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The Health Care End Game
May 2005The next two weeks may well decide the future of health care in Vermont.
On April 21 the House passed and sent to the Senate an astonishingly radical bill to create a Canadian-style single payer system. The bill would put the government in charge of virtually every aspect of health care. The new system would include every Vermonter, no exceptions.
All health services determined to be "essential" by the government would be covered. The taxpayers would be hit up for $2 billion to make it all work.
When the House bill hit the Senate chamber, the equally liberal leadership of that body rapidly started looking for something less terrifying to business and taxpayers that would avoid Gov. Jim Douglas's all-but-announced veto. The thought may have occurred to several Senators that passing a single payer bill over a Douglas veto could well be the kiss of death to their political careers.
Somebody may have reminded them of the political backlash against the Washington "Health Services Act" of 1993. It was, in most essential features, a twin of the "watered-down" plan put forth last week by the Vermont Senate leadership. It retained private health insurance, but featured a government-defined benefit plan, a "play or pay" mandate on business, subsidies for the working uninsured, and a large tax increase.
The Washington plan and its taxes went into effect in 1994. After the November 1994 election, the 64-33 Democratic majority in the House had become a 61-37 Republican majority. The Democrats kept a one seat majority in the Senate (only half of whose members were up for election), but some of the surviving Democrats were publicly opposed to the plan.
Within a month the 1995 Washington legislature passed a 47 page bill containing 44 pages of repeals. The Senate quickly followed suit. The bill provided that if the (liberal Democratic) Governor refused to sign it, it would go to a voter referendum in the next election. The Governor found an excuse to sign.
Whatever the reason for the Vermont Senate's nervous reception of the House plan, it seems clear that its leadership will attempt to cobble together a measure feeble enough to avoid a veto, but strong enough to "set the stage for a more comprehensive system" (Senate President Peter Welch).
There are a lot of useful items in the Senate outline. They include pay for performance, better information technology, more consumer information, and revisiting, however tentatively, the medical malpractice issue. But the Senate's marker for progress toward "a more comprehensive system" remains a shrunken version of the House's undefined but inclusive "essential services" package, complete government control of hospital budgets, and, of course, "play or pay" taxes on both employer payrolls and employee paychecks, at businesses that don't offer health insurance.
Business groups, fearing that this will morph into a financing mandate for all businesses and eventually into the high-tax House single payer scheme, are not likely to swallow this downsized pill. Gov. Douglas is likely to balk at any plan that, like the Senate one, requires drawing 25,000 more Vermonters into Medicaid, already on fiscal life support. He will not support socking small businesses and workers with a higher payroll tax to "set the stage" for single payer a few years down the road.
If there is a solution lurking in the tall grass, it would have to be something like this: shift the focus from creating a Canadian-style mega-system to building strong incentives for personal responsibility. Go full bore on educating consumers about wellness, and about their choices for necessary treatment. Recreate a competitive and innovative health insurance market. Back off expensive coverage mandates, and stop shifting insurance costs from the older and richer to the younger and poorer. Encourage families to own their own policies and tax free health savings accounts.
Redesign non-emergency health care away from "service delivery" by experts, and toward informed consumer choice and increased self-management of care. Make provider pricing transparent, and reward efficient and innovative providers. Tighten the tort and recovery rules to bring down the high cost of malpractice insurance.
Continue requiring the taxpayers to underwrite health care for the poor, coupled with the successful "Cash and Counseling" program from Arkansas and Florida. Charge to the taxpayers a large part of the costs of those who are uninsurable because of high, chronic expenses. Replicate the remarkable community-based Project Access from Buncombe County, NC (pop. 210,000).
Bringing that imaginative vision to life will require considerable leadership. It will be distasteful to politicians hell bent on putting government in charge of "delivering" everybody's health care, and sending the bill to taxpayers. Let's hope there are enough others to flesh out a responsible and innovative solution.
