As states grapple with health reform, Vermont eyes single-payer system

Americans have witnessed much impassioned political wrangling over health care reform. In 2010, President Obama pushed his landmark health care reform package through Congress. By 2014, each state will be required to operate its own health insurance exchange in compliance with the law.

Vermont, however, wants to shake things up even more. Gov. Peter Shumlin, who was elected in November of 2010 thanks partly to his aggressive stance on health care reform, is pushing hard for a single-payer system in the state.

How does single-payer health care work?

A single-payer health care system uses a single insurance pool run by the government. All residents pay into the pool (instead of paying insurance premiums), and the state (instead of insurance companies) pays for health care. Several countries, such as Taiwan and Canada, employ single-payer systems.

Shumlin wants to create a health reform board to draw up recommendations for a Vermont single-payer program and then put that plan into operation by 2014, according to Kaiser Health News. Vermont has struggled with health care cost controls recently. Between 2000 and 2008, its health care spending doubled from $2.2 billion to $4.4 billion, according to grassroots group Vermont For Single Payer. The governor estimates that a single-payer system would reduce the administrative and bureaucratic costs that come from having several health insurance companies offering policies, and would save the state $500 million in the system's first year.

Arguments for the single-payer system

Proponents of the single-payer approach, like Vermont for Single Payer, tout its:

  • Simplicity. The state is able to establish uniform standards for all residents.
  • Successful implementation in other countries.
  • Ability to level the playing field and help everyone, regardless of employment, get coverage.

Arguments against the single-payer system

Opponents of the single-payer scheme are less optimistic. In a lecture for conservative think tank the Heritage Foundation, policy analyst James Frogue points out that single-payer systems are often fraught with bureaucracy and give too much control to the government agencies that oversee them. Frogue argues that Canadians are far less enamored with their single-payer system today than they were when it was first introduced. Problems include long wait times and overcrowding at medical facilities.

What about health care reform?

If health care reform requires all states to fall in line, would Vermont be able to do its own thing? Shumlin's plan is to use the reform law as a springboard, according to Kaiser Health News. Federal health care reform will provide states with money to set up their own insurance exchanges. Shumlin plans to use his state's money to create a Vermont health insurance exchange and then convert it into a single-payer system.

The federal law also allows states to apply for vouchers to opt out of the reform law's requirements (as long they provide coverage that is equal to or better than coverage the federal law would provide). If Vermont gets a voucher, according to Kaiser Health News, it may be able to set up a true single-payer system.