OP-ED

Vermont Chooses Single-Payer: Who Else Has an Appetite for Experimentation?

This past Monday, the Vermont Senate passed a Single-Payer bill. The House had already passed a similar bill and the governor is friendly to the legislation, so all that stands between Vermont and a single-payer law are a few formalities. At the moment, though, Vermont is alone in taking advantage of the Affordable Care Act to achieve universal coverage without private insurers. In fact, it isn’t clear that any other states are taking serious steps even toward a public option.

Massachusetts isn’t going there: it is doubling-down on its eponymous model that relies on private health plans, and seems hell bent on showing the nation that this model can work. The state just boasted that capitation rates will actually go down in 2012, allowing the program to grow enrollment without additional funding. It’s not difficult to imagine the feeling of responsibility weighing on administrators and Democratic officials there as they work to pull the levers of payment reform to reign in Partners HealthCare and other misbehavers.

Connecticut has made some recent noises in favor of public insurance, but has just taken a step back. Democrats there just compromised away core provisions of its health reform bill that would have created a public payer to compete with private insurers. Supporters say the fight isn’t over yet, and it isn’t, but if a version of the public payer survives, it will likely have to sneak in through side channels over several years rather than make a grand entrance. Other progressive states in the Northeast and elsewhere seem even less inclined to rock the boat. That means we may not get a single state by 2014 to test the hypothesis that a public payer can increase competition and move the entire insurance market to control costs better than private plans alone.

Though I’ve long been skeptical of the public payer theory, that would be a shame. It doesn’t do much good to allow states to be crucibles of experimentation if they refuse to experiment in meaningful ways, and instead simply use their freedom to create 50 different bureaucracies that accomplish similar objectives in similar ways, without the administrative efficiencies of a national system.  The question we need to answer is not whether a single-payer, a mixed public-private, or an entirely private-payer system can work. We know from observing other nations that they can, and do. What we need to know now is, in the American context, what tactics within each of these types of systems are most effective at overcoming institutional and political barriers to bend the cost curve sharply without breaking the health care sector. Creating 50 versions of Massachusetts (or one Vermont, 24 versions of Massachusetts and 25 versions of an orthodox conservative alternative) is much less likely to achieve that.

Jonathan Halvorson, PhD, has worked for the past six years in managed care for a regional non-profit insurer. His views are entirely his own and do not represent those of his employer or other known individuals, living or dead.

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Ericjane crimminsBob HertzJonathan HDeterminedMD Recent comment authors
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jane crimmins
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jane crimmins

Hospitals and other entities delivering healthcare services should be required to post costs for services and the costs should be the same for all patients using the service, regardless of their insurer. This would encourage and allow patients (customers) to seek the most affordable services. Also patients should be provided with a bill for services at the completion of their appointment and the bill should include a list of the services provided and the cost of each of those services. this would provide the transparency that we continue to hear hospital administrators and legislators discuss while continuing to deny this… Read more »

Nate Ogden
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Nate Ogden

“I have said in my newsletters for years that all large medical/hospital claims should be published in the newspaper” When we first started talking to our clients about getting confratational with the hospitals no one wants to be the first, they are all scared, rightly so, of the hospitals. Once one stood up though and others could clearly see the problem and solution now more are willing to take up the fight. High cost is why the number of uninsured continues to increase in spite of 20 years of government reform, until they lower the cost we wont lower the… Read more »

Bob Hertz
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To Barry Carol — you are correct about the flaw involved in passing a program betore you pass the financing. A 15% payroll tax might offer some relief to General Motors and State Employee plans (both with an aging risk pool), but a 15% tax is a killer to marginal small businesses, plus the entire restaurant industry. If small business are exempted, a likely political concession, then the 15% will just have to be higher on those who do pay. And this does not even address the large issue of two-earner couples who go onto one spouse’s health plan. (i.e.… Read more »

Barry Carol
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Barry Carol

Nate – That was a very interesting and informative post about the mob and the unions. What puzzles me is why regulators can’t do the following: 1. Prohibit providers from precluding payers from auditing provider bills to ensure that services paid for were provided and were medically necessary. 2. Prohibit all or none contracting. If a payer needs some but not all of a group’s hospitals in its network, it should be able to contract for those that it needs / wants but not the others. 3. There should be special rules that cover care delivered under emergency conditions, especially… Read more »

Nate Ogden
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Nate Ogden

They could but why solve a problem when you can milk it instead. Everything they do is counter to actually resolving the problem.

DeterminedMD
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DeterminedMD

Does it really matter which system is in place? Read the below link after you all get your heads out of the sand, and realize without the doctors, no system will be effective. Oh, forgot that little detail, did you all!?!?

http://www.nypost.com/p/news/opinion/opedcolumnists/doc_holiday_Nyb5JCHkWyejLq7dTjTs2J/1

Matthew Kienzle
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Matthew Kienzle

This is a bit of a departure from the previous posts, but I’d like to discuss the big picture ideas of the preceding article about Vermont. The “Policy Demonstration Laboratory” at the state level is the only way that real progress will be made in American health care reform. It’s obviously not going to happen in DC. There are some benefits to the state level pushing this forward. It’s obviously beneficial for Americans as any concerted effort to curb the cost of health care is welcomed.MA has moved in this direction and CA tried to pass legislation to curb insurer… Read more »

Nate Ogden
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Nate Ogden

“The state(s) that are progressive in this endeavor will benefit.” MA has the most expensive insurance in the country. CA is extremly expensive as well and is only as low as it is becuase of their heavy managed care concentration that rations care better then the more common PPO model in the rest of the country. I’m all for state expirmentation, as long as MA, CA, VT aren’t billed out when they go bankrupt from these crazy ideas. CA did just enter a very interesting lawsuit that could dramaticlly shake up the entire healthcare system. http://www.msnbc.msn.com/id/42595481/42599331 “The Commissioner’s recent press… Read more »

Jonathan H
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Jonathan H

Nate, I don’t get this. What is the mechanism for the drop? Let’s say MultiPlan disappears…how does that diminish Sutter’s pricing power? Market dominance seems to explain high hospital costs better than a relationship with a network PPO company like MultiPlan.

Nate Ogden
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Nate Ogden

Imagine the Mob and Unions. The Mob goes to the business and says you are going to hire my Union or I will put you out of business. They put them out of business by charging prices so high they can’t afford to pay them. If you hire this Union the Mob will give you a discount of 40%. That sounds great but its 40% off a bill marked up 800%. While its impossible to afford the non discounted bill its barely affordable still to pay the discounted bill. So you begrudgingly hire the Union, knowing you’re paying a 480%… Read more »

Barry Carol
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Barry Carol

Margalit – I haven’t heard much about Maryland’s all payer system for paying hospitals lately either. Their system has been in place since 1977. I know that AHIP isn’t enthusiastic about it, probably because the insurers with greater market share in a given state can negotiate more favorable reimbursement rates than their smaller (state market share) competitors. The biggest complicating factor, though, is that any all payer system would require both Medicare and Medicaid to pay the same rates as private insurers pay. In practical terms, that would mean private payers would pay less than they do now and Medicare… Read more »

Margalit Gur-Arie
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How about the Maryland experiment? I haven’t heard much about it lately. Is it still working well?

Barry Carol
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Barry Carol

Dr. Wonderful and Jonathan Halvorson – The McCarran-Ferguson Act only provides an anti-trust exemption to allow insurers to share claims data. They cannot collude to set premiums or market share or anything else. The claims sharing exemption allows smaller insurers to more accurately underwrite and estimate aggregate medical claims in a market or for a population. The net effect is to increase competition among insurers, not decrease it. It would take a more substantive anti-trust exemption to permit what happens in Switzerland where all insurers negotiate with providers as a group in each canton which then allows them to pay… Read more »

rbaer
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rbaer

“Providers and suppliers know that and negotiate accordingly, and build their business models around having the most attractive facilities, or the “must have” drug, or the latest technology”

I am not even sure why this needs to be pointed out. Don’t people see that all these marble lobbys, new facilities/extensions, birthing centers, valet parking, advertisements have to be paid for somehow?

DrWonderful
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DrWonderful

All we really need to do is repeal McCarran-Ferguson which gives insurance companies an unfair exemption from anti-trust laws. There is no fair business, or even a free market for that matter, when an industry is literally allowed to price fix and collude and thereby completely control the market. Remove their anti-trust exemption, actually force them to compete against each other to make patients and doctors happy, and see how quickly all of the problems are solved.

Nate Ogden
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Nate Ogden

” repeal McCarran-Ferguson which gives insurance companies an unfair exemption from anti-trust laws.” Dr. Wonderful, you never read the law have you? Any clue at all what the exemption actually is or you just parioting what MSNCB told you. Let me help you out so you don’t make this silly illinformed mistake again; “McCarran-Ferguson does not give insurers a blanket exemption from antitrust law but it does permit insurers to pool loss data that makes it possible to price insurance products. Insurers contend that without this limited federal exemption, many small and medium-sized insurers would not be able to afford… Read more »

Dr. Rick Lippin
Guest

My take is that it is painfully apparant that until campaign finance and election reform becomes a reality at the federal level that the Federal Government remains highly dysfunctional in many arenas including health care reform.

Thus, while not ideal ,the states are forced to act now. Bravo Vermont!

Longer term Dr. Jonathan Halvorson is correct.

Eric
Guest
Eric

Well put!!! Money out of politics #1, single payer health care #2. Many other states will soon follow Vermont’s lead.

steve
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steve

We need more experimentation at the sate level. I have long been disappointed that the states have not done more.

Steve

Nate Ogden
Guest
Nate Ogden

They have actually done quit a bit, just to limit competition and drive up cost unfortunetly.

NY Pool with its reporting would be a great example.

Implementing stop loss minimums to prevent competition with fully insured carriers would be another.

Mike
Guest
Mike

The Vermont approach is wonderful news, but as Patrick notes it is always dangerous to behave well on a unilateral basis. Doing the right thing is risky if others are committed to doing the wrong thing, or otherwise owned by bad actors such as the insurance industry. Only a national single payer environment can prevent free riding by individuals and employer exit and political attacks by well financed insurers. Until we eliminate the health insurance industry as the primary payer/pooler for health services, we won’t be safe in our homes. These predatory corporate vultures simply have to be destroyed. As… Read more »

Nate Ogden
Guest
Nate Ogden

By this logic Mike only a UN ran international singer payer would work. In case you haven’t heard we already have a problem with foreign free riders and companies outsourcing.

In your utopian single payer dream do illegal aliens magically disappear and production cost in Mexico and China skyrocket to parity?

Medicare fraud far exceeds the cost of insurers why are you ok with replacing private profit with public waste?

Lee Abramson
Guest

I am running for President in the 2012 elections as an Independent candidate. Here are my health care policies: He says Obama Care does not go far enough, and proposes a completely new healthcare plan he calls “Americare,” which will provide government healthcare for everyone from cradle to grave. “Americare will pay for the needs of all United States citizens and allow healthcare providers to be compensated according to their skill set. It will replace Medicare, Medicaid, and all private insurance. I believe that all private insurance companies are criminal organizations, because they make profits by delaying and denying care… Read more »