Is the Vermont Health Plan Single Payer?

The Governor of Vermont calls it single payer.

The Harvard professor who came up with it calls it single payer.

But single payer activist Dr. Margaret Flowers says it’s not single payer.

Flowers is with Physicians for a National Health Program (PNHP).

And many other doctor members of PNHP agree with her.

They are challenging the proposal put forth by Harvard Professor William Hsiao.

Flowers says that if single payer means anything, it means everyone in one insurance pool.

Everybody in.

Nobody out.

In Vermont, 25 percent of the people are covered by Medicaid.

And 18 percent of the people are covered by Medicare.

So, under Hsiao’s proposal, 43 percent of the population of Vermont would not be in the newly created insurance pool.

In an telephone interview on Sunday, we asked Hsiao why he didn’t include Medicare and Medicaid recipients in his proposed insurance pool.

At first he said that it would have been too expensive and too complicated to include every Medicaid and Medicare recipient into a single payer pool.

“Most of the Medicaid eligibles have better benefits than what we are proposing,” Hsiao said. “Medicaid eligibles have everything covered, including dental, nursing home, and they don’t have to pay much co-insurance or co-payment. Some only pay $5.”

“To create a benefits package of that generous level would cost a great deal of money. What we designed for Vermont cannot save that much money initially.”

“Medicare is much more complicated. Medicare benefits are not as rich.”

“Medicare has two groups. One group is dual eligibles. They are eligible for both Medicare and Medicaid. They have very rich benefits – because of Medicaid.”

“Also, many Medicare eligibles have employer retirement plans providing a supplementary wrap around.”

“Another group is buying their own supplementary insurance – Medigap.”

“Plus, in our soundings around Vermont, many Medicare beneficiaries say – please don’t touch our benefits. They are worried about anybody touching their benefits. They are very suspicious. They think you are going to take something away from them.”

But after going around the too complicated and too expensive explanations for a few minutes, we hit upon a more fundamental reason Hsiao carved out Medicare and Medicaid beneficiaries.

To include the 43 percent of the population in Vermont covered by Medicare and Medicaid, you would need a legislative waiver – an act of Congress.

Hsiao’s proposal requires waivers – but only what he calls administrative waivers.

“The President can grant the waivers necessary to allow our proposal to go forward,” Hsiao said. “We don’t have to go to Congress.”

But to include Medicaid and Medicare recipients in a single pool in Vermont – that would require an act of Congress.

Would Hsiao have included everyone in one pool had it required only an administrative waiver and not an act of Congress?

“Probably most likely I would have done it,” Hsiao said.

Flowers says that Vermont should create a true single payer system and then put pressure on Congress to allow the states to pass it into law.

“Congressman Dennis Kucinich’s amendment passed the House last year and the Wyden Scott bill has bipartisan support in the Senate,” Flowers said. “Both would allow the states to pass single payer and include every resident – including Medicare and Medicaid recipients.”

Flowers supports something closer to Hsiao’s option one – a single payer administered by a public entity.

But under Hsiao’s recommended option three, the administrator would most likely be Blue Cross Blue Shield – which currently controls 75 percent of the state’s health insurance business.

“There are concerns about hiring Blue Cross to be the administrator,” Flowers says. “They have an incentive to make things more complex. Instead, there should be a public administrator.”

Flowers is also critical of Hsiao’s proposed funding mechanism – which is a payroll tax.

“It’s a regressive way to pay for it,” Flowers said. “It excludes people making money off of investment income only. It’s not really that difficult to say to people – for those people who earn their money off of investments and don’t have to work – they have to contribute too.”

Hsiao says that such a system would be too complicated.

“It would be a very much more complicated financing system,” Hsiao said.

“You can figure that out,” Hsiao said. “But then you have to ask – who are these people? Most of them are in the Medicare population. Then you want to tax them differently than the people who are currently working. You can imagine how complicated that would be – just for people to understand that.”

And then Hsiao pauses.

And says – “since you are interested in single payer, let me just say – let not the perfect be the enemy of the good.”

Flowers says that exactly what we heard last year from President Obama when he was pushing the equivalent of Romney care – don’t let the perfect be the enemy of the good.

“That line is used over and over again in this situation,”Flowers said. “And what they say is the good is not. It’s similar to what happened last year.”

“So far what we see in Vermont is not single payer,” Flowers says. “There is still an opportunity to push for it be single payer. And that’s what we think we should be doing at this point. Hsiao’s proposal lacks key features of single payer. It’s not universal. It’s not a single risk pool. It’s not comprehensive in terms of benefits. And all medically necessary care is not covered.”

As for Hsiao, he’s pleased that Vermont’s Governor Peter Shumlin is fast tracking the legislation.

Shumlin has said that he will introduce his legislation this week.

Hsiao says he’s working closely with Shumlin to draft that legislation.

“They are working with us as to what are the essential parts of our recommendations that will produce the savings, that will give universal coverage, that will provide uniform benefits to everyone, and the payment systems,” Hsiao said.

“I’m very pleased that the Governor made a public commitment to draft legislation so fast,” Hsiao said.

As for the insurance industry, Hsiao predicts flatly that “the insurance industry will be opposed.”

But a strong grassroots movement, led by the Vermont Workers Center, is on the ground ready to defend single payer.

James Haslam of the Center says his forces will be pushing for Hsiao’s option one.

“We have come a long way,” Haslam said. “It’s amazing how far we have come to create the political will to do something. Now our struggle is what that something is going to be.”

Haslam echoes much of Flowers’ criticism of Hsiao’s preferred option three.

“We would want everyone in one system,” Haslam said. “Income tax is a whole lot more equitable than a payroll tax. And payroll is better than people paying premiums. We would probably be best served with a mix.”

RUSSELL MOKHIBER edits Single Payer Action.



Russell Mokhiber is the editor of the Corporate Crime Reporter..