Editor’s note: This commentary is by John Franco, a Burlington attorney who has been active in health care reform for over 25 years.
Paul Krugman observed in his New York Times column “Rube Goldberg Survives” that the media has obsessed with the failures of the exchange website while ignoring the success of the Obamacare enrollment. Jon Margolis recently made the same observation here in VTDigger in “What About What Went Right?”
There is even a much bigger successes story that no one – and strangely not the Shumlin administration – is crowing about: that the health care reform effort in general and the prospect of a single payer system in particular has already saved Vermonters $800 million in 2012 alone.
That’s almost $200 million more in annual savings than Vermont collects in the entire state income tax.
When people ask “how will single payer save us money,” the answer is that it already has, handsomely, and in quantities beyond the wildest dreams of the most hidebound tax-cutting conservative.
The track record of success is actually quite staggering. From 1999 to 2010 Vermont health care spending jumped from $1.5 billion to just under $5 billion. During that same period, health care’s bite out of the economy doubled from 10 percent of GDP to just under 20 percent. Annual spending grew between 2001 and 2008 by almost 9 percent per year. In 2008 – despite the onset of the Great Recession — the Douglas administration allowed Vermont hospitals over 10 percent in budget increases. In 2010, the state was predicting that Vermont health care spending would hit $5.9 billion by 2012.
But it didn’t.
According the state’s recently released 2012 Health Care Expenditure Survey, it barely nudged over the $5 billion mark instead. Private health insurance premiums grew from $1.85 billion to $1.886 billion – statistically insignificant. Better yet, out-of-pocket spending did not grow at all.
How so?
I attribute it to something called the “Hawthorne effect.” Under it, behavior changes when the actors know their actions are being scrutinized. Just think of how we are on our best behavior on a first date when we want to impress. Well, the health care system tends to act like it’s on a first date when major reforms are being proposed. That happened during the Nixon administration when Ted Kennedy unsuccessfully proposed a national single payer plan and again following the failed Clinton reform initiatives in the mid 1990s. Surely the cost containment effects of Obamacare and the continued recession are also factors, but do not account for the degree to which the brakes have been utterly slammed on health care spending growth in Vermont. Apparently nothing puts the health care system on good behavior like the prospect of a single payer.
When people ask “how will single payer save us money,” the answer is that it already has, handsomely, and in quantities beyond the wildest dreams of the most hidebound tax-cutting conservative. And those savings grow each year.
So take a bow, single payer reform effort, despite all the current angst over how we are going to finance it, for a job well done.
