Single Payer Health Care Reform Vermont Style

1. Single Payer Health Care Reform Vermont Style Leonard Rodberg, PhD Urban Studies Dept., Queens College/CUNY and NY Metro Chapter, Physicians for a National Health Program www.pnhpnymetro.org February 22, 2011

2. Health Care in Vermont – Basic Facts Source: www.statehealthfacts.org, Kaiser Family Fund

3. Vermont's Path to Single Payer Reform • 1989 - Howard Dean's Dr. Dynasaur - "universal health care for children" using state funds • 1992 - Health Care Authority created to propose single payer plan and a "regulated mutli-payer" plan. Collapsed in 1995, with Dean opposing single payer advocates. • 1995-99 - Medicaid waiver creates Vermont Health Access Plan (VHAP), expanding eligibility. • 2005 - Governor vetoes publicly-funded Green Mountain Health for uninsured, to be expanded to universal coverage • 2006 - Catamount Health - subsidized private insurance • 2006 - Blueprint for Health - chronic care coordination through primary care medical home and multi-disciplinary community team • 2008 - Health information technology fund created • 2010 - Act 128 passed - move toward single payer through consultant study and legislative action For two decades: PNHP (esp. Deb Richter) activism

5. No. 128. An act relating to health care financing and universal access to health care in Vermont.Sec. 2. PRINCIPLES FOR HEALTH CARE REFORM • Access to essential health services for all Vermonters • Health care costs must be contained • Transparency, efficiency, and accountability to the people it serves • Preservation and enhancement of primary care • Free choice of provider • Respect for the professional judgment of providers and the informed decisions of patients • Fair and equitable financing

6. No. 128. An act relating to health care financing and universal access to health care in Vermont.Sec. 6. HEALTH CARE SYSTEM DESIGN AND IMPLEMENTATION • Consultant to propose at least three design options for creating a single system of health care which ensures all Vermonters access to affordable, quality health services: (1) Government-administered and publicly-financed single-payer health benefits system. (2) Allow individuals the choice of private insurance or a public option (3) A third option designed by the consultant, according to the principles in Sec. 2 of this act. • Sufficient detail to allow the Governor and the General Assembly to adopt one design in 2011, and to begin implementation by July 1, 2012.

8. Haiao Study Design Principles • No overall increase in health spending — any • new funds needed have to come from savings • Maximize federal revenue for Vermont • Maintain average current benefits of Vermonters • No reduction in income of physicians, hospitals • and other providers • Sustain and increase supply of physicians and • other providers • Eliminate the perverse incentives of fee-for- • service system through risk-adjusted capitation • plus performance bonuses and integrated • delivery systems

9. Hsiao’s Overall Strategy • Build a single payer system that can: • Provide universal coverage and everyone • covered with a standard benefit package • Produce significant savings to fund the • uninsured and under-insured • Control health cost escalation • Move Vermont toward an integrated health • care delivery system • Use payroll taxes as an equitable way to fund • single payer benefits

10. Identified 15 Hurdles that Must be Overcome • Fiscal: No additional overall spending for health care. • Legal: Medicare, Medicaid, ERISA, PPACA • Political: Major stakeholders’ positions • Operational: Smart card, uniform electronic operational systems, common procedures

11. Essential Benefit Package • Cover every resident with at least 87% of medical, • 77% of drug expenses (the average private policy) • Expand coverage for dental and vision care • Exclude nursing home and home care • Emphasize prevention and primary care • Modest, capped copayments for outpatient • services (no copayment for preventive services) • Deductible, coinsurance for inpatient services • Supplemental coverage available via private • carriers

12. Three Reform Options • 1. Publicly-financed, government-administered single payer system -- Essential benefits (87% actuarial value) -- Comprehensive benefits (98% actuarial value) • 2. PPACA plus public option • 3. Publicly-financed, privately-administered (by stakeholder board) single with “essential benefits” Recommended Option 3, “Public-Private Single Payer” “Most likely to be acceptable to major stakeholders, will produce most savings, should rely on market when possible, minimize political interference, gain transparency and accountability”

13. Source: Gruber Microsimulation Model

14. Costs and Savings for Option 3 Additional Costs for Essential Benefits Covering the uninsured and poorly-insured 5 % Adding primary care and community hospitals 1 % Dental and vision benefits 2 % Total New Cost 8% Savings Reduced insurer & provider administration 8 % Reduced fraud and waste 5 %* Integrated delivery system (PCMH, ACOs) 10 %* No-fault malpractice system 2 %* Total Savings 13-25* % Net Savings 5-17*% * Highly uncertain! Note: Reduced cost-sharing for “comprehensive benefits” would add 11% to the cost; long-term care benefits would add another 4%.

15. Revenue Requirements for Option 3(Payroll Tax, for Illustrative Purposes) * Excludes wages below 200% of Federal poverty level Note: Assumes $340 million receipts (6.4% of total) through PPACA

16. Hsiao Study Conclusions • Vermont can fix its broken health system • A new system can control health cost escalation • while provide universal coverage • A single payer system can reduce 8-12% of the • health care cost immediately and an • additional 12-14% over time • A single payer plan is an effective instrument to • establish integrated delivery of health care • Vermont can show the way forward for the USA

18. Goals of Shumlin Bill"The creation of a single-payer health care system to provide affordable, high-quality health care coverage to all Vermonters and to include federal funds to the maximum extent allowable under federal law and waivers from federal law." • Control health care costs • Meet PPACA requirements for health insurance exchange to get federal money • Lay foundation for “single payer exchange” • Make a clear commitment to multi-year reforms that will lead to a “real” single payer • No funding specified: To be proposed by administration January, 2013

19. Vermont Health Reform Board (2011) First step: Payment reform/cost control • Five-person board employed by state: chair, health policy expert, practicing physician, representative of hospitals, employers, consumers. • Work toward consistent provider reimbursement across all payers, global budgets, uniform payments methods • Develop and approve payment reform pilot projects • Establish cost-containment targets for each sector of the health care system. • “ensure reasonable payments to health care professionals …that the amount paid to health care professionals is sufficient and distributed equitably”

20. Vermont Health Benefit Exchange (2014)(“single payer exchange”- Hsiao’s "single pipe") Purpose: to facilitate the purchase of qualified (private) health plans while providing a means of moving toward a single-payer system • All (not just uninsured!) individuals and small (< 100) employers, state and local government employees, Medicaid and Medicare recipients • Self-insured employers potentially can choose to stay outside the exchange because of ERISA • Would offer Medicaid and Medicare benefits as well as private insurance (if waiver obtained) • Collect all premium payments, administer all benefits • Unified, simplified claims administration and billing, common payment methods and levels

21. What an Exchange Looks Like:

22. Leading to a List of Options:

23. …And Select your Plan

24. Green Mountain Care (2017)"Public-private single payer system" • Implemented upon receipt of PPACA waiver • All Vermont residents eligible to enroll • Private insurers prohibited from duplicating coverage. • May be administered by private insurance carrier (cf. Medicare fiscal intermediary, Blue Cross interest/support) • Will seek waiver to administer Medicare and Medicaid with Green Mountain Care as secondary/Medigap carrier. • Budget set each year by legislature, special fund is the "single source" of all health care spending. • Cost sharing (co-pays) set each year by Vermont Health Reform Board, waived for primary and preventive care, chronic care management. • Run by Dept. of Vermont Health Access, with Consumer and Health Care Professional Advisory Board.

25. Conclusions • A single-payer plan is feasible for Vermont • Achieving it will require overcoming numerous significant political, financial, and organization hurdles between now and 2017 • To offer support for single payer advocates in Vermont, go to www.vermontforsinglepayer.org