Vermont and The Road Less Traveled

When it comes to health policy, all eyes seem to be cast toward New England these days.   The high-profile issue this week is Mitt Romney’s defense of the health reform enacted during his Massachusetts governorship and his battle with the Wall Street Journal over its merits.

I think, however, a more interesting story is developing in Vermont.

Later this month, Vermont Governor Peter Shumlin is expected to sign legislation that would, in essence, create a single-payer healthcare system in the state.  The framework of the proposed Green Mountain Care system is essentially this (it’s explained very well in a question-and-answer piece in The Washington Post):  The state would roll up all of its payers – state and local employees, Medicaid and Medicare beneficiaries, individual and small group plans – into one system, with all of the dollars received for their coverage going into Green Mountain Care, which would become the sole health payment system in the state.  Vermont will need Medicare and Medicaid waivers from the Obama Administration to make this work, as well as cooperation from the state’s largest insurer, Blue Cross Blue Shield of Vermont, which has already declared its support (and would likely be the hands-on administrator for the new system).

Sounds neat and simple, and it’s getting raves from those who have long supported a national single-payer system, but there are some critical questions left to be answered.

First, what does Vermont do with the large employers who are self-insurers and covered under federal ERISA regulations?  One theory, expressed in the Washington Post articles, is that these employers will be taxed anyway to help pay for Green Mountain Care and, therefore, they’ll decide it’s cost-efficient to put their employees in a system they’re helping to finance.

Another question concerns the dual challenges of how to pay for a state-run single-payer system and how to contain healthcare costs to make it affordable.  Part of Vermont’s answer is the creation of a Green Mountain Care Board, sort of a revved-up version of the controversial Independent Payment Advisory Board (IPAB) that would have rate-setting powers for doctors, hospitals, pharmaceutical products and medical devices. 

This is where Vermont’s economic and healthcare future gets a little precarious.  You see, there’s a major difference between enacting state policy and writing federal laws.  If individuals and employers believe they’re being hurt by a new state law, it’s not all that difficult to pick up stakes and move to another jurisdiction.

Will employers be open to the higher taxes that will accompany a single-payer healthcare system?  What will happen when the state has to ratchet down on physician reimbursements to keep Green Mountain Care affordable?  Will New Hampshire be the beneficiary of Vermont’s sharp swing to the left in health system transformation?

Some groups will, no doubt, judge Green Mountain Care a success if it drives private insurers out of the marketplace and replaces them with state-run healthcare.  Vermont citizens, though, may hold their judgment until they see if jobs and doctors start an exodus across the state line.