Vermont should adopt a “public/private single-payer system,” recommends Harvard expert Dr. William Hsiao, hired by the state to develop implementation plans for a new universal health care system. Such a system would, in Hsiao’s words “set in place a policy that controls the long range escalation of health care cost, affords every Vermont resident coverage with an essential benefits package, creates jobs by allowing employers to better plan for the costs associated with their workers’ coverage, attract new workers to Vermont with better healthcare and higher wages and finally, creates a healthier and more productive citizenry.” Dr. Hsiao proposes that the new system be established by 2015, and that the legislature pass a law to this effect by the end of this legislative session.

Dr. Hsiao’s draft report, released on January 19, 2011, can be downloaded here. Hsiao’s team has prepared a FAQ info sheet, which can be downloaded here.
Read the Vermont Workers’ Center’s op-ed on the report, published in the Times-Argus and Rutland Herald, January 23, 2011.

Excerpts from Dr. Hsiao’s written statement:

We call Option 3 a public/private single-payer system. It provides an “essential” benefits package, is administered by an independent board with diverse representation, and it employs a competitively-selected third party to manage provider relations and claims adjudication and processing.
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In short, a single-payer system provides insurance coverage to every Vermonter, provides them with a common benefits package, and channels all payments through a single system that establishes uniform processes and rates for all providers. The system also provides a single mechanism for resolving disputes. Contrary to some perceptions, a single-payer system does not need to be run solely by government, but rather can be administered by governmental, quasi-public, or private entities.
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If implemented properly, a single-payer system can provide universal coverage; yield significant savings that help fund the under-insured and uninsured; and control the escalating costs of health care. Our plan contemplates a more equitable financing structure than the current premium-based financing that exists for most Vermonters. It derives its funding from a payroll-based contribution that is split between employees and employers and exempts low-income individuals and low wage employers.
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Vermont will realize considerable savings upon implementation of the system in 2015. […] Therefore, we estimate that Option 1 [a government-administered single payer system] will produce savings of 24.3% of total health expenditure between 2015 and 2024. Option 2 [a private system with a public option] will produce savings of 16.1% of total health expenditure between 2015 and 2024. Finally, Option 3 will produce savings of 25.3% of total health expenditure between 2015 and 2024.  […] The estimates could vary by ± 15%. […] However, we used conservative approaches in our estimation of cost savings and that still revealed considerable opportunity for Vermont to build a more sustainable health system.
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Option 3 proposes a single-payer structure overseen by an independent board with representatives of patients, providers, employers and responsible government agencies. Board members will be charged with establishing a budget for the single-payer system, determining the benefits package, and making adjustments to payment rates. Under Option 3, the Governor has discretion to veto decisions by this board. In addition to establishing an institutional board, Option 3 proposes a third-party to administer provider relations and claim processing function, awarded through a competitive bidding process. Both public and private entities will be eligible to submit proposals for this work. Under Option 3, the Vermont state government will be responsible for determining the eligibility of beneficiaries, collecting premiums, credentialing and licensing providers, and regulating patient safety throughout the system.
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Unlike the comprehensive benefits package, the essential benefits package does not cover nursing home care or home health care. In addition, the essential benefits package calls for more significant cost sharing relative to specialty services, surgical procedures, the use of brand-name prescription drugs and high-technology tests. The essential benefits package also provides lower amounts of coverage for dental and vision care.
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Our single-payer Options are financed by a payroll tax that provides exemptions for low-wage employers and low-earning workers. By using this financing method, we ensure that no additional cost burdens will be placed on the overwhelming majority of employers and their workers if the employers decide to rely on the single payer benefit plan. Simply put, under our plan, most Vermonters will pay no more for coverage under the single-payer system than then they currently pay for private insurance premiums.
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Both option 1 and 3 would create several thousand new jobs in Vermont when the cost of health care declines and results in increases in workers’ cash wages. Option 2 would not produce this positive effect. Option 1 and 3 would also increase gross state domestic product by approximately $180-$240 million in 2015.
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it is inevitable that under a single-payer system, certain private insurance functions will become obsolete and will leave the market in Vermont. We believe that these changes will have the most significant effect on sales, marketing and underwriting personnel within the private health insurance industry.
 

Today begins a 15 day public comment period during which everyone can submit questions to Dr. Hsiao about technical aspects of the report, including the methodology his team used to collect information. Following this period the final report will be released on February 17, launching the debate over which design to select for implementation.

Vermont’s health systems design process is based on last year’s Universal Access to Health Care law, Act 128, which specifies that all design options must meet the principles of universality, equity, transparency, accountability, participation, and health care as a public good. This law was passed largely due to strong grassroots pressure from the Healthcare is a Human Right Campaign, run by NESRI partner the Vermont Workers’ Center. The Workers’ Center will now use its “Detailed Human Rights Standards for Healthcare Systems” to evaluate Dr. Hsiao’s proposals. This assessment tool turns the human rights principles of Act 128 into specific policy questions.