Home > Employee Benefits > Vermont’s single-payer system: model for healthcare reform?

Vermont’s single-payer system: model for healthcare reform?

With health care costs escalating and the number of uninsured Americans estimated at 50 million, private entities as well as state and federal governments are trying to find effective solutions to ongoing health care problems. Earlier this year, Vermont passed legislation creating a single-payer healthcare system to be operational in 2017, potentially being the first state in the nation to have such a system. It is still too soon to assert that a single payer system is an effective way to combat rising health care costs and ensure coverage for all Vermont residents. Nevertheless, by taking the bold step to pass such a law, Vermont will be under scrutiny as the rest of the country watches what unfolds in the coming years.

The single-payer system differentiates itself from Massachusetts health care reform law and the Federal Affordable Care Act in that there is no individual mandate requirement. In addition, insurance is not linked to employment. A Vermont resident would be able to change jobs and continue with the same coverage without interruption.

A major issue yet to be explained is how the single payer system will be financed, although there is a recommendation to have a payroll tax of 9.4% and a tax on employees of 3.1% as primary funding sources [1]. The Administration will present the recommendations to the Legislature in January 2013. The gubernatorial election in Vermont is November 2012, so it is uncertain how that will affect the timeline of the financing report.

Vermont also has to obtain numerous waivers from the federal government to establish an Exchange in 2014 as well as the single-payer system. Universal health coverage would not be a reality for Vermont residents until 2017 and that is contingent on meeting the exact guidelines to qualify for the necessary waivers.

Other minor issues that have yet to be answered include the transition from the private insurance companies into a single-payer system. Would that lead to mass layoffs without the creation of new jobs? Also, it is unclear whether the incomes and rates doctors in Vermont currently receive would reduce. If so, would the doctors leave the state and would the state be able to recruit the same level of talent? State border issues could be a challenge as well. How would Vermont residents seeking medical care outside Vermont be billed? Who would claim financial responsibility if such an event occurred? Until all these issues are resolved, the feasibility in establishing the single-payer system is still open for debate.

About the Author

Priya Setty is the Employee Benefits Compliance Specialist in the Employee Benefits Group at William Gallagher Associates. Her role involves educating and providing compliance guidance to clients in applicable local, state and federal regulations affecting their insurance programs and employees. She is also a member of WGA’s Health Reform Advisory Committee.

617.646.0216 | PSetty@wgains.com

  1. Walter Carpenter
    December 17, 2011 at 1:28 am

    The interesting thing here is that single-payer, universal, or whatever handle it goes by works in every other industrial/technological nation where it is in place. While it may be constantly evolving, adding or shedding different features, its basis is still there and few people within those countries especially want to migrate to ours. As one of the people involved in the health care reform in Vermont, I can say with certainty that doctors, especially gp’s think that the change cannot come soon enough. Specialists are having a harder time with it, but they are coming to see the advantage.

    As for the lay-offs there might be some, but perhaps they can be absorbed into the new system. And health insurance companies will not be going away either. As in other single-payer countries, they are a part of it too, but they are not, and should not be, the basis for a system of health insurance. They are run for profit, not health care.

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