state’s Republican mayors are coming out in support of it.

For another, there are the plan’s economic benefits. Hsiao reckons that the state will save nearly $600 million a year – and twice that by 2019 – even as 52,000 uninsured Vermonters (9 percent of the population) gain access to coverage. What is more, Hsiao’s study estimates that single-payer insurance would generate 4,000 jobs because businesses would no longer be burdened with the costs of employees’ coverage.

One can hardly wait to see how this turns out by way of the enhanced competitiveness of the state’s economy. Vermont will need a federal waiver to go through with this plan, but its congressional delegation in Washington – two Democratic senators and a representative of the same stripe – have already introduced legislation to secure the waiver.

The U.S. is currently the world’s only advanced nation without universal health care coverage, and you don’t see too many others envying our lot. Vermont’s a small state, and the last time it had something big to offer Washington, it was Calvin Coolidge. It’ll do better this time. A state-by-state approach to serious health care reform may well be the way forward.

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Patrick Smith, a correspondent abroad for many years, is a columnist essayist, critic, and lecturer. His most recent book is Time No Longer: Americans After the American Century. Follow him @psmith7600 or on his web site,