Man charged with creating single-payer finance system faces challenge

Michael Costa, deputy director of health care reform, explains the timeline for developing a financing strategy for single-payer health care at the 41st annual Vermont Tax Seminar in Burlington on Friday. Photo by Hilary Niles/VTDigger.org

Michael Costa, deputy director of health care reform, explains the timeline for developing a financing strategy for single-payer health care at the 41st annual Vermont Tax Seminar in Burlington on Friday. Photo by Hilary Niles/VTDigger.org

Finding a way to pay for a health care system that doesn’t yet exist is a daunting task.

And as Vermont marches toward single-payer health care by 2017, that task largely falls to Michael Costa, the state’s deputy director of health care reform. Speaking to an audience of tax and insurance professionals Friday at the 41st annual Vermont Tax Seminar in Burlington, Costa mapped out his plan for getting there.

Preliminary studies peg the cost at $1.6 billion of public money, though Costa describes that less as a bull’s-eye and more as an approximate range. That large sum is not new spending, he says, but a rearrangement of costs that people already pay on the private market.

Getting that message across, Costa says, is supremely difficult considering the opacity of the current employer-based health insurance system.

Timeline

In early 2014, Costa will offer several financing structures for the Legislature to consider. Lawmakers will then spend the session crunching numbers to assess the relative impact of each option on Vermont residents, businesses and government.

Meanwhile, all stakeholders will be talking a lot about the benefits assumptions built into the alternatives. For example, will it cover dental care? At what rate will the system reimburse doctors? Will the state hire a private insurance carrier for the job, or take on the task itself?

With feedback from the Legislature, Costa and his team will go back to the drawing board. In spring 2015, the administration will propose a single financing plan to the Legislature, along with some alternative benefits packages.

A year later, in the 2016 legislative session — and, Costa hopes, with an approved financing plan in place — his colleagues on the policy side will propose a final benefits package for legislative approval.

With financing and benefits plans in place, the Legislature will appropriate funds in 2016 to spend the following year.

Meanwhile, the Green Mountain Care Board — the regulatory agency created to oversee almost all aspects of the state’s new health policies — will be watching.

As long as the board finds no “negative aggregate impact on Vermont’s economy,” that financing is sustainable and that the program generally meets its cost-containment goals, board members will pull the trigger to implement universal health care in 2017.

Challenges and questions

Describing what Vermont’s universal health care will look like is difficult because it doesn’t yet exist.

Costa could only talk about processes and potentials when he was peppered with questions from accountants and attorneys following his presentation at the tax seminar.

Will the package include prescription drug benefits? Will retirees on Medicare be overburdened or underserved? Will there be enough physicians to adequately serve all the people who suddenly will be getting preventive and medical care? Will we be able to keep our doctors?

“That’s up to the Legislature,” Costa responded several times. “That’s a great question. … That’s a legitimate concern.”

According to the timeline, however, there won’t likely be any firm answers, reassurances or even disappointments for at least a year.

The other major challenge, Costa says, is explaining single-payer health care to people who understand very little about the employer-based health insurance they have now.

Most people don’t see what their bosses pay for their health care, Costa said. That makes it very difficult for people to evaluate how their costs might change under a new health care financing and delivery system.

To illustrate his point, Costa described a small, family-run landscaping company. The three brothers who run it don’t have health insurance benefits through their business, and they fear that single-payer will impose new taxes that might put them out of business.

All three brothers are married to women who work in the local school system, Costa said. That drew a chuckle from the crowd in anticipation of Costa’s punchline: The school contributes a significant percentage toward each family’s roughly $25,000 annual health insurance plan.

“If you were to consider health care benefits foregone wages — which I do, which a lot of economists do — you would say, ‘Gee, they’re paying a lot of money for their health care,’” Costa said. But his landscaper friend’s perception is that he’s paying nothing.

Costa said if the state were to implement a system whereby that family’s health care costs were greatly reduced, the landscaper’s family might “win.” But instead of feeling like they were getting something free, they would see the cost.

“At the end of the day … do they consider themselves winners or losers?” he asked, rhetorically. He suspects they would win from single-payer, whether they recognize it or not.

But that’s not to say he assumes no one will lose under the new regime. He said he doesn’t see how such a sweeping policy could be changed without someone paying more.

Costa’s goal in the Legislature this spring is to have an informed conversation about how to figure out who the winners and losers will be after a transition to single-payer, because he knows there will be both.

Follow Hilary on Twitter @nilesmedia

Comments

  1. sandra bettis :

    why do they make this so difficult? we have a great model to the north of us. and why are employers worried? in single payer, your health care has nothing to do with your employer.

    • Jim Barrett :

      Is this SINGLE PAYER the program we were sold, I thought we would have choices. Single payer is exactly that….no choices, no options, government owned and operated, no competition. All health insurance companies bankrupt and their workers unemployed .. how nice.

      • sandra bettis :

        what kind of choices would you like? which ins co will gouge you more? that ‘competition’ has been working well for you? does medicare have competition?

      • Joe Lendvai :

        Jim, with single payer you will have complete choice of doctors and hospitals – total access to health care. You will never have to worry about you and your family going bankrupt because of the impossible financial burden of a medical catastrophe. Today, at least one third of the money you pay for health insurance goes toward anything but healthcare.
        You’re right, though, if you want a choice of insurance companies as opposed to health care, you’ll be out of luck. And your concern about insurance company employees losing their jobs is an important issue. Some will find new positions in the SP system; others will be retrained to provide direct services in health care with the promise of better pay than what they are receiving today. So all in Jim, single payer will be a winner for just about everyone, except perhaps for the six and seven figure salaried CEOs and insurance execs. And we will all be better for it.

      • Walter Carpenter :

        “All health insurance companies bankrupt and their workers unemployed .. how nice.”

        How do you know? And in many single-payer nations there is far more competition than we have here.

  2. Bob Zeliff :

    Very good an clear write up of the time line and challengs both for the legislature and communicating to all Vermonters the true costs of health care. Let’s keep the progress and the problems in accomplishing Green Mountain Care financing transparent and not repeat the SNAFUs of both overselling Obama care on one side and a deliberate miss information campaign on the other.
    Vermonters deserve better, let us all stick with facts please.

    I would like the media to start fresh and make sure they report facts. The lazy method reporting false quotes for either side serves Vermonters poorly.

  3. walter judge :

    Who’s the “they” in your question? No one is “making” this difficult. Transitioning from our current mixed system of private/government/employer based health care is going to be difficult whether or not you understand why. And, no, not everyone agrees that the model to the north if us us a great one.

    • sandra bettis :

      uh, the rest of the world does.

      • walter judge :

        Please prove that the “rest of the world” specifically approves of Canada’s system. There are 5 billion people in the world. Canada has 30 million of them. That’s a tiny fraction of a fraction.

        • sandra bettis :

          uh, the rest of the (industrialized) world has single payer….

          • walter judge :

            Uh, the rest of the (industrialized) world does NOT have single payer

  4. Ellen Oxfeld :

    You have to understand that right now many people get health care through big employers or the public. The reason is that if I have a small business but my spouse is a school teacher, then I will get health care through my spouse. Of course, I am really paying through property tax, but this may not be so visible to me. If I am now asked to pay a payroll for health care, I may see this as an added cost because in my eyes I think have always gotten health care for almost “free.” So, that is why the tax package has to weigh all of these things. If you impose a flat payroll tax, then people who are already paying a large chunk of payroll for health care may such as municipalities or big firms may see a decrease, but the small businesses may see a sudden increase.
    This means there has to be a more nuanced approach, and that is what Michael Costa is aware of.

  5. J. Scott Cameron :

    I’m in the Bahamas this week and I spoke to several thoughtful Canadians about their health insurance. Most said it worked well in the past, but that it is getting worse as cost control becomes the prevailing mantra. They are being hit by cuts to benefits and services, forced to use generics even in situations where they do not work. Hospitals are closing and doctors are leaving the system. And they have long waiting times for many services. Most still supported the system but no longer believe that the primary goal is protecting their health.

    • Lee Russ :

      The Canadian information is very suspect. While individual Canadians can obviously have different opinions of their healthcare system, I spent considerable time not that long ago researching the facts about Canadian healthcare:
      http://vtdigger.org/2013/11/01/russ-canadian-health-care-facts-fears/

      From the article linked above:

      •Between 2008 and 2012, physician growth rates outpaced population growth rates threefold, resulting in 214 physicians per 100,000 population in 2012.
      •During each of the five years profiled in the report, more physicians returned from abroad than moved abroad.

    • Walter Carpenter :

      ” Most said it worked well in the past, but that it is getting worse as cost control becomes the prevailing mantra. They are being hit by cuts to benefits and services, forced to use generics even in situations where they do not work.”

      Stephen Harper, their conservative prime minister, and the conservative government (or coalition government which gave Harper a majority) are trying to “privatize” more of the Canadian system under the guise of “austerity,” to make it resemble the American system a little more While the merits of this can be discussed, I would not be surprised if some American insurers are behind this effort. In any case, this is what’s been going on up there.

      • sandra bettis :

        and getting plenty of opposition in the process.

        • Walter Carpenter :

          “and getting plenty of opposition in the process.”

          Very much so. Canadians are not all that happy about what Harper is trying to do to their health system.

  6. J. Scott Cameron :

    One more thing. In Canada the whole country participates. little Vermont will not be able to capture all the health care dollars. ERISA Plans, Taft-Hartley (union) plans, Medicare, federal government employee plans all exempt. Vermont will probably have to legislate to force the teachers, state employees and maybe even municipal employees into a single payer – they love their current plans and do not want to play. Many Vermonters work in NY or NH, many health facilities and doctors used by Vermonters are in NH or NY. I don’t see how this little state can do it successfully.

    • sandra bettis :

      for single payer to work, everyone (rich and poor) needs to be in the system. there will be no more separate plans from employers – employers will have nothing to do with your health care – which is the way it should be. i’m hoping the whole country gets sick of making ins cos rich and decides to go single payer.

      • J. Scott Cameron :

        I agree. THat’s why Vermont’s plan won’t work.

    • Lee Russ :

      You’re making a lot of assumptions about the plan. One reason for the delay in implementation is to get as much of this worked out as possible.

      As for size alone being a hindrance, there are very small countries–smaller than Vermont–that have universal health care.
      Malta (population about 450,000) has publicly funded healthcare; Lichtenstein (population about 36,000) has a mandatory private insurance plan much like the Affordable Care Act; Luxembourg (population about 530,000) has publicly funded universal care with supplementary private insurance available).

      • J. Scott Cameron :

        Malta, Luxembourg and Lichtenstein are countries/principalities. Vermont is a tiny state which is a member of a much greater nation, and we can’t call all the shots in this federalist system. I’m hoping for the best but the system we are moving to is being social engineered top down. There is little discussion and too many secret plans. The politics seem to have overwhelmed the policy.

        • Lee Russ :

          The Canadian system started in a single province (Saskatchewan), then spread nationwide.

          For what it’s worth, I don’t think the Green Mountain Care plan’s creation is as much top down as it may seem. The Green Mountain Care board has been meeting with the public all over the state and continues to do so. The medical profession is certainly represented on the board and I’m sure it has had considerable input through other channels. You know the business community has had input.

          If you have real concerns, I seriously urge you to pass them on, in detail, to the people directly charged with creating GMC.

          The Green Mountain Care Board’s web site is: http://gmcboard.vermont.gov/
          That site includes a page for public comments and a schedule of the board’s meetings.

          There are also 3 Advisory Groups to the board, heavily populated by people in the medical profession, and at least ne of which includes a representative from Blue Cross of VTV. The advisory group page is:
          http://gmcboard.vermont.gov/advisory_groups

        • Walter Carpenter :

          “Vermont is a tiny state which is a member of a much greater nation, and we can’t call all the shots in this federalist system. ”

          Should we not try? Should we just leave things as they are?

  7. Cynthia Browning :

    I continue to believe that it is incorrect to call the proposed state run insurance program “single payer”. There will still be Vermonters covered by private insurance from out of state sources and likely from Vermont companies with “ERISA” plans. There will still be Vermonters covered by Medicare and Tricare (military).

    It will be interesting to see how much these Vermonters will be paying into an insurance program in which they do not participate.

    I would be interested to know what Mr. Costa might have said about this issue.

    Another important issue is how robust the revenue sources for this program will be. What will happen if the economy falls into recession, in which case income tax and payroll tax revenue falls? Will taxes then be increased, with damaging economic effects? Or will we have somehow built up reserves or purchased re-insurance, and what are the revenue sources for those costs?

    And you better believe that the $1.6 b number is part of a “range” — it would be good to know what the high end of that range really is as financing is considered. I think that the worst case high end that first year is $2.3 b based on my analysis of the UMASS study.

    Rep. Cynthia Browning, Arlington

  8. Phyllis North :

    Single payer may be a great idea for the nation as a whole, but I don’t think Vermont is big enough or wealthy enough to strike off on its own and try this. I predict this plan will never come into existence.

    • Lee Russ :

      Repeat of the reply to J. Scott Cameron, above:

      “As for size alone being a hindrance, there are very small countries–smaller than Vermont–that have universal health care.
      Malta (population about 450,000) has publicly funded healthcare; Lichtenstein (population about 36,000) has a mandatory private insurance plan much like the Affordable Care Act; Luxembourg (population about 530,000) has publicly funded universal care with supplementary private insurance available.”

    • Lee Russ :

      See the reply to J. Scott Cameron, above.

      Low-population countries like Malta, Lichtenstein & Luxembourg all have universal coverage systems of one type or another.

  9. Walter Carpenter :

    “And, no, not everyone agrees that the model to the north if us us a great one.”

    Well, like it or not, the model to the north of us returns better results at less cost than our crazy mix does. I agree that the transition will not be the easiest of things, but it should not be made so difficult either. And to have health insurance not tied to employment, freeing both employer and employee from this burden, is long past time.

    • Patrick Cashman :

      Just to be clear; Tricare is part of a retirement package from the federal government. The state has no business inserting itself between the retiree and their benefit provider. The retiree earned it on their own, without state support.

      • Todd Taylor :

        Federal law prevents states from providing more favorable tax treatment for state and local pensions than for federal service pensions; since the Supreme Court ruled the individual mandate to be a tax, those on Tricare can’t be treated differently than retired state workers.

  10. Dave Bellini :

    The same people that tell us we need to have large cash reserve for retiree health care want to have every Vermonter in one pool with no cash reserve. They call it “unfunded liabilities.” I don’t get the logic. If the state promises to pay retiree health care, it’s an awful monster that needs to be prepaid. Promise healthcare to everyone and it’s no problem………..

  11. Bob Zeliff :

    There are several bits of incorrect information in some of the responses above.

    Green Mountain Care is Vermont insuring Vermonters. Self insurance like large companies do to save money, but better because there are clear plans being implemented by the Green Mountain Care Board to improve health and control costs This is what the article is about.

    It is NOT the Affordable Care act.aka Exchanges, aka Obama Care, aka Romney care. Obama care is keeping 100% private insurance companies, paying, defining coverage between health care givers and the people. Some have called this an insurance company wealth fare system. This is the excessively complex system which have some many problems right now. Unfortunately it was largely written with insurance companies input to get enough people in congress to vote for it. Clearly a bad compromise in retrospect.

    The Canadian single payer system was started by Saskatchewan, and upon the success there was adopted by the rest of Canada. I hope little Vermont can lead the US in this as it has in so many other areas.

    Rep Browning asks about what happens during recession, but seem to ignore what has and continues to happen in our recession. People loose their jobs, lose their health insurance. Note that DID NOT happen in Canada. Same recession…much better health care in Canada! Duh!!

    Mr. Bellini choses to confuse the fundamental difference between a retirement fund and health care. A retirement fund is savings, money being set aside over a working career to be paid out …again over multiple years.

    Green Mountain care, will work like any any other self insurance program, (or car insurance for that matter), collect the money it expects to pay out in the next year. Some years there is a surplus, some a short fall. This is a well understood actuarial practice that works well in current self insurance programs both in the US and around the world.

    Hope this helps

    • Dave Bellini :

      Bob, the anti-pension folks have been beating the GASB 45 drum for a few years. The awful monster of retiree healthcare. State employees and our retired state workers are in the same self-insured pool for healthcare. Our healthcare costs have held steady and are currently trending downward. So, what I’m doing is challenging the incorrect belief that healthcare has to be prefunded, be it for active workers, retirees or another pool. I’m pointing out that some folks in the Administration point to GASB 45 when it suits their political purpose and completely ignore the tenants of it, when it suits a political purpose. I said “retiree healthcare” not retirement “fund” AKA pension.
      .
      Also, self-insurance is better than insured products. I’m sure that BCBS and MVP will do quite well selling their products through the exchange since BCBS, the state and MVP almost have a cartel in Vermont.
      .

      • Bob Zeliff :

        Dave,

        Thanks!
        I did a cursory check of GASB 45 and some writing around it. Enough to know I do not understand its subtilizes…but also enough to see your point about retiree health care costs being talked about short term costs and long term liabilities. Yep, I do not understand how or why that is correct.
        Sorry I missed your point in my response.
        bob

  12. Cynthia Browning :

    When we have a recession people lose health insurance with their jobs and this has had tragic consequences for many. But we still need to be honest about how the state would deal with the problem of a recession in terms of “single payer” financing and I have seen nothing from the state addressing this issue.

    Vermont has already done better than many states in expanding Medicaid eligibility and providing Catamount Health Insurance for some years now. And that lose your job/lose your insurance scenario should no longer happen given the Affordable Care Act and the ability of people to obtain insurance and subsidies through the exchanges, no matter how imperfect they have been at the start.

    MVP and BCBSVT have large reserve funds built up out of our premiums that help to ensure that they can meet cost spikes or if revenue shortfalls. I have not seen a good scenario for how the Administration plans to handle those problems under “single payer”. Will we hire BCBSVT to process the GMC claims and somehow also hire their reserves? Will we buy re-insurance and if so with what funding sources? Will we determine that we don’t need reserves, which in my opinion would be amazingly irresponsible, leading either to restrictions of care or to ill timed tax increases?

    If the “single payer” is to be sustainable, the Administration and the Legislature need to be honest about what it will cost and how it will be paid for. This includes accounting for funding during a recession and reserve funding.

    In addition, in terms of the self insured ERISA plans of large corporations — my understanding is that there may be litigation under Federal law if Vermont requires such corporations to contribute to the “single payer” that they do not use or if they are required to eliminate their special plans. It is not clear to me that the “single payer” will be financially viable without revenue from those Vermont companies and their employees. It is not clear to me that they will either willingly dismantle those programs or pay twice for health insurance.

    I think that this issue should also be clearly addressed in any financing plan scenarios.

    Rep. Cynthia Browning, Arlington

    • Dave Bellini :

      Cynthia,
      A lot of your questions have been asked since 2011. There were no answers then and there’s no answers now. The Administration has resisted providing details because that would lead to scrutiny and they don’t wasn’t to be challenged.
      .
      Of course ERISA plans will sue under federal law. Why dismantle a self-funded plan that’s working well? Tricare is not going away either.
      .
      “Will we buy re-insurance and if so with what funding sources?” Almost certainly, it becomes part of the administrative expense.
      .
      “MVP and BCBSVT have large reserve funds…” And if possible, the Administration will want some control of those funds.
      .
      “…how the state would deal with the problem of a recession in terms of “single payer” Pete won’t be Governor then so it will be up to the legislature. What are the chances the legislature will be proactive and develop a cogent strategic plan to address this very issue? From my observation the Governor will hand the ball off on 3rd down.

    • Bob Zeliff :

      Ms. Browning,

      I’m glad you agree that during this recession the health out comes for Canadians on their single payer system have been MUCH better than Americans who rely in insurance tied to their employment. Millions of American lost their jobs and their insurance. A double blow to their and there family’s lives. Our insurance system is clear inferior in this aspect

      • Walter Carpenter :

        “Millions of American lost their jobs and their insurance. A double blow to their and there family’s lives. Our insurance system is clear inferior in this aspect.”

        Thanks, Bob. I know what that is like. I lost everything, including health insurance, when the company I worked for “eliminated” my position. The thing to remember is that employer-sponsored health insurance can be used as a weapon too.

  13. sandra bettis :

    walter judge – care to name one country in the industrialized world (other than the usa) that doesn’t have single payer/universal health care??

    • Todd Taylor :

      You would hate the German health care system Sandra. If a person earns more than $60,000 per year, that person can become what’s known as a ‘private patient’. Although private patients risk overdiagnosis and overtreatment because they are the system’s secret money source (and are normally charged two or three times more than for a regular patient) the nonprivate patient has much longer waiting times and rarely gets to see the best specialists. I’ve lived and worked in Germany and my wife is German.

      • Walter Carpenter :

        “the nonprivate patient has much longer waiting times and rarely gets to see the best specialists. I’ve lived and worked in Germany and my wife is German.”

        But at least they have access to health care. This more than so many, many Americans have.

      • Lee Russ :

        I’m confused. The system you describe does not match up with the 2012 Commonwealth Fund description of the German Healthcare system:
        http://www.commonwealthfund.org/Topics/International-Health-Policy/Countries/~/media/Files/Topics/Country%20Profiles/New%20Folder/Germany_profile_2012.pdf

        According to the Commonwealth Fund article, people over the income threshold have the option of remaining in the publicly funded program, or switching to the rivate insurance program, and that 75% of the people who have that choice choose to remain on the publicly funded program??????????

    • walter judge :

      You made the statement that the entire industrialized world has single payer. Prove it.

      • sandra bettis :

        i don’t have to prove it – it’s a commonly known fact – to everyone but you i guess.

        • Walter Carpenter :

          “You made the statement that the entire industrialized world has single payer. Prove it.”

          You asked for it, here it is. The first is from Wikipedia. It does its list by continent. The USA is in this list, although I do not think it should be, because the USA does provide single-payer insurance to some of its residents, just not all of them. The second is a list of the major democratic/technical nations which have some type of single-payer or universal care. This list also includes the USA, which it should not. All of these nations rank ahead of the USA in health care outcomes, statistics, and costs.

          http://en.wikipedia.org/wiki/Universal_health_coverage_by_country

          http://coto2.wordpress.com/2010/03/22/list-of-countries-with-universal-healthcare/

          • Walter Judge :

            Your source proves, if anything, that Ms. Bettis, sarcasm and all, was not correct.

            First, assuming the list, which appears to be complied by a pro-single payer advocacy organization, is even correct, only sixteen (16) countries are listed as having single-payer. That is not the “entire industrialized world” as Ms. Bettis claimed.

            Significantly, Germany, Belgium, Luxembourg, Greece, and Switzerland do not have single payer.

            Second, several of the countries listed as having single-payer are arguably not included in the “industrialized world.

            FACT: the entire industrialized world does NOT have single payer, much less does the “entire world,” as Ms. Bettis originally claimed.

            FACT: Even in Europe, most countries do not have single payer. According to Wikipedia, there are fifty (50) countries in Europe. According to your list, only nineteen (19) of them have single payer. That’s less than half.

            http://en.wikipedia.org/wiki/Europe

          • sandra bettis :
          • sandra bettis :

            ps – mr judge – i never ever said the ‘entire world’. i said the ‘industrialized world’. pls do not misquote me.

    • Lee Russ :

      Sandra,

      It’s the technical difference between systems in which all healthcare costs are paid by a single entity–”single” payer–which a few countries have, and systems in which everyone is covered but there are multiple entities making the payments–”universal” care, which most countries have, either by mandating that everyone buy insurance from a private insurer, or by using a mix of private insurance and public funding.

  14. Bob Zeliff :

    Ms. Browning,

    You answer by raising questions. Sophistry?

    You say MVP AND VTBC have large reserve funds. Just how large are these? 5% of their turnover? 1% of their turnover? I would like to hear your number for this. Do these companies buy re insurance? Why?

    In you opinion would the State need larger or smaller reserve funds? Why?

    As a Legislator, what will you be recommending for reserve fund for Green Mountain Care? By the way what is the reserve number you have avocated for State Employee’s retirement fund? How do you propose to raise those funds?

    Do you recommend that Vermont hire BCBSVt to process claims? Or are you recommending that Vermont expand it’s work force and do that claim process with in the government? Are you recommending Vermont buy re insurance from them too? If so why or why not?

    Certainly, the legislature needs to be honest with Vermonters. Does you question about this honesty imply that you have knowledge that it is not? If so what is your roll in that?

    I think you get the point, questions are easy. It is the answers that are really important.

    I hope you will work hard to get beyond the status quo and find ways to give ALL Vermonters the best health care at less cost that we are now paying.

  15. Cynthia Browning :

    We all share the goal of ensuring that all Vermonters receive the best health care possible within a financially sustainable system.

    Vermont government funds like the General Fund and the Education Fund are required to hold 5% stabilization reserves.

    Therefore if the “single payer” GMC fund amounts to the $1.6 billion cost, the 5% reserve would have to be $80 million. If the GMC fund needs $2.3 billion, the 5% reserve would be $118 million. If we do not keep 5% reserves for our spending funds it affects our bond rating.

    However, the entire GMC fund may be more than the $1.6 billion state cost given in the UMASS study — if there are significant flows of other funds and the entire cost is much higher, 5% of the larger figure would be that much higher. It would be important to have reserves to protect against any drop in the availability of Federal Funds.

    My recollection is that the insurance companies may have reserves around 2%, but I would have to look that up. They may purchase re-insurance as well.

    It is the Administration that is proposing the “single payer”, therefore it is their responsibility to answer our questions. In my opinion they have not been forthcoming in doing so thus far. I think that their publically presented numbers often tend to be based on politically convenient assumptions that tend to lower cost projections.

    I look forward to a complete legislative vetting of any detailed proposals of cost or financing that may be brought forward.

    In terms of the problems of inadequate funding of pension and retirement health care systems, I think that the state will have to contribute more but I also think that the systems will need to be modified to reduce costs. These difficulties are the reason why we need to be careful in setting up new state obligations like the “single payer” to be sure that we are meeting the cost in a sustainable way, and not adding to the burdens of future generations or creating a system that will fail Vermonters.

    Rep. Cynthia Browning, Arlington

    • Dave Bellini :

      “…$1.6 billion cost, the 5% reserve would have to be $80 million…..”
      .
      OOOOhhhh, now I understand why BCBS is so important to the Governor. BCBS probably has reserve funds of over $80 million. You asked if the state was going to “hire their reserves?” Looks like it to me! Is BCBS going to lie down in the middle of the road for Governor Shumlin? The BCBS reserve comes from the many rate payers over the decades, can they just hand it over to the state? Then again, in 2017, wouldn’t BCBS just become a quasi agency of the state under single payer? The state will hand over single payer to BCBS for claims administration. BCBS will hand back to the state, its 80-90million dollar reserve fund for the new single payer. What are the laws on doing this? Wouldn’t BCBS have to dissolve its current business model and pay out its reserves to all its rate payers over the years? Could this wind up like CVPS where the rate payers never got paid back because the state decided for them it would use the money for “something better?”
      .
      As to your retirement statements, don’t confuse the state employees retirement with the teachers or the municipal system. They’re different. Retired state workers healthcare is merged with active employees healthcare and the costs have been trending downward. Please don’t fix what’s not broken. If you think something needs to be “modified” then spell out exactly what you mean and for whom, since we all want clarity from our elected officials.

      • Karen McCauliffe :

        Dave, In the Avalere recent report for Vermont’s single payer, it was questionable if BCBS would even exist in this state under Vermont’s single payer. So do not count on their reserves of BCBS quite yet for Vermont’s single payer….

        page 21 out of 22…notice it is “it is very possible that BCBS-VT would go out of business.”

        “Blue Cross Blue Shield of Vermont relies almost exclusively upon providing health insurance and related services to Vermont residents.13 With approximately 220,000 enrollees, it covers more than 70 percent of the privately insured people in the state. If GMC actually captures the population expected by the Financing Plan, it is very possible that BCBS-VT would go out of business. At minimum, the company would shrink significantly and it would have to alter its business model radically.
        The elimination of private health insurers in Vermont – in particular, Blue Cross Blue Shield of Vermont, the only payer operating entirely in the state – could result in the loss of a significant number jobs in the state.”

        • Dave Bellini :

          It makes me uncomfortable that the Governor switched the state employees health plan ASO from Cigna to BCBS. They have their hands full with Vermont Health Disconnect, they’re looking at potentially going out of business or “radically” changing their business and they have to administer our health plan beginning on January 1, 2014. The Administration wants to kill off everything by 2017 so that their new model is the only thing available.

          • sandra bettis :

            i have heard that bcbs has been promised the contract for single payer…..which, to me, would not be an economical single payer since we all know that bcbs likes to give out 6 million dollar bonuses…..

  16. sandra bettis :

    lee – semantics. when we first tried to get health care for everyone, we called it universal health care but some folks called it socialism (a bad word in some circles apparently) so we changed the name to single payer. it’s the same thing – health care for all. it’s great that the tide is turning on this one and people are beginning to see it as a good thing.

  17. Walter Judge :

    Ms. Bettis, this is what you said:

    “uh, the rest of the world does.”

    12/7, @ 11:03 am.

    How can I be misquoting you, when I am cutting and pasting from your own post.

    • sandra bettis :

      mr judge – you said ‘not everyone agrees’. i said ‘the rest of the world does’. i did not say ‘the rest of the world has single payer’. again, you are twisting my words.

  18. Walter Judge :

    The Wikipedia article that you cite, on Universal Health Care, does not support your statements either that the whole world or even just the entire industrialized world has single payer.

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