By Dan Lichtenstein-Boris, 2010-2011 Southern California CaHPSA Conference Coordinator

As the Washington insider crowd lauds and applauds Paul Ryan’s Medicare privatization scheme, the governor of Vermont is on the cusp of signing a state health insurance law that is inexpensive, nearly universal, and truly “courageous.”
 
In their new budget, Congressional Republicans used the national concern with cost containment to denounce Obama’s signature Affordable Care Act and its emphasis on patient access and the enhancement of quality care. Paul Ryan’s Medicare Reform Plan and President Obama’s Patient Protection and Affordable Care Act of 2010 both promise to subsidize individuals to buy private insurance in regulated market exchanges. Neither idea, whether instituted for seniors or working adults, will dramatically reduce out of control medical price inflation. Rather than let individuals pick their insurance, Green Mountain Care, which is what they are calling Vermont’s quasi single payer, would let every Vermonter instead pick the provider of their choosing. Insuring all Vermont citizens and consolidating administrative costs will eliminate the inefficiencies created by market pressures in health insurance.

Market solutions to health reform will fail to curb rising prices because only state intervention can stop the death spirals of higher costs, fewer enrollees, and sicker patients. Gathering the fragmenting and warring health plans and incorporating them into a single unified system can protect both individuals’ and the public’s health and wellbeing. Green Mountain Care will eliminate inefficient competition that has led to escalating price increases. 

Currently private employer based health insurance plans have little to no incentive to control costs. They generate the most profits by pushing costs onto others and collecting premiums from the healthiest. Insurers push costs onto the sick in the form of higher deductibles and co-pays. By squeezing doctors and hospitals through price negotiations, health plans turn away from subsidizing the costs of caring for the uninsured. Rather than invest in preventive care, these plans would rather wait until sick workers retire—and become Medicare’s responsibility, or become too sick to work, and fall into Medicaid’s purview. In the private insurance market, experience rating, caps, co-pays, deductibles, utilization review, checking for pre-existing conditions, and rescinding plans of those who need them most have all been acceptable mechanisms for health plans to discourage those likely to use services from getting insurance.  Insurers compete on price by limiting the number of providers in their network. Clearly, insurance competition does not give consumers what they want—access to quality health care.

But why has the health insurance market failed consumers?  Shouldn’t markets for health insurance work like other markets, where buyers and sellers compete by optimally using resources to settle the price, quantity, and quality best suited for all?  Not in this case. Health care isn’t a good that one can make an easy decision to forego if the price isn’t right. People will pay as much as they value their own lives for certain urgent procedures and vital medications. Because of efficiencies and economies of scale in insurance, health plans serve both the healthy and sick best when everyone is in the risk pool. Green Mountain Care will come close to giving those in Vermont all the efficiencies of a single insurer.

By covering almost everyone, Vermont’s new state health insurance plan will eliminate the perverse incentives to pass costs along to the next sucker in the health care industry, rather than focus on reducing costs through preventing illnesses and managing chronic conditions. This plan is a roadmap to a new system. It sets Vermont squarely on the path to give the state a Canadian style health system within the decade, especially once Federal waivers become available in 2017.

But in order for the hope and aspirations of the Vermont people to be sustained, Vermonters need vision and support from the Obama administration. States should get federal license to experiment with their health plans sooner than 2017, as long as they make certain commitments to vulnerable populations, access and quality. Green Mountain Care is not a true single payer system because they will need waivers to roll Medicare, the Affordable Care Act, Medicaid and other federal health subsidies into the funds for Green Mountain Care and other state initiatives.

Massachusetts, Vermont’s New England neighbor, led the first charge to health reform this decade—individual mandates and market based health insurance exchanges.  The verdict is still out on the fate of the Massachusetts model, but initial studies have shown that there has been little change to the amount of medical bankruptcies in the state. If we go by international evidence, a single payer plan will do a better job at containing costs and increasing access than a Massachusetts plan. The fact that Vermont’s Green Mountain Care is nearly a single payer plan truly frightens the opponents of social insurance. Hopefully, single payer supporters will finally have their platform in Vermont to show the country that single payer can work in America.