by Ellen Oxfeld, Middlebury, Vermont
What are the potential savings from a single payer system in Vermont? A recent report from the Joint Fiscal Office and the Department of Banking, Insurance and Health Care Administration (JFO and BISHCA) has led some single payer opponents to claim that significant cost containment can occur without single payer.
This is a spurious claim that misinterprets the report and challenges the fundamental precepts of the study the Legislature commissioned last year by Harvard health economist William Hsiao. The Legislature should invite Professor Hsiao back to Vermont at his earliest convenience to analyze and clarify the findings of the BISHCA report, which in fact reaffirms that a single payer financing system is the only way to simultaneously control costs and provide comprehensive health care coverage to all Vermonters.
Indeed, since 2001, the state has commissioned four official studies of our health care system and tested the proposition of whether a single payer system would be able to cover all Vermonters and contain costs. Every single time, the answer has come out in the affirmative, whether it was the Lewin study of 2001, the Thorpe study of 2006, the Hsiao study of February 2011, or the follow-up that was just released by the state of Vermont last week under the auspices of JFO/BISHCA (Joint Fiscal Office and Department of Banking, Insurance, and Health Care Administration).
It is true that the latest study is more conservative, but even this study concludes that with a single payer system we can provide an equitably financed system with comprehensive coverage for all Vermonters (something that is not the case now), and contain the rise in costs while doing so. Let us not lose sight of this important insight – we can cover everyone with a comprehensive package and contain costs. Isn’t this better than the current situation? Right now, by everyone’s admission, costs are uncontainable, and 200,000 Vermonters are either uninsured (43,000) or underinsured (160,000) according to a March 2011 report prepared for the Vermont Office of Health Access.
That said, some important questions have been raised about the latest study and they should be addressed. First, the study concludes that fraud reduction and clinical reform will actually save a much greater percentage of health care costs than administrative savings from the implementation of single payer. This might lead some people to conclude that single payer is the least necessary piece of the reform package. However, this would be a misreading of the evidence. We should remember that fraud reduction and clinical reform will never be truly effective if they are not part of a unified financing system – that is single payer. Also, fraud reduction and clinical reform on their own can never get us to universal coverage for all Vermonters – again, let us not lose sight of this goal!
Second, the study’s definition of administration included such things as billing, personnel management, and even hospital laundry. But did it have a measure of costs to the system as a whole for having the complex financing [structure or non-system] which we have now? For instance, did it count the costs to the system now that arise when people delay treatment because they have inadequate coverage, or when people have to fill out (and others have to process) mountains of paperwork each time their incomes rise or fall to apply to different programs.
Still, let’s not forget the bottom line. With single payer all Vermonters can have access to comprehensive coverage, equitably financed. Every study has validated this, and no other alternative to comprehensive cost effective coverage for all Vermonters has ever been put forth. Professor Hsiao, who is a world renowned expert at examining the way different parts of a health care system interact and affect one another, should also come back to shed light on the latest study.