William C. Hsiao, Ph.D., Anna Gosline Knight, Sc.M., Steven Kappel, M.P.A., and Nicolae Done
Vermont's newly passed single-payer health care law will produce annual savings of 25.3 percent compared with current spending, cut employer and household spending by $200 million, create 3,800 jobs, and boost the state's overall economic output by $100 million, according to this Commonwealth Fund–supported analysis in Health Affairs.
Vermont is the first state to enact single-payer health care legislation, successfully navigating the competing interests of businesses, providers, and the public while overcoming legal constraints and limited state budget resources. The law, which passed in May 2011 and is expected to become operational in 2015, creates a public–private, single-payer system financed through payroll taxes and offering a generous standard benefit package. The authors of this article, who were among the experts providing recommendations to the state, provide estimates of savings, costs, and impacts on employers and families, using financial statements from hospitals and insurers, all-payer claims data, and other sources.
Although Vermont's new system might not be politically viable elsewhere in the United States, the authors contend that its experience holds two important lessons for other states. First, states must have a "credible and convincing plan when fortuitous political windows appear," they argue. In Vermont's case, this included strong grassroots support for single-payer health care, a state legislature controlled by Democrats, and a Democratic governor elected on a single-payer platform. Second, states can adopt components of Vermont's plan even if political opposition to a single-payer plan appears insurmountable. These components include: 1) a comprehensive all-payer claims database, with records from all private payers and from Medicare and Medicaid, to help reduce fraud and abuse; and 2) a "single-pipe" system of payment, with uniform payment methods and rates, as well as uniform claims processing, to reduce administrative inefficiencies.
Vermont's single-payer health care system is expected to lower health care spending by 25 percent, cut employer and household health care costs, create jobs, and boost the state's economic output.