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Universal Healthcare Would Slow VT Cost Growth

 |  By John Commins  
   November 03, 2011

Vermont's yet-to-be-defined leap into state-sponsored universal healthcare could cost as much as $9.5 billion by 2020, about double the $4.7 billion the state now spends on healthcare. That's roughly $14,000 for every person in the state.

But the state plan will still cost less than maintaining the current system of private plans, which could add an additional $550 million to $1.8 billion to the cost of healthcare in the state, according to new estimates released this week.

The 45-page report, Costs of Vermont's Health Care System Comparison of Baseline and Reform System, was mandated by Vermont lawmakers this spring after they passed Act 48, a universal healthcare bill. Lawmakers have until early 2013 to finalize the plan and figure out how to pay for it.

Whatever plan emerges will at best only slow the 7% annual increases in healthcare costs that are projected until 2020 under the status quo. Vermont, with an aging population and already aggressive coverage for the poor and under-insured, has seen some of the fastest growth in healthcare costs of any state in the nation. In 1992, healthcare represented 10% of the Vermont economy. In 2009, it represented nearly 19% of the state's economy.

"Achieving savings in healthcare spending is a difficult process. In this context, success is measured as reduction in the rate of growth—achieving absolute savings (spending less than in the prior year) is extremely unlikely," according to the report.

Although cost savings are a key component of the plan, the report cautioned that money should not be the only factor when measuring success. "Ultimately, accomplishments will be measured against several standards, including the health of the population, satisfaction of both providers and patients, and the financial sustainability of the system."

Nonetheless, the report said more precise estimates of any projected savings for state-sponsored universal care could be difficult right now because nobody really knows what the plan will look like.

"The actual savings will be determined by decisions yet to be made by the Green Mountain Care Board, the executive branch, and the general assembly, as well as the impact of national initiatives and policy changes, including the amount of federal financial support that we can anticipate," the report's authors wrote.
That savings would be dependent, for example, on cost-containment measures that include payment reform, delivery system changes, and reductions in provider costs—particularly simplifying administrative and paperwork costs that are now associated with private health plans.

If the healthcare system takes action on those and other cost-cutting measures, savings will begin in 2014 and "rise rapidly for the next several years," according to the report.

That savings will also require "substantial investments" in the program's infrastructure, which could cost between $50 million and $150 million.
 

 

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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