Editor’s note: This op-ed is by John McClaughry , vice president of the Ethan Allen Institute. It was first published on Vermont Tiger.
Another study?
Do we really need another study?
Sen. Kevin Mullin, the only Republican member of the Senate Health and Welfare Committee, seems to think so. According to a recent VPR story, Mullin would not agree to make the committee’s vote to report the Green Mountain Care bill unanimous unless the committee agreed to include his amendment to “thoroughly study the impact of implementing a single payer system well before it’s put into place.” Mullin told VPR’s Bob Kinzel that he “thinks the study will help deal with the fears that many people have raised with him.”
Specifically, Mullin insisted that the ambitious Shumlin single payer plan be stopped in its tracks unless the Shumlin-appointed Green Mountain Care Board determines that:
- Each Vermont resident covered by Green Mountain Care will receive benefits with an actuarial value of 80 percent or greater.
- Implementation of Green Mountain Care will not have a negative aggregate impact on Vermont’s economy
- The financing for Green Mountain Care will be fair, equitable, and sustainable
- Administrative expenses (whose?) will be reduced
- ost containment efforts will result in a reduction in Vermont’s per capita health care spending below the rate of growth in per capita health care spending nationally, adjusted to account for demographic differences
- Health care professionals will be reimbursed at levels sufficient to allow Vermont to recruit and retain high quality health care professionals
Note first that there is no mention of just when the Board has to make these determinations. Is it before the new taxes go into effect? Before anyone is enrolled? Before some final federal waiver is obtained? There is no enforcement mechanism. The determinations made by the board may be utterly without merit, but once made by the Board — there is no appeal — the machine grinds relentlessly forward.
Five of the six items are entirely subjective. Here’s the Green Mountain Care Board at work, maybe in January 2013:
Chairwoman Rader-Wallack:
“OK, now we have to make some determinations to satisfy that silly Mullin amendment before we can spring this important plan full blown on the fortunate people of Vermont. Do we agree that this will have a strongly positive aggregate impact on Vermont’s economy?”
Mr. Mayer (business rep):
“Of course it will. I said so.”
Chairwoman Rader-Wallack:
“OK — no disagreement there. Do all of us find that our financing scheme is fair, equitable and sustainable?
Mr. Haslam (consumer rep):
“No, I don’t. We should finance the whole thing with taxes on the rich and the big corporations.”
Chairwoman Rader-Wallack:
“Now Jim, you know I agree with you, but we all know the rich and the big corporations are already tiptoeing out of the state, so let’s just go along this once, OK? Fine. Thank you. Now, we can surely agree that our efforts will reduce the per capita health care spending below the national average, right?”
Mr. Slusky (hospital rep):
“Tell me again how we’re going to keep the spending down?”
Chairwoman Rader-Wallack:
“Simple. We’ll set the global budget low enough to put our per capita spending below the national average. Remember?”
Mr. Slusky:
“But with our state’s aging, drug abusing , and obese people demanding lots of services, how can we do that?”
Chairwoman Rader-Wallack:
“Richard, haven’t you been listening? We’ll do it Quebec style. Fewer doctors, fewer hospitals, no new technology, no fancy medications and procedures that just keep old folks living longer and gobbling up even more services, and lower payments to doctors, dentists, nursing homes, and hospitals. OK? Now, will we be able to recruit health care professionals?”
Dr. Richter (physician rep):
“Of course! Thousands of young doctors are eager to come here and work for subpar wages in return for being part of a pioneering venture like this one. Only last week Fletcher Allen recruited two bright young doctors, from Chengdu and Battambang!”
Chairwoman Rader-Wallack:
“I take that as a yes. Now let’s rubber stamp this thing and move on with our history making experiment.”
But seriously, one may well ask, what is it about single payer health care that hasn’t been studied almost to death in Vermont?
Let’s rewind to 1990. During the tenure of Democratic Gov. Madeleine Kunin, pressures built up for “insurance reform” and “hospital cost control”. With a liberal Democratic Governor and Democratic control of the House and Senate, the moment appeared ripe for sweeping “structural reforms” built on sharply expanded government intervention into the health care and insurance sectors. Under strict budget pressure — a $65 million general fund deficit for FY 89 — the Kunin administration backed off from its ambitious goals, settling eventually for including middle income children in an expanded Medicaid program improbably named “Dr. Dynasaur.”
One energetic new Senator elected in 1988 had grander ideas. Sen. Cheryl Rivers came to that body as chief lobbyist for the Low Income Advocacy Council. She fervently believed in Canadian-style single payer, and introduced a bill to bring that result about. An early supporter was Lt. Gov. Howard Dean MD.
But when Dean suddenly became Governor in August of 1991, he fled the scene of that earlier indiscretion. Determined to make himself the Nation’s Young Doctor-Governor, Dean redirected his enthusiasm to something he called “regulated multipayer”, modeled after the German sickness funds and designed and implemented by a new Vermont Health Care Authority.
Rivers, however, was able to persuade Speaker Ralph Wright to include a parallel study of single payer. The resulting Act 150 directed the new Health Care Authority to study both plans and report in November 1993. That it did, but Rivers immediately denounced its single payer analysis as inadequate, and Dean denounced its regulated multipayer analysis as inadequate.
On the day the Authority’s plan was released, the Free Press carried a front page story headlined “Governor to unveil health plan: Single payer out of favor.” In it Dean was quoted as saying “I’m not interested in debating with the Progressives. [They] have to get over this obsession with a Canadian-style single payer system.”
In the 1994 House, Speaker Wright, goaded by Rivers, brought a single payer measure to the floor. Terrified by the public reaction to the Free Press’s denunciation of the proposed payroll tax financing, the House rebelled. Single payer crashed in flames. Dean was reduced to urging the House to pass any sort of bill, so he could persuade the Republican Senate to massage it into his preferred plan.
With the shell of a plan pushed through the House, Dean argued for his regulated multipayer plan. That enterprise collapsed with the Senate Finance committee’s 7-0 vote to bag the whole project. (Rivers voted no to protest the demise of single payer.) Shortly thereafter Dean’s resident health care guru Anya Rader departed the state for greener pastures.
After five years of increasingly unsustainable Medicaid expansion at Dean’s urging, the legislature agreed to another study of structural reform. This was the Hogan Commission, that reported late in 2001.
The introduction to the Hogan Commission report read like the introduction to a Bernie Sanders-Cheryl Rivers socialized medicine tract. “We do not have a health care system in Vermont. No one is in control. No one is responsible for ensuring that high quality medical care is adequate for the needs of the public. No one ensures that medical charges are appropriate or that they are paid in full… There is no global budgeting” or “public accountability” for health care institutions.”
These findings led readers to anticipate a conclusion such as “Therefore, we (the government) must take control. Vermont needs a Health Care Czar who will make sure everybody gets all the high quality care the government thinks they need, all charges are appropriate, all budgeting is under government control, and everything not required is prohibited.”
Instead, the Hogan Report made an abrupt U-turn. It proceeded to deny that putting the government in charge of everybody’s health care was a good idea. The commission (not including Rivers, who filed a dissent on this point) rejected single-payer government-monopoly health care because it didn’t believe government could manage it or pay for it, and that in any case there was no consensus for such an idea. With a Republican House, single payer fell back into the crypt for three more years.
In 2003 Blue Cross Blue Shield of Vermont engaged Northern Economic Consulting to analyze a generalized single payer plan. The executive summary presented to the legislature that year (and again this year) concluded that “the single payer plan will not control health care costs in a way that will be satisfactory to a majority of Vermonters… Vermonters will have long waiting times to gain access to health care professionals… less access to new health care technologies…some care will be denied to certain segments of the population… Vermonters who currently have health insurance will experience a reduction in the quality of health care … the [proposed payroll tax financing] would put Vermont’s economy at a competitive disadvantage… The single-payer system is not financially sustainable.”
By 2005 a Democratic legislature led by Sen. Peter Welch exhumed single payer and tried again. The House passed a single payer bill notable for its absolute incoherence, and omission of any means of financing the takeover. The Welch-led Senate revised the inchoate House plan, stretched out its takeover schedule, added payroll and income tax financing, and sent it to Gov. Jim Douglas.
In a detailed 13 page veto message that was perhaps the finest state paper of his eight year term in office, Douglas ripped the bill apart. “The result of the legislation,” he wrote, “would therefore be a system of insurance dominated by the government that competes with, and eventually eliminates, private health insurance options—an outcome with particularly negative consequences for the thousands of Vermonters currently covered by comprehensive private insurance plans.” The legislature didn’t even try to overturn the veto. Back again to the crypt.
The following year Douglas and Welch unexpectedly agreed on a limited plan to subsidize affordable coverage for the non-Medicaid eligible uninsured (“Catamount Health”). The legislature also engaged a nationally known health policy expert, Dr. Kenneth Thorpe of Emory University, and paid him $183,000 to among other things prepare a report on the merits of single payer.
In his detailed August 2006 report, Thorpe estimated that “a single payer plan could extend coverage to all non-Medicare eligible residents of the state, and reduce overall state healthcare spending by approximately $51 million… Overall, the plan would require a new 13.5 percent payroll tax to fund the program. I assume employers would pay about 75 percent of the total (10.1 percent payroll tax) and workers the remaining 3.4 percent.”
The new legislature of 2007, with both chambers under strong Democratic control, apparently decided to give Catamount Health a chance to work. Rather than refighting the single payer war, Senate President Peter Shumlin instead focused his energies on making Vermont a global leader in the fight against the Menace of Global Warming.
In the run up to the 2010 race for Governor, the legislature, spearheaded by Sen. Doug Racine, pushed through a bill (S.88, Act 128) to fund the legislative Health Care Reform Commission to contract with yet another national expert, Dr. William Hsaio of Harvard, to explain how to effect single payer. The ante had now increased to $300,000. For this sum Hsaio and his team presented in February 2011 their detailed 184 page report containing three Options with projected “cost savings” and payroll tax rates. Hsaio’s Option 3 became the basis of the House-passed Green Mountain Care bill – although with differences important enough to call into question the computer model used by Hsaio associate Jonathan Gruber to produce enormous first year cost savings.
The preceding recitation does not include a vast literature on the subject in both the U.S. and Canada. For example, Prof. Michael Porter of Harvard Business school, looking at single payer from the standpoint of economic value added, concluded that “a single-payer system would create serious, and our view, fatal problems for health care value…. the single payer would undoubtedly engage in major cost shifting to providers, suppliers and patients. …top-down administrative control of medical decisions often compromises patient care, retards improvement and innovation, and limits patient rights. ..It simply strains credulity to imagine that a large government entity would streamline administration, simplify prices, set prices according to true costs, help patients make choices based on excellence and value, establish value-based competition at the provider level, and make politically neutral and tough choices to deny patients and reimbursement to substandard providers. Medicine as currently structured is deeply flawed in all these areas and a single payer system would do little to correct the problems. .. The real solution is not to make health insurance a government monopoly or to make all physicians government employees, but to open up value based competition on results at the right level.” (The Ethan Allen Institute distributed the full excerpt from Porter’s 2006 book to all legislators this year.)
In addition, the Institute distributed a one page flyer listing “Ten Hard Questions About Single Payer Health Care.” Coherent answers to these ten questions would have at least made clear how the backers of single payer intended their plan to work, and how its inherent problems would be dealt with. With the honorable exception of Rep. Tom Koch, apparently no legislator was willing to stand up and systematically pose the questions, and follow up aggressively when the single payer backers offered evasive or incoherent replies.
Not that it would have done a lot of good – the advocates seem to believe there are no inherent difficulties with the grand single payer scheme, and if there are, Vermont’s genius will overcome them where Canada’s has failed for forty years.
So now Sen. Mullin has successfully insisted that the Green Mountain Care Board produce some “determinations” to relieve concerns about the present bill — the same kind of concerns that inevitably arise whenever this left wing perennial appears on the policy agenda.
Apparently neither Sen. Mullin nor his colleagues have paid much attention to the serious and unavoidable problems, consequences, and costs ineluctably contained in any version of the single payer scheme – problems that were at least addressed by the Hogan Commission, Blue Cross Blue Shield of Vermont, Kenneth Thorpe, and even William Hsaio. They are, however, eager to vote for this historic measure.
The advocates are intoxicated with the fiction that “health care is a human right”. They harbor a deep seated animus to insurance companies, corporations in general, and anything smacking of informed consumer choice. They are convinced that their dissatisfactions with today’s health care are the result of “market failure” — even though most if not all problems can be traced back to an unwise policy choice, tax or mandate from either state or federal government.
The Senators ought to know better, but the majority party’s continued support for single payer seems to be a remarkable example of willing suspension of disbelief. It is also a major disservice to the people of Vermont, who are in line to bear the brunt of single payer’s inevitable — and possibly tragic — consequences. The Mullin amendment will not prove to be of any value in fending off this result.
