Vermont’s difficulties in aligning its health care programs with the demands of the new federal health care law are further evidence of the inadequacy of patchworks fixes.
The fixes embodied in both state and federal programs are patchwork because they are about providing health care coverage, not providing health care. State and federal governments continue to perform contortions to provide health care to Americans by making sure they have health insurance. But insurance and health care are not the same thing.
Vermont has made enormous progress over the years in extending coverage, beginning with programs to cover children and then finding ways to make sure people without insurance, or who lose their insurance, have a place to go. Catamount Health was an important step in extending coverage to Vermonters who would otherwise lack it.
The federal law passed this year was also an important step forward. It is designed to end damaging practices such as the exclusion from coverage of people with pre-existing conditions — people who are sick.
Vermont’s latest problem involves its efforts to create a program to cover the so-called "high-risk pool" of people with pre-existing conditions who have been without insurance for more than six months. The new federal law offers a new plan to cover these patients, and while the federal government provides coverage to some states, other states, including Vermont, are creating plans of their own. Vermont would be entitled to about $8 million as part of $5 billion in federal money through 2014.
But Washington rejected Vermont’s initial attempt at devising its high-risk coverage plan. Vermont officials had tried to extend its Catamount plan to those eligible for the federal program, which meant reducing the waiting period for eligibility from 12 months to six months. But the new federal rules would require broadened rules, covering more people, which would have been too expensive.
Why all these convoluted calculations about eligibility, coverage and premiums? Why are state and federal officials so pre-occupied with figuring out who should and shouldn’t be included in a given program?
The reason is that health care at state and federal levels is still about setting up coverage plans, and coverage plans are about money. Health care coverage, whether it is provided by a private insurer or a public program like Catamount, is about securing a cash flow for the provider. Coverage provides a flow of premiums from customer to insurer, and getting people to enroll is a way of getting them to provide the money that health care depends on.
Insurance companies have traditionally excluded people with pre-existing conditions in order to prevent people from signing up for insurance only after they have become sick. In order for them to obtain enough money to keep the system running, they need a steady flow of premium payments from people during those years when they are well.
By creating coverage for people with pre-existing conditions, state and federal programs take on new costs and they need to make sure they have enough money coming in. So the federal program includes an insurance mandate, which eventually will require everyone to be insured, while subsidizing those who can’t afford it.
This is how our patchwork system has evolved. An array of coverage programs is in place to keep premiums flowing and to keep the program from going bankrupt by limiting those whom it will cover.
The most elegant solution is to end the health insurance system entirely, doing away with the system of requiring premiums and limiting coverage. The late Sen. Edward Kennedy had reached the conclusion that the best solution was what he called "Medicare for all."
President Obama pushed a program that maintained the role of insurance as middle man, deciding, probably correctly, that it would be politically impossible to create a government system that would replace the health insurance industry.
Unlike the present system Medicare for all would rely on taxes instead of premiums. Everyone pays taxes; everyone would be covered. When we wanted to provide coverage for seniors, that is the system we devised. Vermont is now embarked on a study of health care alternatives, including what is called a single-payer system, like Medicare. The state has enlisted the help of one of the world’s leading experts, Dr. William Hsiao, a professor of economics at the Harvard University School of Public Health. Hsiao helped Taiwan create its single-payer system and is accustomed at taking a broad, system-wide look at costs and demands.
Vermont is small enough it could become a laboratory for building a system that would work, helping show the nation how to weave together a seamless system that does not depend on a many-seamed patchwork. Creating a comprehensive, unified system is a complex, pragmatic challenge. It is not clear that the pieces are there to make it work — containing costs while extending coverage. But it is a noble endeavor, and Vermont can be proud of assuming a leadership role in taking it on.