As Vermont inches toward a single-payer health-care system, residents keep asking how it will be financed.

State officials aren’t sure yet. One idea is a combination of a payroll tax and a progressive income tax — that is, the more you earn, the higher your tax bill. 

But one thing is certain: The system will depend on money provided through the 2010 federal health-care reform law. Without federal funding, the state couldn’t cover its start-up costs.

Residents raised the financing question several times Tuesday at a health-care forum held at River Arts in Morrisville.

About 30 people attended the forum, one of 15 being held statewide this year by the Vermont Public Interest Research Group.

House Speaker Shap Smith, D-Morristown, and Rep. Peter Peltz, D-Woodbury, led the discussion. Panelists included Sen. Jane Kitchel, co-chair of the state Health Care Reform Commission; Steve Kimbell, commissioner of the Vermont Department of Banking, Securities and Health Care; and Rep. Mike Fisher, chairman of the House Health Care Committee.

People asked questions about the new system and weighed in on the current system. 

“Where we all agree is that the pressures we feel within the system are overwhelming,” Smith said. “As business owners, it’s one of the biggest pressures in a business budget.”

Patty Prince of Morrisville said that, under the current system, she is struggling to pay her medical bills even though she has private insurance.

She is covered through her husband’s employee health-insurance plan at IBM. The plan covers 80 percent of their medical expenses.

Last year, both she and her husband needed surgery, leaving them with over $12,000 in out-of-pocket expenses. The hospital asked that they pay $1,000 a month, but they couldn’t afford it. Eventually, Prince persuaded the hospital to accept $400 a month instead, and says it will take several years to pay off the debt.

“It’s very disheartening,” Prince said. “When you’re sick, you can’t work. We went three months without pay and every time we went back to the hospital for a follow-up visit, they’d ask for more money, even if we had just made our payment.”

Vermont’s law

Vermont’s comprehensive health-care bill took effect in May. Its goal is to provide care to all of the state’s residents through a European-style single-payer system called Green Mountain Care. 

Key components include containing costs by setting reimbursement rates for health-care providers and streamlining administration into a single, state-managed system. 

A five-member board was appointed in October to set up Green Mountain Care. Among other tasks, the board will design a payment system under which hospitals and other providers will be paid a set amount to provide health care to a set population. The current system is known as fee for service, which pays doctors on a per-visit basis.

The single-payer plan wouldn’t affect health benefits for Vermonters covered by Medicare; it’s a federal program, and the state plan wouldn’t change it.

The federal health-care reform law won’t allow Vermont to enact single-payer until 2017. In the meantime, the state would set up a health-benefit exchange program in 2014, as required by federal law. The exchange would allow individuals and small businesses to compare prices and benefits offered by a network of in-state and national private insurance companies.

In 2010, the Vermont Legislature commissioned Dr. William Hsiao, a Harvard economist who has helped design health-care systems in seven countries, to analyze the costs and benefits of various health-care options, ranging from single-payer to a fully privately managed system. The resulting report, released earlier this year, maintains that a single-payer plan would be about 25 percent cheaper for consumers, businesses and the government than the current system of private health insurance, saving about $500 million in just the first year.

Financing questions

Most of the questions at Tuesday’s forum centered on financing.

One person asked how the state will guarantee that taxes for the new system won’t rise faster than private health-insurance premiums.

“We’re not saying, ‘Reduce cost,’” Fisher replied. “We’re saying, ‘Reduce the rate of growth.’”

Stowe resident Helene Martin said that, while she is “appalled by the lack of fairness” in the current system, she’s not sure Vermont’s 627,000 population can fund a single-payer plan.

The plan would save money by reducing unnecessary medical procedures, Kitchel said. 

“Research shows that 30 percent of health-care spending is on services that don’t improve health,” Kitchel said. “The (health-care) board is really going to be looking at payment reform. It’s a really important piece.”

Additionally, the board will look at paying physicians based on patient outcomes, which would improve health-care quality while saving money, Kitchel said.

And the plan would continue to implement the state’s Blueprint for Health program, which focuses on preventing and treating chronic diseases such as diabetes, which contribute greatly to health-care costs, Kitchel said.

One person asked if the health-care board will focus on cost containment or quality of care when it maps out details of the single-payer plan.

Panelists said both are important, but costs must be controlled before details about the types of health-care services covered can be hashed out.

“The system we grew up with — where, if you didn’t like one opinion, you could get a second or a third — is on its way out,” said Kimbell, commissioner of the Vermont Department of Banking, Securities and Health Care. “I don’t call it rationing.”

What happens if the U.S. Supreme Court shoots down a provision in the federal health-care law that requires every American to have health insurance, a person asked.

“If the (federal) law goes away, we’re in real trouble,” Fisher said.

The state could still forge ahead on its own, but probably wouldn’t get the federal money it needs to start up the program, Fisher said.

Another person asked if the board will discuss end-of-life issues. The Agency of Human Services will recommend a package to state health-care providers that would offer them treatment options, Kimbell said.

“Surprisingly, most people chose the most humane way out,” Kimbell said.

Winning support

Single-payer health care has drawn a mixed reaction from state physicians.

Both the Vermont chapter of the American Academy of Family Physicians and the Vermont Psychiatric Association have endorsed single-payer health care.

But a survey earlier this year showed a quarter of the state’s doctors would consider leaving Vermont if a single-payer system were adopted. The survey, conducted by state Rep. George Till, a Democrat who supports single-payer, showed 44 percent of doctors support it, and 46 percent oppose it.

Members of Vermont Health Care for All, a single-payer advocacy group led by physician Deb Richter, say a single-payer plan would actual attract physicians who are fed up with the mountains of paperwork they must fill out for traditional health insurance companies.

“With national polls showing the majority of physicians favoring single-payer, we have reason to believe that, for every physician who might leave Vermont, we will likely gain two or three,” the group said in a leaflet distributed at Tuesday’s forum.

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