Gov. Peter Shumlin put Vermont on a path to creating the nation’s first single payer health care system when he signed Act 48 in 2011. But since then, his administration has made little progress up that mountain, drawing questions and accusations from the far political left and right about the governor’s sincerity.
Now, Shumlin and his team are beginning to shift gears, planning the implementation of a publicly funded, universal health care system. In the past two months, the administration has moved two of its policy heavyweights to the fifth floor Office of Health Care Reform — right around the corner from where the governor sits.
Michael Costa, former policy director at the Tax Department, took the elevator up to his new office at the beginning of June. He is charged with figuring out how to finance a single payer system with tax dollars.
David Reynolds, a co-architect of the Affordable Care Act and a former health policy adviser to Sen. Bernie Sanders, joined the team in July. He is tasked with bringing the moving parts of a single payer system together.
Costa and Reynolds join Robin Lunge, director of Health Care Reform, who helped craft the single payer legislation and has overseen the administration’s health care policy initiatives since July 2011.
“This shows that we’re serious,” said Secretary of Administration Jeb Spaulding. “But that’s not why we’re doing this. We’re doing this because we are serious.”
Shumlin doesn’t flinch when questioned about the proposal’s vulnerable points, like shifting more than a billion dollars in health insurance dollars to the tax sector.
“I am bound and determined to pass the first sensible single payer health care system in the country, and that’s going to be the most ambitious policy lift in Vermont history,” Shumlin said on Monday. “So, obviously, we’re going to gear up our staff and engage Vermonters from all walks of life.”
For the past two years, Shumlin’s top health care team has been focused on creating and implementing a new web-based insurance market for more than 100,000 Vermonters. The exchange, called Vermont Health Connect, is slated to open Oct. 1. Then, on Jan. 1, 2014, Vermonters buying health insurance individually or through businesses with 50 or fewer employees will be legally required to purchase plans on this market.
The exchange is not the single payer system the administration has in mind. It is a market that is being created in accordance with the Affordable Care Act, aka Obamacare. To deviate from these federal regulations and implement a single payer health care system, Vermont will need a federal waiver from the secretary of Health and Human Services. But, under federal law, states are not eligible for the waiver until 2017.
This past legislative session, the administration was supposed to submit to the Legislature a financing plan for funding a universal health care system with public dollars. The plan was called for in Act 48, which became statute.
The financing plan, however, did not arrive on legislators’ desks. The administration said it would be premature to propose specific taxes and that the Legislature should focus on passing necessary laws for the imminent insurance exchange.
What did come was a road map of sorts for drawing up a financing plan. It was created by the University of Massachusetts, which estimated the state would need to raise roughly $1.6 billion in public dollars to finance a single payer system.
Some critics of the study say that it’s an underestimate of the overall cost to the public. But Costa says this study is crucial for developing a single-payer financing plan.
“I am developing a specific financing plan for Green Mountain Care, and we will have that to the Legislature in January 2015,” he said. “When I read Act 48 and the UMass report, I basically see who is covered, what is covered and how much this costs. For the next 18 months, my role is to take the ‘how much’ and design several different ways that you could pay for it and look at what are the impacts on employers, individuals and Vermont’s economy.”
Green Mountain Care
Green Mountain Care is the name of the publicly financed plan that is proposed in Act 48. To get there, Lunge says the administration must cooperate with federal law.
“Our first step in moving towards Green Mountain Care and payment and delivery system reform was to start with the Affordable Care Act, and so a significant portion of our time and efforts and focus has had to be on the Affordable Care Act,” she said. “As we get closer to that being live and up and running, our focus is shifting to the bigger picture, long-term goals.”
Act 48 is explicit: Green Mountain Care would provide “affordable, high-quality, publicly financed health care coverage for all Vermont residents.”
Specifically, Lunge said, “It would provide coverage for doctor’s visits, hospital stays, preventative care, prescription drugs, all of the services that will be covered through all of the plans in Vermont Health Connect.” She added that Green Mountain Care would use a sliding scale for deductibles and co-pays based on residents’ incomes.
Shumlin says he is adamant that Green Mountain Care is applied universally — that includes teachers and state workers.
“Everybody in,” he said. “This is what we envision: No more health care premiums; public financing instead. Contracting out to one of our insurers to adjudicate the claims. We don’t want to be an insurance company. This means having a health care system where the health care follows the individual as a result of their residency in the state of Vermont, not where they work.”
One of the largest pieces to this puzzle is the business community. In 2011, Harvard economist William Hsiao recommended an 11 percent employer tax to fund a single payer system. The proposal was extremely unpopular among many of the state’s largest employers.
“Businesses are one of the many sectors that have so much to win if we get this right and so much to lose if we don’t,” Shumlin said. “One of the biggest challenges for businesses large and small is the unsustainable rise in costs of health care, which gobbles up our dollars faster than we can make them.”
Shumlin’s Business Council
In April, the governor organized a group of 20 business leaders from across the state to meet with him in off-the-record sessions about financing options for a single payer system.
The council’s representatives span the gamut of Vermont’s businesses, from IBM executive Janette Bombardier to Onion River Sports owner Andrew Brewer to Ken Perine, CEO of the National Bank of Middlebury.
David Coates is chair of the council. He heads the Vermont Long Term Disaster Recovery Group and is a former partner of KPMG LLP, the auditing firm.
“It seems to me that business is extremely important for health care, and, as you know, businesses provide a lot of it,” Coates said. “At the end of the day, if this is going to have a very negative impact on businesses, then it will have a very negative impact on jobs and the economy.”
The group has met twice thus far and Coates says the members are waiting for the financing plan from Costa. He says his team won’t be devising financing mechanisms, but, rather, will react to the administration’s proposals.
“The hurdle in my opinion will be what is the cost and how will it impact these businesses’ bottom lines,” he said. “If those things come in in a positive way, then I don’t think there will be a hurdle whatsoever.”
But while thousands of Vermonters are keeping a close eye on the administration’s financing plan, one key official says he is focusing on how to make the rest of the system work.
When David Reynolds founded Vermont’s first network of Federally Qualified Health Centers in 1976, he says insurance wasn’t the chief issue.
“Coverage alone does not equate to access,” Reynolds said. “Before I started Northern Counties, people in the Northeast Kingdom had health insurance, but they didn’t have a place to use it.”
Reynolds says a single payer system is about much more than financing, and it’s his task to make the system mesh. On the state government side of things, he is charged with greasing the wheels of state bureaucracies so that they work together.
“You need to have the workforce; you need to have integrated systems; you need to have more integration of mental and physical health; and those are the things I’m working on,” he said.
Reynolds left Northern Counties Health Care Inc. in 2007 to become U.S. Sen. Bernie Sanders’ senior policy adviser for health. When he said goodbye to Northern Counties, the network included six federally qualified health centers, two dental clinics and a home health and hospice division.
Working with Sanders, he pushed for progressive policies in Washington.
“David was the lead negotiator, researcher, and drafter of legislation to advance the senator’s priorities in health care,” Sanders’ spokesman Jeff Frank said. “He was involved in the drafting of the first national single payer bill introduced in the United States Senate.”
Reynolds says that one of his token achievements in Washington was helping to negotiate the creation of the 2017 waiver in the Affordable Care Act — the very waiver that would allow Vermont to deviate from the law to set up a single payer system.
“When the president gave up on not proposing single payer or a public option, that (waiver) was a compromise to get the votes of the more liberal members,” he said. “I call the Affordable Care Act the ‘private health insurance preservation act.’”
In 2011, he returned to Vermont to work on implementing Act 48.
“Having come from the dysfunctionality of Congress, working for Bernie Sanders, this is just remarkable to see,” he said. “People are really dedicated to this task.”