Rep. Bob Krebs, left, D-S. Hero, and Rep. Richard Howrigan, D-Fairfield, listen to debate on the universal health care bill
Editor’s note: This story was published after second reading. Since then, the bill also passed on third reading.
You can call it Frank. You can call it Fred. But don’t call it a single-payer health care system. That was the message Rep. Mark Larson, D-Burlington, delivered to lawmakers in the House Appropriations Committee last week and during the House floor debate on Vermont’s latest effort to reform its health care system. The euphemism single-payer was struck from the bill in an amendment to make the legislation more palatable to Republicans, sources say. The bill passed 89-47 after eight hours of debate, speeches, amendments and roll call votes. The legislation now goes to the state Senate.
The actual, rather unsexy moniker? “A Road Map to a Universal and Unified Health System,” or Green Mountain Care, for short.
Larson said “fewer-payer” would be more accurate. That’s because the state’s single payment system (in theory administered by a sole entity) will always have at least a few “payers.” In addition to Green Mountain Care, other payers would include Medicare and Medicaid, large self-insured companies like IBM and supplemental insurance (likely for teachers and state and municipal employees who have “Cadillac” plans).
Whatever you call it, passage of H.202 pushes the state toward a single-payer health care reform construct, and the goals set out in the “road map” are audacious: All Vermont residents would be eligible to receive an “essential” health benefit package; health insurance companies would be effectively cut out of the game and relegated to a peripheral role in the new system; and cost containment measures would be designed to push the system toward fiscal sustainability. All this would be accomplished under an ambitious, three-year timeline.
Though government-controlled health care payment systems are commonplace in most countries in the developed world, no other local or state government entity in the United States has come as close to implementing a universal health care system for all of its residents. Vermont would be the first state to achieve what has been impossible elsewhere – including President Barack Obama’s much-compromised attempt to reform the national system — if the state can negotiate the push and pull of special interests, namely single-payer activists and a host of medical professionals and facilities that stand to win or lose — whatever is proposed.
The Legislature has outlined a new “road map,” but it isn’t the first time lawmakers have gone down a garden path toward the dream of creating a fully fledged universal coverage plan. Two previous health care reform efforts that achieved partial gains nudged Vermont closer to the goal. CORRECTED In 1992, the Legislature passed a law similar to the current measure that created the Vermont Health Care Authority, which was charged with designing universal access plans for the 1994 General Assembly to consider. The proposal failed. Just five years ago, the Legislature and Gov. Jim Douglas enacted Catamount Health, a Medicaid-subsidized program for uninsured Vermonters. Despite this last effort to extend coverage to uninsured Vermonters, 47,000 residents are currently without health insurance, and 160,000 are underinsured and find it difficult to pay for health care costs as out-of-pocket expenses and deductibles rise.
With H.202 and the Hsiao report in hand, the third time might be the charm. This go-round Gov. Peter Shumlin, a Democrat, has made health care reform his signature initiative and his Democratic compatriots in the Statehouse are determined to make it so. The effort builds on the work of economist William Hsiao’s initial research for the design of a “single-payer” health care system.
Republicans opposed the bill because they say they can’t support sweeping reform without knowing how much the system will cost or who will pay for it.
Hsiao proposed a 14.5 percent payroll tax, and also suggested that an income tax could also be an option. The House Health Care Committee decided the “details” are beyond the Legislature’s purview for the time being. The board and a team of eight researchers from the Department of Banking, Insurance, Securities and Health Care Administration will devise the system; lawmakers will be responsible for approving a financing plan (2013), a budget (2014) and plans for implementation of the system (2012).
If the legislation is enacted as is, (the Senate is taking testimony on the bill Thursday night), it will set a few parameters in place for the formation of the Green Mountain Care board and implementation of the health care exchanges under the federal Affordable Care Act. In addition, the bill sets the stage for Green Mountain Care, the single payment system. H.202 hands over the biggest decisions – the benefit packages for consumers, reimbursement rates for doctors and hospitals and how the cost containment and payment reform systems will work – over to the five-member professional board.
Debate on the floor
Rep. Mark Larson, chair of the House Health Care Committee, introduced the bill and was subsequently queried by lawmakers for about 5 hours. Larson, D-Burlington, was unflappable. He didn’t lose his cool, even after about three hours of steady grilling from Rep. Tom Koch, R/D-Barre Town, who used an amendment proposed by Rep. Cynthia Browning, a Democrat, as an opportunity to flay open the underlying bill.
Larson began with a preamble that explained the rationale for reform. “Our current system is broken; it’s too costly; and there is no mechanism for cost control,” Larson said. The state is spending $4 billion a year on health care now; he said that total will likely grow by a third, or by $2 billion over the next two years. “We have a system that has demonstrated that despite all of our efforts cannot control the cost of health care,” Larson said.
The system, he said, is also unfair and inequitable. Constituents say the premiums they pay for health insurance are comparable to a tax, except that some people pay and others don’t, and yet everyone benefits.
“At a time where Vermonters are increasingly seeing the cost of copays going up and the amount of coverage going down, we can’t afford to spend money on things that don’t add value to our health care system,” Larson said.
The second amendment, proposed by Rep. Linda Waite-Simpson, D-Essex Town, passed on a voice vote. The amendment will require the state to hold a public hearing and an economic study regarding how Green Mountain Care would affect self-insured employers, including IBM which is in Waite-Simpson’s hometown.
Browning’s amendment would have confined H.202 to the formation of the board and the exchanges and would have stopped short of allowing the state to move forward with the laying the foundation for the single payment, universal Green Mountain Care plan.
“We need more detail,” Browning said. “I don’t think we’re ready for this commitment. The other problem I have with it is the level of uncertainty it creates, which is the worst thing for economic activity and the worst thing for business.”
Rep. Tom Koch used the amendment as an opportunity to conduct a courtroom-like cross-examination of Larson. With a laser-like focus, Koch methodically deconstructed the 92-page bill, section by section, raising questions about how the plan would affect self-insured employers; how the bill would contain costs under a per capita reimbursement system; whether the system would limit care to patients in order to contain costs; how the plan would monitor health care quality and whether the legislation would provide adequate reinsurance in the event of catastrophic medical claims.
“Is not one of problems with capitated payments is (sic) the economic incentive for providers to do less for patients?” Koch interrogated.
Larson replied: “That’s true if you don’t monitor the quality.” He said Green Mountain Care would include safeguards to prevent providers from underserving people under capitated payment system.
Koch also pointed out a sole reference to “single-payer” and then proceeded to use a Gertrude Stein style “a rose is a rose is a rose” line of questioning to highlight what was already spelled out in the legislation – that is, passage of H.202 means that most Vermonters, not already covered by Medicare or a large self-insured employer, would, in 2014, shift toward one health care administration system. He pointed out that the objective of the bill is to eliminate insurance competition.
Koch and other Republicans also argued that including self-insured companies in the Green Mountain Care system would be unconstitutional; Larson said the state would not seek an ERISA waiver, and said such waivers are not possible to obtain. Businesses, he said, would continue to function as they do now.
Nevertheless, an amendment from Rep. Heidi Scheuermann, R-Stowe, and Rep. Oliver Olsen, R-Jamaica, proposed that the state exclude self-insured companies from the Green Mountain Care system.
Scheuermann said under the proposal, self-insured companies would pay double – they would pay insurance premiums and potentially a payroll tax, as suggested by Hsiao’s report. Scheuermann said a number of large, self-insured companies could be affected, and she rattled off a list: GW Plastics, General Electric, General Dynamics, Pizagalli Construction, Plasan, King Arthur Flour, Cabot Creamery, CVPS, among others.
Scheuermann said while the state may not require participation in a single-payer plan, companies would likely be forced to pay into the plan. “There is a lot of uncertainty in this bill, and the angst is palpable for businesses in this state,” Scheuermann said. “This is one piece of certainty if we take this off the table to say this would be one thing we wouldn’t do. At least take this off the table and don’t force companies to pay.”
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Sausage Making at the Statehouse!
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A big thank you to the Vermont Legislature for having the courage and dedication to hold this vote last night. It’s clear that the employer-based system of health insurance isn’t working for anyone right now. Companies pay more for lesser care and workers are contributing more and more to their insurance costs and getting less and less.
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Having ALL Vermonters in a single-payer/few-payer system would create the greatest savings. Any such system must include all people on a government payroll; state, county and town. No one should have a “Cadillac” plan, obtained by union “negotiations” at tax payer expense.
That way all Vermonters have the same plans and the same services. That would be democracy and fairness. All treated equally before the law. No big host of people would be required to administer it.
Plans with high deductibles should also be offered to people who want them.
It would be the lowest cost way to go, the least complex and the easiest to administer, AND create the greatest savings. That is the way it is done in Europe.
I lived in Europe for 28 years under a single-payer system that covered ALL workers, including government workers, professors in colleges, policemen, teachers, loggers, farmers, business owners, etc.
It is a fair system that provides care for all at about half the cost per person per year.
Medicaid and Medicare have 10% administrative costs and 90% benefits.
HMOs have 20% administrative costs and 80% benefits.
The additional 10% HMOs keep is about $250 billion per year which is used for lavish offices and multimillion dollar paychecks for top management, PR, advertising, and paying politicians, etc., to keep the gravy train going.
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Hsiao proposed a 14.5 percent payroll tax, and also suggested that an income tax could also be an option. The House Health Care Committee decided the “details” are beyond the Legislature’s purview for the time being. The board and a team of eight researchers from the Department of Banking, Insurance, Securities and Health Care Administration will devise the system; lawmakers will be responsible for approving a financing plan (2013), a budget (2014) and plans for implementation of the system (2012).”
The legislature and the Governor have the cart before the horse in their approach to health care reform. Financing plans and Budgets should be available BEFORE Vermont rushes headlong down the path of an expanded entitlement that cannot possibly succeed without rationing of services.
Since they’re bent on approving a pig in a poke, ask your legislators who support this approach two questions: 1.) what form of rationing they would support because virtually unlimited demand is not affordable, as our present system reveals; and 2.) Where will cost savings be realized? [If administrative costs is their answer, how many jobs in insurance and other companies will be lost?]
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I challenge the term “CADILLAC PLAN” used for state employees and retirees.
Let’s examine what the “CADILLAC” model for retired state employees really is:
For example, a medicare eligible(65+) retired couple in the state employee plan would have the following costs:
First dollar deductable: $600.
Annual premiums: $1532.52
Co insurance Up to $1500.
Drugs: Up to $1550.
GRAND TOTAL MAXIMUM FOR RETIRED COUPLE: $5182.52
There’s plenty of retired couples living off a meager pension and maybe social security that spend over $5000. out of pocket towards their “CADILLAC.” There is NO INCOME SENSITIVITY taken into consideration. So for some very elderly retired people this “CADILLAC” costs them dearly. I must ask: If this is the “CADILLAC” what will the Ford be like?
Working state employees fare better but a working couple will pay $3087.24 in annual premiums alone for their “CADILLAC.” Again, the state does not consider ability to pay, so the exempt $100,000+ upper management political appointee pays the exact same premium and copays as the worker earning less than $30,000.
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David Usher, using the old bamboozle, talks about rationing of health care if single-payer (I refuse to play the dishonest semantic game) becomes law. What we have now Mr. Usher is rationing by economic status i.e. the wealthy get excellent care because they can afford big bucks, while the rest of us take our chances in the emergency room. What Mr. Usher assiduously avoids is the harsh reality that we are a society of obscenely concentrated wealth and benefits and any analysis which does not take this into consideration is patently fraudulent.
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@ Dave Bellini – Active teachers and state employees DO have a Cadillac compared to the rest of us. And retired have an option for coverage that others don’t.
@ David Usher – The rest of the industrialized world can pay for health care just fine, without rationing. We being one of the wealthiest should have no problem. Rationing of health care already exists within our for profit insurance system.
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Yes, in order to reduce costs of health care, folks not providing health care, i.e. insurance salesman, brokers, owners, etc. will have to look for other work. Duh.
BTW, great reporting, as usual by Anne Galloway.
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“Rationing of health care already exists within our for profit insurance system.”
I wonder what critics of this health reform effort that passed the house today for the third time by an even stronger vote of 92-49, would feel when an insurance company judged that a procedure/test they needed was “medically unnecessary,” or what it is to have to fight for their care every step of the way through a life-threatening illness like I had to where a person who is sick is a “medical loss.”
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What are the 10 big actuarial questions for states creating an insurance exchange? http://www.healthcaretownhall.com/?p=3707
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H.202 begs for an answer to the question – WHO DECIDES?
Do patients, doctors, pharmacies, hospitals, insurance companies and others in the health care system consulting with each other decide freely on health/medical products and services for each patient based on the combined knowledge of hundreds of thousands of these Vermont individuals?
Or, are these decisions made based on the knowledge of a few hundred legislators and their advisors and imposed by force by government employees?
Who are these legislators and government employees who have superior knowledge to make and impose these decisions with passage and implementation of a piece of legislation?
WHO DECIDES?
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Lawmakers have been quoted as saying the only detail remaining to be worked out is the cost. Hello? Shouldn’t that be the first consideration? Reimbursement levels paid by this new single-payer will be the greatest determinate of the continued success of health care providers in Vermont. Right now the payer mix in the state is roughly 50% private (insurance) pay which pays 125% of Medicare rates, 30% Medicare and 20% Medicaid which pays less than 80% of Medicare rates. If the private insurance market is made illegal and rates are lowerd to Medicare rates, or even less, as is most likely, that will force many small and rural providers OUT OF BUSINESS. Most providers survive due to the extra reimbursement of private insurance payers. If that is reduced, operating expenses will out-strip revenue. The situation will be the same for almost every hospital in the state. Now, what will health care look like than?
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One answer to the Norman Henry March 26 question is as follows; The reason why some legislators desire to make decisions contrary to the advice of experts is not that these legislators have obtained the necessary knowledge of the disapline enabling them to do so, but rather the desire to control who makes the decisions for the delivery of goods and services. These legistators believe Socialistic policy should control the delivery of services and not the Free Enterprise/Capitalism system. They believe that a few “CZARS” can be more efficient in providing goods and services rather than the employer, employee and market system, where individuals are required to take responsibility for their actions. This issue is about control over the decision making process and no more. Everything else is just a “smoke screen”.
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A single payer health plan for Vermont without all the larger employers and unions will make for a very small remaining pool. It simply will not be economically feasible. Don’t these lawmakers have any financial sense at all?? Dr.Hsiao’s report was quite clear that in order for a single payer plan to have a prayer of working, ALL Vermonters would need to partake; ie, no opting out. This plan will absolutely bankrupt this State, no doubt about it. Wake up Democratic lawmakers before driving off the cliff!
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I really can’t wait to hear what IBM will think about paying the payroll tax in addition to the cost of their existing generous healthcare plan! And how all the other technology companies with their highly compensated (and you would think highly desirable) Vermont employees will feel about subsidizing lower paid jobs at other Vermont companies with the payroll tax as a % of payroll–.
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As a Physician Assistant (PA) student and supporter of universal healthcare, if this bill passes I would feel inclined to move to Vermont to practice.
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Funny thing is about the criticism of this plan, is that people think they have to pay more for Universal health coverage, when in fact, they will be paying less. More money gets taken out of the state treasury in fact, when people DON’T HAVE ANY insurance or coverage, and wind up in the emergency room. Just read the above article again. They already covered that.
Personally, I think it is great. Everyone should have health care, period. If you are out of work, on a fixed income, and you don’t have insurance, you get to be treated! How amazing is that? You shouldn’t have to lose your home over being sick, no matter what!
Many modern countries make it work, through higher taxes. They also have a much higher quality of life for everyone, as a community. Good job Vermont, for paving the way for America, the way it should be for everyone.