Vermont Considers Canadian-Style Health Care

Published May 1, 2005

State legislators in Vermont are considering proposals that would turn the state’s health care system into a government-run single-payer system similar to Canada’s.

Early in the 2005 session, State Sen. Ed Flanagan (D-Chittenden) and State Rep. Michael Obuchowski (D-Rockingham) introduced sweeping single-payer measures. In the House, Speaker Gaye Symington (D-Jericho) appointed a special committee chaired by Rep. John Tracy (D-Burlington) to produce a committee-constructed plan. The committee’s draft bill appeared on March 25; as of this writing, it had not been formally introduced or assigned a bill number.

As presented, the House plan would set up a new government department to control a “publicly financed, integrated, health care delivery system.” Under the proposed plan, all Vermont residents would get their health care from this system. A Health Benefits Board would determine which medical services are “essential” and thus to be offered by the system.

State government officials also would decide how much doctors, dentists, and other health care professionals would be reimbursed for their services. All essential services would be financed by “broad-based taxes based on the ability to pay.” Costs would be controlled by a “global budget,” a spending oversight mechanism state government officials would adopt to limit how much each medical facility could spend.

Movement Failed Twice Before

Politicians in Vermont have attempted to create a single-payer system twice before, in 1988 and 1994. Both attempts failed. After the second failure, Gov. Howard Dean, M.D. (D), whom critics sarcastically called “America’s young doctor-governor,” persuaded the legislature to expand Medicaid to include families with increasingly high incomes.

By Dean’s last year in office (2002), children from families with incomes up to 300 percent of the federal poverty level were eligible for Medicaid coverage. Vermont had a higher percentage of its under-65 population enrolled in Medicaid than any state except Tennessee. Nevertheless, the share of the state’s population reported as uninsured, as measured by the Current Population Survey, rose from 9.5 percent when Dean took office to 9.7 percent at his departure.

The cost of expanding Medicaid rolls was borne principally by doctors, dentists, hospitals, and nursing homes, who were forced to provide Medicaid services at levels of reimbursement lower than what they had previously received.

In his 2005 inaugural address, Dean’s Republican successor, Gov. Jim Douglas (elected in 2002), reported that without dramatic changes the state would face a $600 million shortfall in Medicaid by FY 2009.

Leaders of the Vermont House and Senate, both single-payer health care advocates, saw concern over rising health insurance premium rates and the looming Medicaid fiscal crisis as the occasion to advance a single-payer scheme. The 2004 legislative election, a Democratic landslide, put them in a better position than ever before to further their agenda. Democrats took control of the House 83-60 (plus six left-wing progressives and one independent) and expanded their control of the Senate to 21-9.

Rationing Inevitable

The new bill doesn’t spell out the details of the proposed cost-control mechanism. But a paper issued by Vermont Health Care for All, the leading advocate of single-payer health care in the state, explains its goal of top-down control of spending on health care “infrastructure.”

“The majority of what we spend on health care goes to infrastructure costs [that] are largely fixed,” writes Deborah Richter, M.D., president of Vermont Health Care for All and former president of Physicians for a National Health Plan. “Therefore, the single effective way to control total health care costs is to control the size of the health care infrastructure itself and not by controlling utilization.

“Payment for health care is a collective investment in the health care infrastructure,” Richter continues. “The important question is exactly how much we are willing to invest in our health care infrastructure. Decisions cannot be left to chance.”

References to “infrastructure” notwithstanding, direct medical care to patients will have to be rationed in order to meet global budget limits. The Vermont bill does not establish criteria for how such rationing should be done; rather, doctors and hospitals are left to do the unpleasant work of denying care to patients.

Governor Opposes Bill

Douglas was quick to criticize the committee’s proposal. In a statement released the day the bill was unveiled, he called it “a single-payer, government-run, taxpayer-financed health care plan that goes against all my efforts to lower costs and increase accessibility. … They are asking Vermonters to pay more income taxes and get less health care.”

In its place, Douglas reiterated his advocacy for reforms “that tackle the root causes of rising health care costs, increase low-cost health insurance options, encourage healthy decisions and preventative care, and attack health concerns at their inception before they develop into more serious and costly ailments.

“All Vermonters must have a right to choose the health care plan that works best for them,” Douglas said, “and not be forced into paying for a single, government-run plan, funded by dramatically higher taxes.”

Single-payer advocates in the legislature are not likely to be daunted by Douglas’s opposition. Vermont Health Care for All has mounted an aggressive marketing campaign to sell Vermonters on the single-payer idea. At their 2005 town meetings, 17 cities and towns adopted resolutions calling for such a plan.

John McClaughry ([email protected]) is president of Vermont’s Ethan Allen Institute (