Thursday, January 21, 2016

The Failure to Adopt Single Payer Health Care in Vermont -- And How It Could Succeed Nationally

The principal policy difference between Hillary Clinton and Bernie Sanders is over health care -- specifically, health care financing. Bernie favors the adoption of a "single payer" health care system, which he (and many before him) refer to as "Medicare for All." Hillary doesn't disagree about the desirability of a single payer system, but contends that it isn't feasible, politically or economically. She's right, at least for now. There is a way to bring about single payer system, but Democrats can't do that by themselves. Republicans, or at least a substantial proportion of Republicans, would have to agree. And there is a way that might happen.

To gain a better understanding of this subject let's review the background of health care financing. It's useful to differentiate three different ways of paying for health care:

1. Private Pay. Employers that offer health insurance purchase health insurance plans for their employees, and persons who are not employed or whose employers do not offer health insurance either purchase health insurance for themselves or pay all medical costs out-of-pocket. (United States)

2. Single-Payer. Employers no longer offer health insurance to their employees. All health care costs are paid by the government, which either negotiates reimbursement rates with physicians and hospitals or simply sets those rates. (Canada, and Medicare and Medicaid in the United States)

3. National Health Care System. The government owns all of the hospitals and employs all health care workers. (United Kingdom)

The Affordable Care Act chose to expand and strengthen both private pay and single-payer in America. It broadens single-payer by expanding Medicaid (at least in states willing to accept federal funds to do this) to cover all persons at or near the poverty line. It strengthens private pay by offering subsidies to middle-class individuals and families to purchase private insurance. The law also requires insurance companies to cover most medical conditions, to limit co-pays and deductibles, and to offer policies to all persons in the community at the same rate, with some variations allowed for age, sex, and whether people are smokers.

But the The Affordable Care Act did not utterly close the door on a public option "Medicare for All" system. The statute allowed the states to experiment with health care financing reform. Although a number of Democrats (and therefore a majority of Congress) rejected the "public option" when the ACA was being debated in Congress throughout 2009 and early 2010, the statute permits individual states to propose using the federal funding they would otherwise receive to implement a "single payer" program of paying for health care for all citizens.

The State of Vermont enthusiastically studied this option, which it called "Green Mountain Care." But after four years the state concluded that it wasn't economically feasible to create a single-payer system in Vermont. On December 30, 2014, Governor Peter Shumlin issued this report, explaining how the state simply couldn't afford to implement a single payer health care system.

The key paragraph in the report follows. Governor Shumlin stated:
I have supported a universal, publicly financed health care system my entire public life, and believe that all Vermonters deserve health care as a right, regardless of employment or income. Our current way of paying for health care is inequitable. I wanted to fix this at the state level, and I thought we could. I have learned that the limitations of state-based financing – limitations of federal law, limitations of our tax capacity, and sensitivity of our economy – make that unwise and untenable at this time.
No-one doubts Governor Shumlin's devotion to health care reform. Nor should anyone doubt Hillary Clinton's resolve on this subject. As First Lady she led the fight for universal health care more than twenty years ago. Had she proposed a plan similar to the Affordable Care Act at that time, it might have been adopted. But neither the health insurance industry nor the country as a whole was then ready to move towards single payer, and it still isn't ready. Like it or not, we must continue to approximate universal health care by expanding access through private health insurance.

This may change, but it will change only with the assistance of a substantial segment of the Republican Party. And that is appropriate. Sometimes it is necessary to move forward with only a majority of the public or the public's representatives. But it is almost always preferable to enact reforms that are, if not a consensus, at least supported by an overwhelming percentage of the public and the various interests in society. 

How might that happen with respect to health care financing reform? What would persuade significant elements of the Republican Party to support a single payer system?

Very simply, the key is the elimination of employer sponsored insurance. As a result of globalization, American businesses are competing with a vast array of international companies that do not bear the cost of paying for their employees' health care. As a result goods and services from the United States are at a serious disadvantage. They compete in international markets against goods and services whose cost does not reflect the expense for health care for the workers who make them. Another way of looking at this is that other countries are subsidizing the export of goods and services by having single payer or national health care systems of their own. If there were a treaty banning all forms of government subsidies of a country's exports, we would surely contest their single payer systems as gross violations of the principle of free trade.

In short, a single payer system is more than theoretically attainable in America -- it is both economically and politically feasible. But not until entities such as the National Association of Manufacturers, the United States Chamber of Commerce, and the segments of the Republican establishment that represent those interests decide to work with Democrats to lift the enormous cost of health care from the backs of business enterprises and place it on the shoulders of taxpayers. 

Democrats cannot do this alone. Democrats cannot by themselves raise taxes to the extent necessary to cover the cost of health care even though this would probably result in substantial savings in overall health care spending. Until the traditional core of the Republican Party decides to join forces with Democrats on this issue, the wisest course of action is to continue to expand and improve access to health care by subsidizing the private system of health insurance.

Wilson Huhn is the author of "ObamaCare: Is It Necessary, What Will It Accomplish, Is It Constitutional."


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