Be careful what you wish for

Last July, when I was at my old blog, I highlighted the Vermont Gubernatorial Primary, where the candidates were fighting it our to see which was more pro-single-payer. Well, one of those candidates won, and he’s keeping his promise.  He has unveiled a bill that would potentially transform Vermont into a (very close to) single payer system. As Kevin points out, it won’t be a perfectly-single-payer system because (1) Medicare will still exist and (2) large businesses are still allowed to self-insure. But it’s darn close.

This is potentially doable, it turns out, because of allowances made in the language of PPACA that allow states some flexibility in the set up of their health care systems. Yesterday, Governor Daniels (full disclosure, he’s my governor) wrote an op-ed in the Washington Post asking for states to have more flexibility in just that. While I may disagree with some of the flexibility he wants (ie less robust coverage options), I’m all for local ingenuity. If a state can set up a system that improves coverage, and do so in a way that saves them some money over PPACA, go for it.

And that’s exactly why Vermont may prove to be more of a danger than people think, both to those who support the PPACA and those who want it repealed. Medicare Advantage was an experiment to see if private insurance companies could provide the same benefits of Medicare at a lower price. If they could, it might have sounded the death knell for a government run Medicare. Turns out they couldn’t, and Medicare stands strong. Vermont is now betting that they can devise a single payer system that will provide the same benefits as private companies at a lower price.

By definition, it’s universal, so it will absolutely improve coverage. All they need to show, then, is that it reduces costs. There’s very little reason to believe it can’t.

First of all, there will be administrative savings, which will be significant. No more profits, stock options, advertising, underwriting, etc. Plus, billing will be simplified in all offices and hospitals. But the big ticket savings may come from the ability to finally influence how we deliver care.

You see, all the talk of pay-for-performance and capitation and such always comes in the form of Medicare and Medicaid. But private insurers can reimburse any way they want. So even if a government run system tries to influence things, private insurance can always do things differently. Doctors obviously prefer the private reimbursement rates, and the government caves. But with one system, there’s nowhere else to go. Cost cutting measures will actually have teeth.

Conversely, this could cause a doctor or hospital revolt. If done correctly, though, the market power of a single-payer system may actually deliver on the promise of improved outcomes and controlled costs.

And – unlike talk of repeal – this has a real chance of happening. The bill exists. Democrats control both houses of the legislature in Vermont and seem to be behind this bill. There’s no reason to believe it won’t pass, and the powers-that-be in Vermont want to get this done ASAP. Moreover, every cry from a Republican governor for more freedom to have the ability to decide things locally makes it more likely that Vermont will get its way.

Of course, the devil is in the details. To pay for this, they will likely need a tax. That won’t be popular, but if spun right, it should not be more than health insurance costs already for most people, and so should be a wash. It will be a tricky play, though.

Then we’ll have to watch. If Vermont pulls it off, and creates a single-payer system that covers everyone, works towards better outcomes, and starts to control costs, then it will be harder for other states to argue that it’s a bad idea.  It’s one thing to accuse England of being a socialist nightmare; calling Vermont one will not ring as true. Other than their health care system, it’s America. You can’t attack Vermont without attacking the US.

From my perspective, it’s a win-win. We get some comparative evidence of how such a system might work in the US. If it fails, then we see why and learn something. If it succeeds, then there is hard-to-refute evidence that a single-payer system in the US is a much more viable option.

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