Healthcare reform at the state level often occurs due to legislative and policy changes. These initiatives are implemented to comply with federal law, improve the health care system, or address state-specific challenges. This paper will seek to investigate Vermont’s single-payer health care system reform.
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Rationale and Adoption
Vermont’s health care reform began as a response to the adoption of the Affordable Care Act (ACA) in 2010. Vermont, a traditionally Democratic state that greatly supported ACA, but many of the leaders and activists were ultimately disappointed by the concessions made by the federal law to private insurance companies. Many of the activists including Senator Bernie Sanders and newly elected Governor Peter Shumlin wanted to implement universal health care for the population, otherwise known as the single-payer system. It would cover the base costs of essential health care costs for state residents.
It was considered that a single-payer system would result in long-term cost savings for the state by no longer providing public funds for private plans which occurred in the previous health care reform for the state. Advocacy groups and state legislation began preparing a new bill before Shumlin took office. The plan was designed using consultants such as well-known health care economists from Harvard and MIT. A high level of policy expertise was present during the plan development. Preliminary reports suggested creating a public-private system. This was considered with the establishment of The Green Mountain Care Board that designed benefits packages and sought to match national standard requirements as well. However, the law itself was intentionally vague, leaving out financing details. Eventually, the bill was signed into law on May 26, 2011 (VerValin, 2017).
The legislation lacked a clear funding structure which may have led to its inherent failure. The system would have cost $5.91 billion to fully implement, with the burden of $1.61 billion placed on taxpayers and $332 million on employers. Shumlin’s administration projected an increase in taxes to 11.5% for employers and 9.5% for individuals, which were significantly higher than the original estimates of 9.4% payroll tax and 3.1% individual income tax respectively (McDonough, 2015). The reform’s financial prospects strongly depended on federal support from Medicaid and ACA payouts. However, these proved to be much lower as the state received $161 million less from Obamacare and $150 million less from Medicaid than accounted initially (Roy, 2014).
Impact on Healthcare
Comprehensive projections by the team that helped develop the foundation for the Vermont plan suggested that health spending would be reduced by 25.3%, with the highest amounts coming from payment reform (10%) and administrative expenses (7.3%) (Hsiao, Knight, Kappel, & Done, 2011). Vermont would achieve $56 million in savings the first year of operation due to reduced waste and fraud in the health care system. Employer spending would drop by $100 million, with similar figures for households (average of $370 per family). Estimates considered that the state’s economy would benefit from the creation of over 3,000 jobs annually. The gross state product and economic output would increase by over $100 million as well. The goal was to achieve coverage of 97% of the population and 87% of the actuarial value of covered benefits (Hsiao et al., 2011). Since the reform never achieved full implementation due to political and economic challenges, it is difficult to evaluate its full impact on healthcare within a state. However, even the most conservative projections estimated savings for the health care system and increased coverage long-term.
This health care reform eventually saw its demise Governor Shumlin announced the plan would be scrapped in 2014. It was a bold initiative to implement a large-scale single-payer system. However, the political and economic challenges proved overwhelming and unsustainable for the legislation. This experience suggests that comprehensive health care reform at a state level is a complex aspect that must consider a myriad of issues, from adequate funding to public support, balancing the benefits and costs.
Hsiao, W. C., Knight, A. G., Kappel, S., & Done, N. (2011). What other states can learn from Vermont’s bold experiment: Embracing a single-payer health care financing system. Health Affairs, 30(7), 1232-41. Web.
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McDonough, J. E. (2015). The demise of Vermont’s single-payer plan. The New England Journal of Medicine, 372, 1584-1585. Web.
Roy, A. (2014). Six reasons why Vermont’s single-payer health plan was doomed from the start. Forbes. Web.
VerValin, J. (2017). The rise and fall of Vermon’s single payer plan. Web.