John Franco is worried that history may be repeating itself and that Gov. Peter Shumlin’s single-payer plan may succumb to the same fate that killed a previous attempt at reforming Vermont’s health care system.
Franco fears some of the same pitfalls that stymied major reforms to Vermont’s health care system in 1994 when Gov. Howard Dean led the charge could derail Shumlin’s effort.
Franco helped to design a single-payer proposal for then-Congressman Bernie Sanders, I-Vt., who was spearheading an effort to implement single-payer in Montpelier.
Those efforts failed to gain traction, as did the more modest reforms that Dean attempted to push through the Legislature.
Franco is concerned, based on new information about Shumlin’s financing plan reported by VTDigger, that the current governor hasn’t learned from the failures of his predecessors.
While Dean and Shumlin approached universal coverage differently, both governors have faced economic forces and special interests that make guaranteed health care for all an extremely difficult goal to achieve.
Dean opposed single-payer, and instead backed a regulated multi-payer system that would require businesses to offer health insurance. Dean’s proposal included subsidies for small businesses and individuals to help pay for coverage, according to an article in the journal Health Affairs from that year. Though the multi-payer program stalled out, Dean and lawmakers were able to expand Medicaid and passed laws regulating the sale of health insurance.
Shumlin has opted for a taxpayer-financed universal coverage program.
The two governors’ proposals, however, share one important similarity, according to Franco.
Dean split the burden of paying for health insurance 50-50 between employers and individuals, which is a departure from what was then, and is still now, the status quo: a 75-25 split, with employers covering the lion’s share. That decision was met with criticism in his own party, according to the Health Affairs piece.
In the end even a modified version of Dean’s proposal that backed away from the 50-50 split couldn’t win support of lawmakers, in what was a more politically divided Statehouse.
Shumlin is considering an employer payroll tax and an income tax to finance Green Mountain Care. If the two taxes generate the same amount of money now being spent by Vermonters for private insurance, roughly $2 billion, it would upset the current 75-25 split and shift it to 50-50, which would transfer roughly $250 million from employers to households, Franco said.
Franco said the Shumlin administration is trying to do something monumentally difficult.
“Every option has all these design tradeoffs,” Franco said, “Every avenue has its weaknesses, and some become dead ends.”
Health reform, then and now
Vermont’s uninsured population has dropped from 56,000 in 1994 to 46,000 in 2012. In that same period, health care spending has doubled from 10 percent of the state’s economy to 20 percent.
The cost borne by individuals with private insurance has increased proportionally and frustrations with those costs are mounting.
But politically the situation then and now has similarities.
Health reform fell apart in the 90s for a variety of reasons, but Howard Leichter, author of the Health Affairs article, argues the primary failure was that no one sold the middle class on the need for reform.
“No one in the state made a credible case, especially to middle-class Vermonters, about why they should abandon what they had for something they knew nothing about and that in the end seemed to benefit only the uninsured,” Leichter writes.
The Shumlin administration has done little in the three years since passing Act 48, the current health reform law, to help the public understand how reform would impact them personally.
The passage of Catamount Health in 2006 was publicly supported because policymakers and advocates were able to spell out how people would be impacted by the program, which was designed to expand access to subsidized health insurance, according to Peter Sterling, with the pro-single-payer group Vermont Leads.
“All the secrecy has just been a disaster, as far as I’m concerned,” Franco added.
Shumlin has pandered to single-payer advocates, without delivering anything of substance, according to John McClaughry, director of the conservative Ethan Allen Institute and a former state senator.
“He could have done more to build a juggernaut for single-payer,” said McClaughry, who opposes the government-funded program.
While the Shumlin administration was obliged under state law to offer specifics about how it would finance single-payer in 2013, the governor did not offer specifics or endorse a particular financing model.
Then last year, Shumlin delayed a self-imposed deadline to present the plan, and he continued to keep draft proposals and models a secret. He claimed executive privilege when a lawmaker from his own party requested public documentation of the plan, and he is now fighting Rep. Cynthia Browning, D-Arlington, in court.
Since his near defeat in the November election, Shumlin has said he wants to be more inclusive and intends to solicit public engagement going forward.
Robin Lunge, one of the plan’s primary authors, has said the administration will hold a number of informational sessions for lawmakers and a series of public forums hosted in conjunction with the Green Mountain Care Board to help people understand the program.
In 1994, then-state Rep. Rich Westman, a Republican and now the senator from Lamoille County, helped develop a health reform proposal that some view as a precursor to Catamount Health.
The sticking point in the proposal Westman co-authored 20 years ago was the employer mandate, which businesses and insurers fought bitterly, he said.
“There’s a lot of parallels between the ’90s and now in terms of the unease about whose ox is getting gored when you develop a financing plan,” he said.
After the 1994 session policymakers lost their appetite for sweeping reform, he said, and focused on incremental steps toward universal coverage, such as Catamount and Dr. Dynasaur — enhanced Medicaid for children in low-income families.
Now that the state is pondering large-scale reform once again, there could be the same chilling effect as people parse what impact an employer payroll tax and income tax-financed program would have on their own finances, he said.
Paul Harrington served on the Vermont Health Care Authority, a precursor to the Green Mountain Care Board in 1994. He’s now director of the Vermont Medical Society.
For Harrington, the goal of health reform isn’t necessarily single payer.
Harrington, like many health policy experts, defines the goal of health reform using what’s known as the “triple aim,” or universal access, containing cost growth and maintaining high quality care.
An important difference between efforts in the 1990s and now is that many politicians wanted to adopt a wait-and-see approach as President Bill Clinton was still pushing reform at the federal-level, Harrington said. Clinton’s efforts were unsuccessful.
With the passage of the Affordable Care Act in 2010, the country has an existing reform law, which could be leveraged to achieve the goals of reform, he said.
“I could easily see an outcome where (lawmakers) don’t completely undo our premium-based system, and instead make the subsidies through the ACA even more generous,” he said.
Such a proposal could involve public financing through more modest taxes to help pay for subsidies the federal government doesn’t cover, Harrington said.
Ken Thorpe, a health care consultant for the Legislature, suggested a program to further subsidize premiums to lawmakers last year as an alternative to single-payer, and last week Franco penned a commentary for VTDigger calling on Vermont to leverage state and federal subsidies to go for universal coverage, while a dip in the growth of medical costs has created the opportunity.
Advocates for single-payer argue that the Affordable Care Act subsidies — even with the additional state subsidies — leave people with out-of-pocket costs they can’t afford.
Some are pushing for a single-payer program with no out-of-pocket costs, which is likely to push the revenue needed for the program well beyond $2 billion.
“It’s imperfect, it’s not as clean as a social security financed single-payer, but it’s doable and doable in the next biennium,” Franco said.
Whatever path the governor and lawmakers take, Harrington urged them not to be doctrinaire in looking for solutions. Franco agrees.
“What happens if everybody gets so locked into the means they forget the ends?” he asked.
Ultimately in 1994, health reform was eclipsed by property tax reform and fell apart in the Senate. That’s something that could easily happen again this year because legislators have once again heaped both issues onto their plates.
