State Seeks Economists To Vet Single-Payer Financing Plan

June 18, 2014

VPR News

By Peter Hirschfeld

The Shumlin Administration will soon enlist outside analysts to help design a single-payer health care system. And state officials are beginning to narrow the options they could use to raise about $2 billion in public financing for the program.

Potential bidders for the latest single-payer contract up for grabs in Vermont include consultants from the Massachusetts Institute of Technology and the Rand Corporation.

Michael Costa, the administration official in charge of developing a financing plan, convened a conference call with bidders last week. During the call, he explained what exactly his team will need to have a financing proposal ready for the beginning of the 2015 legislative session.

“There are three big things we’re looking for,” Costa said. “We’re really looking for … how businesses and people pay for health care now, a behavioral response to proposed coverage and financing changes … and then once we see the impact of those changes, really being able to assess the economic impact of that behavioral response.”

"If we don't have a window into what those tradeoffs are, it's impossible to provide the Legislature or the governor with the appropriate background information or making those judgments." - Lawrence Miller, who is leading health care reform effort for the Shumlin Administration

Whoever wins the contract will use complex modeling tools to conduct micro-simulations of various public financing possibilities. This exercise in econometrics may seem impenetrable to any Vermonter without a degree in economic theory. But it’s designed to answer the fundamental question facing elected officials as they consider this unprecedented state-level reform: Will Vermonters end up better or worse if the state proceeds to a single-payer system?

“If we don’t have a window into what those tradeoffs are, it’s impossible to provide the Legislature or the governor with the appropriate background information or making those judgments,” says Lawrence Miller,the man tapped by Governor Peter Shumlin recently to head up the state’s health care reform effort.

Miller says the overhaul of the more than $5 billion health care industry that accounts for one-fifth of the state’s economy will cause all kinds of consequences, intended and otherwise. But Miller says there are ways to predict those impacts.

He says the administration has a better grasp now about the possible benefit plans and financing proposals under single-payer. And he says officials now are ready for the kinds of economic analyzes that can be conducted by institutions like MIT.

“We’ll rely on, hey, what does the science say? Whether it’s medical science, or economic science,” Miller says.

The fact that the administration will soon winnow its financing options to what Costa says will be a “handful” of scenarios doesn’t mean Vermonters will get to take a look at those concepts.

Miller says the big reveal – a moment Shumlin’s critics say has been purposefully delayed until after the next election – likely won’t come until the administration knows for sure what taxes it will propose using to raise the money needed to replace the approximately $2 billion Vermonters now pay every year in private health insurance premiums.

“So I really do feel strongly that we should give the team that’s working on this a bubble to do good professional work,” Miller says.

Bidders will submit proposals by June 20. Costa says the state hopes to have a firm working by July 1. The Vermont Legislature, meanwhile, will soon hire economists to help lawmakers vet whatever plan the administration comes up with.