The New Health Dialogue

Gov. Peter Shumlin (D-VT). Wikimedia commons.

Just 18 months after the health reform debate killed the potential for a national “public option” in health care, one of the 50 U.S. states is poised to breathe new life into government-run insurance systems. Despite its fiercely independent reputation, the State of Vermont is forging a path towards single-payer health care, and its newly elected governor is determined to succeed.

“Everyone else in the developed world has done this, and we haven’t,” Governor Peter Shumlin (D-VT) told an audience at a recent health care forum sponsored by The Atlantic. The event brought together health care leaders, policymakers, and representatives from dozens of DC policy shops for a daylong discussion of the “next steps” during implementation of the Affordable Care Act (ACA).

Shumlin’s plan for a single-payer system set the tone for much of the day, with a heavy emphasis on cost control, practice reform, and reimbursement reform as essential components in fixing the nation’s health care woes.

The Vermont plan is a radical response to the state’s growing annual health care expenditures, which have doubled over the past decade from $2.5 billion to $5 billion. As Shumlin noted in his address, Vermont does not face the problem of access to health care common to other parts of the country; rather, the state suffers from a high underinsurance rate—150,000 out of a state population of 650,000 have incomplete or only catastrophic coverage. Coupled with the runaway costs resulting from the current fee-for-service reimbursement model, Vermont had ended up with a system misaligned with the principles of population health and preventive medicine.

Sounding more like a corporate executive than the average politician, Shumlin described how Vermont’s approach to these issues involves a combination of reimbursement reform and efficiency measures to affect savings. The single-payer system will allow Vermont to “pay [providers] a fair wage for actually making us healthy,” he said of the plan’s emphasis on primary care and incentives for providing care that prioritizes good outcomes over high patient volume.

“We don’t need to ration care, we need to ration waste,” Shumlin summarized.

The Vermont plan is perhaps the most dramatic in a series of proposals to let states “customize” their health systems to meet the new coverage and service regulations outlined by the ACA. The act established the Center for Medicare and Medicaid (CMS) Innovation Center as a clearinghouse for organizations and states to receive federal support for novel projects. The movement behind state-based innovation emphasizes that states should serve as laboratories for development of health care delivery models and quality improvement plans. The most successful experiments could then be exported across the country with assistance from the Innovation Center and other agencies.

Nonetheless, state-based innovation has raised red flags in the offices of policymakers and public advocates. As Eric Schultz wrote last week, proposals for full devolution of public safety-net monies—as would occur under Rep. Paul Ryan’s (D-WI) proposed budget—could allow the states to cut services to plug budget holes or effectively price low-income individuals out of the insurance market by raising premiums. This runs counter to the notion that cost, quality, and access must all be addressed together to fix the system.

As Sen. Ron Wyden (D-OR) put it during an interview at the Atlantic forum, “What [the states] can’t do is customize poor people out of coverage.”

The Vermont plan holds the promise of reconciling the competing exigencies of cost control and access; however, successful implementation of the plan rests on agreement from the Federal government, which must approve a host of changes to public plans necessitated for single-payer care delivery. If Vermont does succeed in its attempt to remake the system anew, it could emerge an unlikely standout model of balance between Federal control and state control of health care policy.