What are the pros and cons of a “single payer” system?
In general, single payer health care means that all medical bills are paid out of a single government-run pool of money. Under this system, all providers are paid at the same rate, and citizens receive the same health benefits, regardless of their ability to pay.
There are a number of proposed benefits to a single payer system. Currently, providers must follow different procedures with each of many insurance companies to get paid, creating an enormous amount of administrative work. Under a single payer system, providers might reap significant savings from reduced administrative expenses, and be able to focus more on delivering care. As with Medicare, a single payer system may also give the state stronger leverage to negotiate lower rates for drugs, medical devices, payments to providers and other expenses, resulting in lower overall costs. Additionally, a single payer system provides universal access to health insurance, which eliminates the problem of the uninsured.
report from the University of Massachusetts Medical School estimated that the total cost of the healthcare system in 2017 will be $5.9 billion. This number is based on the assumption that GMC would pay providers at 105% of what Medicare currently pays them, which is more than they receive from Medicaid but less than what they currently receive from private payers. Using this estimate, the state would need to raise $1.6 billion to supplement the funding it will receive from the federal government, Medicare and Medicaid. An opposing group, including providers, payers, and the business community commissioned its own report which assumed the rates would be between 115% and 125% of Medicare, raising the cost estimate to between $1.9 and $2.2 billion. The differing estimates in these reports mostly demonstrate the increasing concern from various healthcare stakeholders regarding the Shumlin administration’s plan. However, they also make the point that much is still unknown about how much GMC will cost in 2017.
Second, the state hasn’t decided how to raise this money. The report they released stated that there were a number of possible revenue sources that require further study before a final decision is made. However, Governor Shumlin has indicated that that a payroll tax (similar to the one funding Medicare now) would likely play a large part in the final financing plan. Based on an estimate from the UMass report that a 1% payroll tax could raise $119 million, a financing plan would have to include a fairly large payroll tax or a combination of taxes to cover the $1.6 billion that is estimated to be necessary. (Any tax would be in place of the current premiums and other health insurance costs that individuals and employers pay.) Governor Shumlin has said that he will announce his financing plan in a year, but some believe this is too long to wait. Senator Peter Galbraith, a Democrat, introduced a bill proposing an 11% payroll tax on employers and a 2% payroll tax on individuals, combined with a tax on other earnings such as capital gains, to fund GMC.
Third, planning and execution must proceed in an orderly manner. As the recent Obamacare exchange roll-out demonstrated, this can be a difficult process. Still, such planning has begun. In addition to the looming issues of how much it will cost and where the money will come from, the legislature is beginning to look at when to begin collecting funds, how much providers will be paid, malpractice reform, a benefits package, and many other pertinent issues.
Vermont has committed to an innovative path, even though much is still up in the air as to what Green Mountain Care will actually look like in 2017. One thing is clear, the rest of the country will be watching Vermont’s success or failure closely.