On Thursday, Vermont Gov. Peter Shumlin (D) signed a bill (H 202) that takes the first official step toward creating a single-payer health insurance system in the state, Modern Healthcare reports (Lee, Modern Healthcare, 5/26).
Background on Legislation
On May 5, the Vermont House passed the final version of the bill, which would:
- Create a state health insurance exchange as required under the federal health reform law;
- Establish a publicly financed single-payer system; and
- Allow enrollees to purchase supplemental private insurance policies (California Healthline, 5/6).
The bill also immediately would create the Green Mountain Care Board, a five-person panel that would oversee financing for the health care system and establish rates for health care providers (DoBias, National Journal, 5/25).
Reason for the New System
Shumlin noted that health care spending in the state has doubled in the last 10 years. In addition, health care costs in Vermont rose by 8% annually between 2004 and 2008, which is three percentage points higher than the national average (Wall Street Journal, 5/25). Further, about 7% of state residents are uninsured, and about 15% more are underinsured (National Journal, 5/25).
Shumlin said, "Vermonters understand that our system is not sustainable and that they're going to lose their rural health care providers if we don't make change,"
He expects the single-payer insurance system to save the state $500 million annually (Adamy, Wall Street Journal, 5/25).
How the Plan Would Work
Instead of paying premiums, employers and employees likely would subsidize the state's single-payer plan through taxes, the Journal reports. Residents also would pay a portion of the cost through copayments.
Under the plan, residents would receive a Green Mountain Care card, which would link to their electronic health records.
About 20% of Vermont residents have employer-sponsored coverage that is governed by federal laws. Those individuals would remain on those plans, and Medicare beneficiaries would stay in that program. Most of the remaining state residents would be forced to change from their existing coverage to a state-run system that offered a standard benefits package, according to the Journal.
The state also would seek permission from the federal government to move Medicaid beneficiaries into the state-run plan (Wall Street Journal, 5/25).
Vermont would need an exemption from HHS to opt out of some provisions in the federal health reform law. Current law would not allow the state to apply for such an exemption until 2017 (McDonald, Bloomberg, 5/25). However, President Obama has said he supports allowing states to get waivers as early as 2014. Vermont also would need waivers to make changes to Medicare and Medicaid (Wall Street Journal, 5/25).
