Vermont Single-Payer Law Has a Long Way To Go

The Vermont legislature has been basking in the healthcare limelight for the past few weeks. On May 26, Gov. Peter Shumlin (D) signed into law a bill known simply as H202. If everything proceeds as expected, Vermont citizens will be covered by a single-payer health insurance system sometime in 2017. Yep, six years from now.

Actually it's not a real single-payer system because it incorporates universal coverage, but that's the terminology being used to describe the Vermont law.

In all the ballyhoo following the signing of H202 a lot of people have lost sight of what the bill actually does: It creates a process which will – fingers crossed – result in the implementation of the single-payer system….eventually.

There is a lot to be accomplished before the first proud Vermonter presents his or her Green Mountain Care membership card to a provider. The Burlington Free Press identified almost 40 questions involving at least seven state agencies that need to be answered before the state can begin bring this insurance law to life.

• What healthcare payment and delivery reforms would best control the rate of growth in healthcare costs and maintain healthcare quality?
• What state law changes are needed to integrate the private insurance market with the health benefit exchange?
• How might the state reorganize and consolidate health-related functions in agencies and departments across state government?
• Should the state adopt a prescription drug formulary to be used by all insurers, public and private, with some variations allowed for Medicaid?
• Should non-residents employed by Vermont businesses be eligible for Green Mountain Care?

Then there's the matter of the federal waiver the state will need, the health exchange that must be created, and the financing package that will be necessary to fund the insurance law. The devil definitely is in the details.

Vermont has been easing into healthcare reform since 2006 when the legislature adopted the state's Blueprint for Health, which set into set into motion a series of initiatives to look at chronic condition prevention and care management. Each year since then legislation has been enacted related to a host of healthcare issues, including healthcare cost containment, care coordination, and the adoption of electronic health records.

But the patchwork approach didn't deliver the results state officials felt were necessary to bring healthcare coverage to the almost 200,000 uninsured and underinsured in the state. In 2010, William Hsiao, PhD, a professor of economics at the Harvard University School of Public Health, was hired to develop three design options for a statewide healthcare system that would provide coverage for Vermont residents. Legislation set the parameters for the designs: state-run universal coverage and single-payer plan; a public option to compete with private plans; and a third plan that would be politically and practically viable.

When Hsiao unveiled his plan for universal coverage and a single-payer system in February 2011, newly elected Gov. Peter Shumlin and much of the legislature were already onboard. Shumlin had campaigned on the issue and once in office delivered a five-page strategic plan that detailed the administrative and legislative steps to make Hsiao's design a reality. That plan pretty much morphed into the 213-page H202.

The next step is to get the five-member Green Mountain Care Board up and running. That is the healthcare board charged putting together the nuts and bolts of statewide healthcare reform and ensuring that H202 delivers what it promises, including cost containment and payment reform. A nine-member committee, packed with reform supporters, has been appointed to vet potential GMC board members.

The Green Mountain Care Board will have a great deal of power. Beginning in January 2012 it will review insurance rate requests and later on in the year it will turn to hospital budgets. In between it will set the benefit package for the program. And yet with the exception of a few whimpers, the provider and payer industry has remained quiet on the issue. The Vermont Medical Society and the Vermont Hospital Association supported the reform efforts.

On the payer side, even the giant Blue Cross Blue Shield of Vermont supported the proposal.

Kevin Outterson, an associate professor in law and public health at Boston University has studied H202 and followed the legislative process. In an interview with HealthLeaders Media, he attributed the provider and payer support to the long standing connections within the small state as well as the size of Vermont's provider market.

He notes that the Blues plan has a deep relationship with the physicians and hospitals throughout the state and that there are only four significant hospital systems in Vermont. "The state needs every hospital to participate in the single payer so Green Mountain isn't going to squeeze out or bankrupt the hospitals."

In addition, BCBSVT hopes to snag the contract for the payment system for the new single-payer plan.

Major employers such as IBM are more reticent, according to Outterson. "They are worried about the cost and taxes." Financing is a huge unknown, but payroll or income taxes and some pooling of federal funds such as Medicare and Medicaid is expected. In media interviews Gov. Shumlin has expressed a preference for getting the cost containment measures in place first and then turning to the financing issues.

The timeline for the introduction of the single-payer plan stretches across seven years because of some federal waivers Vermont will need. Especially critical will be waiver request to replace the health benefit exchange required by the Affordable Care Act with a health insurance plan that could cover all 600,000 Vermont residents. The feds won't let Vermont apply for that waiver until 2015 and it won't go into effect until 2017.

Outterson, who also blogs about healthcare reform for The Incidental Economist, says Vermont officials are very aware that their progress in developing a single payer system is being closely watched by other states to see if the model really can hold down insurance costs. "Something the governor has done very well is to convince businesses to let this experiment go forward. His pitch is that if this works, Vermont will have the lowest healthcare costs in the country. That's a tremendous enticement for economic development in the state."