BRATTLEBORO, Vermont - Vermont became the first state to lay the groundwork for single-payer health care on Thursday when its governor signed an ambitious bill aimed at establishing universal insurance coverage for all residents.
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"We must control the growth in health care costs that are putting families at economic risk and making it harder for small employers to do business."
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Legislators say the plan, approved by the Democratic controlled House and Senate this spring, aims to extend coverage to all 620,000 residents while containing soaring health care costs.
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A key component establishes a state health benefits exchange, as mandated by new federal health care laws, that will offer coverage from private insurers, state-sponsored and multi-state plans. It also will include tax credits to make premiums affordable for uninsured Vermonters.
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The exchange, called Green Mountain Care and managed by a five-member board, will set reimbursement rates for health care providers and streamline administration into a single, unified system.
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Residents and small employers will be able to compare rates from the various plans and enroll for coverage of their choosing.
As designed, the goal is an eventual state-funded and operated single-payer system.
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But its sponsors say that outcome is far from certain. The plan will be phased in over several years, with an evolving financial structure that mandates a number of conditions.
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Among the criteria are adoption of a financing plan by 2014; ensuring the new system costs less than the current fee-for-service one; and obtaining federal permission via a waiver to allow Vermont to proceed with the single-payer option, in around 2017.
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Advocates of change say the existing fee-for-service care has a financial incentive to deliver more care, such as tests, with little attention to quality or better outcomes.
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The single-payer concept was omitted from the federal health care overhaul championed by President Barack Obama, in part due to Republican criticism it meant excessive government control.
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Progressives in Vermont, including Shumlin and U.S. Senator Bernie Sanders, an independent, have worked for years to modify the state's health care system.
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Shumlin said he recognized "people have legitimate questions" about how a single-payer plan would be financed and operated.
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"We will answer those questions before the legislature takes the next step ... We'll be getting input from all Vermonters moving forward, which is essential."
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If the state secures one key federal waiver related to exchanges, Green Mountain Care could begin as early as 2014. Another waiver needed to implement the single-payer component under federal law would not be available until 2017.
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Vermont's plan calls for the board to consider the likely costs of coverage, factor in potential savings from reforms and recommended sources of revenue. It is charged with delivering a financing plan to legislators by 2013.
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If that plan's single-payer component is adopted, lawmakers would approve a budget annually.
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Single-payer proponents say the present system is too expensive and excludes too many residents. Vermont has around 47,000 uninsured and 150,000 underinsured residents.
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But critics are wary of what a new program will cost and which taxes would help finance it. It is not yet clear whether it would involve increases such as a higher payroll tax.?
The state's health care spending runs about $5 billion annually, with costs rising between 6.5 percent and 8.5 percent in recent years.
Some experts say a revised system would save an estimated $580 million annually, and $1.9 billion by 2019, while creating several thousand jobs.
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