Legislators Face Serious Headwinds in Move to Single-Payer

November 29, 2014

Valley News

White River Junction — Vermont’s path-breaking health care reform project seems headed into daunting terrain that will challenge legislative leaders to find common ground, stay true to their principles and deal with increasingly difficult political and budget realities.

“I’m seeing a yellow blinking light,” said state Rep. Sarah Copeland-Hanzas, a Bradford Democrat who supports a so-called single-payer system of universal, publicly funded health insurance.

While most Vermonters believe a publicly financed system would be more equitable, Copeland-Hanzas said, they will only support moving forward with reform if they have been persuaded that a viable plan has been developed.

But some on the other side of the aisle think the light has already turned red.

“Single payer is not a possibility,” said Senate Republican Leader Joe Benning, a Lyndonville resident whose Caledonia Senate district includes several Bradford-area towns.

Vermont Gov. Peter Shumlin is due in December to spell out the benefits that would be covered by the Green Mountain Care plan, and in January to present a financing plan for the $2 billion in annual revenue that needs to be raised.

An inquiry about the likely timing and content of those proposals elicited this terse email from Shumlin press secretary Scott Coriell: “We’re still on track.”

That’s something, given the recent wave of bad budget news from Montpelier, including Wednesday’s announcement of a $17 million round of cuts, which followed last summer’s $31 million reduction in an already-approved budget. Meanwhile, a $100 million budget gap for the fiscal year that starts July 1 still needs to be filled, legislators say.

But that budget crunch won’t short-circuit the health care debate, said Copeland-Hanzas, the vice chairwoman of the House Health Care Committee.

“To the extent we are (creating) a new way of financing health care, these two issues are not really related,” she said, although the budget pressures “do contribute to the overall sense of unease” in Montpelier.

Over the past year, fortune has loosed a hail of political slings and arrows at health care reform in Vermont.

The wobbly launch of the $100-million, mostly federal funded, Vermont Health Connect website undermined public confidence in the administration’s ability to carry out health care reform. Despite the website’s improved performance during the current round of applications, for health insurance in 2015, scars remain.

Recent revelations of impolitic comments by Jon Gruber, a Massachusetts Institute of Technology professor with a $400,000 contract to assess the economic impact of various taxes to support Green Mountain Care, further depleted the political capital of the governor.

That further drained an account diminished by the narrow margin of Shumlin’s November re-election win at the polls (Shumlin topped Pomfret Republican Scott Milne by 2,434 votes, but the victor will be determined by the Legislature in January since neither candidate got a majority).
But the vote wasn’t a judgment on single-payer, said Peter Sterling, director of Vermont Leads, a nonprofit social welfare organization that advocates for a single-payer system: “As much as the governor underperformed … the election was not a referendum on health care reform.”

Of course, one reason the election didn’t constitute such a referendum was that so few financial details of health care reform had been put on the table.

Act 48, enacted in May 2011, early in Shumlin’s first term, promised “universal access to and coverage for high-quality, medically necessary health services for all Vermonters.” That system was intended to roll out as soon as 2017, which was the earliest that Vermont could get a waiver necessary under the federal Affordable Care Act.

Act 48 gave the administration until Jan. 15, 2013 to come up with a plan showing “the amounts and necessary mechanisms to finance Green Mountain Care and any systems improvements needed to achieve a public-private universal health care system.” But Shumlin, arguing that his reform team wasn’t hiding its cards but still shuffling through the complicated work of analyzing and comparing possible solutions to a an array of complex problems, missed that deadline.

Legislators and advocates interviewed for this story signaled that their tolerance for future missed deadlines had worn thin. Most attention is focused on the financing proposal, due in January.

That’s a deadline worth paying attention to, said House Speaker Shap Smith, a Morrisville Democrat.

“I think if the governor doesn’t make the deadline in January there is no way we’re going to move forward with the plan,” Smith said. The proposal should include “a good deal of specificity” including a financing plan, an implementation strategy and information on when the money would be needed, he said.

But Benning predicted that the administration would not come up with a viable plan to generate more than $2 billion of revenue.

“That’s where I think it’s going to flop,” he said.

Indeed, $2 billion seems, on the face of it, an insurmountable financial mountain for a state which currently raises and spends about $1.8 billion annually in its general, transportation and education funds. However, as single-payer supporters point out, that $2 billion in public revenue is intended to take the place of, and end the need for, a similar sum currently raised from premiums paid by employers and employees and from out-of-pocket expenses paid directly by Vermonters.

That highlights what may be the fundamental challenge of health care reform: finding a way to open one or more new revenue streams while shutting down or diverting other revenue streams, all the while maximizing the active support of those who come out ahead and avoiding provoking those worried that they may be hurt by change into picking up their pitchforks.

Even single-payer advocates see the challenge. “Most Vermonters will pay less and have at least as good health care as they have now, Sterling said. But he acknowledged that reform would produce “winners and losers. There will be people who will pay more for health care under single-payer than they do now.”

That could recreate in Vermont a paradox that in the early 1990s frustrated proponents of a national single-payer plan. Paul Starr, a Princeton sociologist, in his 2011 book Remedy and Reaction: The Peculiar American Struggle over Health Care Reform, described the skepticism those proponents faced from consumers who already had employment-based health insurance.

“Single-payer supporters could argue that overall costs of health care would be cheaper, but to those with employer-provided insurance, it would not appear that way,” Starr wrote.

A required steep increase in taxes “would replace private insurance premiums, but most insured Americans did not see the share of premiums paid by their employers,” he added. “From the standpoint of the (already-insured) public, therefore, single-payer could appear to threaten higher taxes for worse coverage.”

Shumlin’s proposal may face similar questions. Copeland-Hanzas said that a financing plan will need to show how to “replace the current premiums that we pay as Vermonters and that our employers pay for us with a publicly financed system.” The new funding plan also has to account for the volatility of various revenue sources and include a “recognition of ability to pay.” That could ease the “reverse progressivity” of the current health care system in which low-paid workers bear a heavier burden of health care costs than do more highly paid workers, she said.

While the phrase “single payer” doesn’t appear in Act 48, the law does commit the state to develop Green Mountain Care as “a universal health care program that will provide health benefits through a single payment system.” Some advocates see the fight for single-payer as a way for Vermonters to lead the way in tackling head-on basic problems of a health care system where costs are soaring, quality is uneven and millions of citizens remain without insurance coverage.

Some critics think it’s time for reformers to roll up their tents and for Vermont to shed its pioneering aspirations. Vermont is too small, too poor and not sufficiently isolated to lead the way, they say.

“Vermont can’t do this by itself,” said John McClaughry, a former Republican state senator and vice president of the Ethan Allen Institute, a conservative think tank. McClaughry warned that with universal care in Vermont “the halt and the lame and the cancer stricken (would) come streaming up the Interstate and achieve resident status overnight.”
Senate President Pro Tempore John Campbell, D-Quechee, acknowledged that cross-border issues remain a big challenge to reformers.
“We can’t just really isolate ourselves,” he said.

Also at issue is how the thousands of Vermonters who work in neighboring states and get insurance through employers there would be treated.
McClaughry dismissed single-payer advocates as liberals with a “blind faith” that a universal and publicly financed system would “get rid of the insurance companies (and) achieve enormous savings.”
Benning held out hopes that if lawmakers could “finally get out of the terminology bind that has got us polarized we might actually be able to do something.”

That might clear the way for “some kind of hybrid” system, he said.
But that work could best be done at a higher level, Benning said. “If you’re going to have a good program, you do it nationally, not state by state.”
Rejecting a popular formulation that describes the states as “laboratories of democracy,” Benning said that the health care debate in Vermont had become a “Petri dish of ideology.”

In any case, reform advocates plan to continue their efforts in Vermont.
“The Legislature has to at least make sure that every Vermonter has access to affordable heath insurance,” Sterling said. At a minimum, he added, that requires “universal health care that doesn’t rely on out-of-pocket costs to cover expenses.”

Smith, the House speaker, said his goal is to build “a system that brings the rate of (health care cost) inflation down to a reasonable level but fixes health care financing in an equitable way.”

Bringing down costs is a critical element of reform, he added: “We can’t do single-payer funding or universal (coverage) funding without having a plan that brings costs under control.”

In fact, he added, addressing the state’s current budget woes requires “understanding that health care is part of the problem” and makes it “integral to solving education problems as well as budget problems.”

And Shumlin may not have the last word, Campbell said. “If we learn that the governor’s plan is not viable we are not going to pick up our marbles and go home,” he said. “We’re not going to stop there.”

“We need to have an affordable health care system for all Vermonters,” Campbell added. “We’ll be blazing another trail.”

Rick Jurgens can be reached at rjurgens@vnews.com or 603-727-3229.