The implementation of the new universal health care law adopted by Vermont earlier this year will result in system wide health care savings there of between 5.5 percent and 18.3 percent in the year 2020, according to a new report (PDF) by the Vermont Legislative Joint Fiscal Office. Vermont’s new health care system will be modeled on a single payer system.
From the report’s executive summary:
The analysis indicates that without reform, Vermont health care spending will more than double from 2009 to 2019, from $4.7 billion to $10 billion. Our estimates, based on national trends, indicate that average growth in Vermont will be about 7% a year. However, we conclude that it is possible to reduce this rate of growth through a wide range of policy initiatives. The actual savings will be determined by decisions yet to be made by the Green Mountain Care Board, the Executive Branch, and the General Assembly, as well as the impact of national initiatives and policy changes, including the amount of federal financial support that we can anticipate.
Savings will be dependent upon the types and scope of cost-containment measures that are implemented, such as regulation, payment reform, or delivery system changes. System-wide savings that result from reductions in provider costs (e.g., simplified administration) will also be affected by the mechanism by which those cost reductions are passed on to payers.
If action is taken in each area of potential savings discussed in this report, savings will begin in 2014 and rise rapidly for the next several years. In 2020, savings are estimated to range from $553 million (5.5%) to $1.8 billion (18.3% of total spending). The table below shows estimated low- and high-range savings in each category discussed in this report.
In order to achieve these savings, substantial investments will be needed. While total investments, including projects already under way, could be higher, in this report, we estimate the portion of those investments attributable to Act 48 to be from $50 to $150 million.
Having read through the report’s analysis of the areas of potential savings, I think the overall estimates seem reasonable, even fairly conservative. The report projects that even with the new system, health care costs in Vermont will continue to grow. But with the reforms in place, costs will grow at a significantly slower rate.
It is important to keep in mind that most of the state’s new system will not start until 2014, and the new system will not be fully implemented until 2017, unless the state can’t get needed federal waivers to start the full reform earlier. This means the 5.5 to 18.3 percent savings projected for the year 2020 only reflect the benefits expected from a few years of full implementation. In the years beyond 2020 the total savings will be even larger thanks to the compounding effect of a slower growth rate.
If the federal government provides the Vermont with the many waivers it will need to implement its new system, the state has the potential to become a strong example to the rest of the country about the benefits of adopting genuinely progressive health care reform instead of corporatist legislation like the Affordable Care Act.




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But doesn’t Vermont’s program require a federal waiver which has not yet been granted (and quite possibly won’t ever be)?
My bold. This is another pile of crap.
That’s what I thought, too. Obama is dragging his ass as usual on this, probably all worried that Vermont might actually go the way of universal health care, which Obama does not want.
Or that Vermont might piss off Obama’s precious Republiccans.
I scanned the PDFs when this was first proposed or passed months ago. I couldn’t find any specific cost saving proposals, just estimates of what would allegedly be saved by measures to be specified later.
Furthermore, the “model” used was done by that flim flam MIT economist who was responsible for Obamacare.
My caveat involves the history of TennCare.
TennCare was a great idea, and worked well for a while, but it was sabotaged by a Republican governor (Sundquist) and then a triangulating Democratic one essentially eliminated it (before trying to save it using any of the five proposed cost-containment measures that Gordon Bonnyman, a health care advocate for the poor, suggested).
Now TennCare is mocked by conservatives as a “failure” of single-payer, when in fact its death was due to political murder, instead of natural causes.
-stewartm
So another pig-in-a-poke.
There you go again, insisting on, you know, specifics. Have you no shame?
No shame at all.
I have an overarching model of why medical costs balloon: because they can is the short version. I’ve typed the medium length version skeen teen times.
When I see that $x gagillion will be saved by streamlining paperwork, I fall off my chair laughing.
Wall St. does more paperwork in a nanosecond that med providers do collectively in their entire existence. If reducing the cost of paperwork were the problem, profit maximizers would have done it a long time ago.
The reason why they haven’t done it is bc they don’t have to. But if they were forced to, they would do one of the following (or something else I’m unimaginative enough to anticipate): pass the costs along to payer, or like a squeezed balloon, costs or profits would go up in another part of the system. BC they can.
I haven’t followed it closely but Amy Goodman’s Juan Ganzales has done yeoman’s reporting on how some computer company paid by NYC to digitize some system in school system has ripped off NYC for millions.
The opportunity for everything to go wrong is 100%, to go right 0%.
And that’s before one considers stewartm’s very valid point about pols mucking about & changing everything before any “benefits” accrue.
Agreed.
For that reason, given America’s political climate, I argue that real health care reform in the US must involve these key elements:
a) A British-like National Health service that provides free care to everyone (including drugs);
b) A National Pharmacy that manufactures (if need be) and dispenses drugs as no cost or very low cost ($5);
c) A Medicare-for-all system that reimburses any private hospitals/providers at the same scale it costs the National Health Service to perform the same procedure.
d) For those using private hospitals or clinics or pharmacies, a reasonable maximum out-of-pocket limit to patient responsibility for any amount charged over the reimbursement scale re(say, no more than 10 % more for any single treatment or drug, and not more than the $1000 per year total). IOW, no gold-plated clinics for the wealthy only.
The problem is for-profit health care. You put roadblocks up at any attempt to suck profit from health care delivery of any sort. Private deliverers aren’t necessarily bad, as long as they are non- or low-profit. After all, health care has traditionally been delivered by humanitarian or religious groups, and I believe those would do fine under such a system.
-stewartm
Yes, but left out of your proposal is an expansion of publicly supported pharmaceutical and medical development. I have to say, this is a major flaw with most progressive visions of health care. It’s not enough to ensure universal access. Universal access to what? We want medical care to continue to advance. In fact, we want it to advance much more than it does under the current system.
We need a much larger National Institutes of Health (increase the budget by a factor of 10 and it’ll still be half of Defense Department spending). We need a biotech DARPA. We need a myriad of federally funded bio-medical and drug development centers across the country. Otherwise, we’ll encourage the stagnation of health care. The most important barometer of a nation’s progress is health – longevity, maternal and infant mortality, mortality from cancer, and from the diseases of aging. I don’t see enough urgency on the left on the research and development side of health care.
Surely you jest. 80% of PhRMA research is me-too drugs, the smallest patentable diff from existing block buster drugs. (Think Viagara & Ciallias.)
Docs, universities (WITH USG funding), PhRMA stealing & patenting body parts for profit. Here’s just one recent example.
Everything about U.S. medical ind is broken. Has been for decades. No salvation now.
Focusing on one piece is a form of denial of the malfunction of the entire system.
I can’t think why Washington has to sign off on this. But I’m confident they won’t. The rest of the country, forced to buy useless insurance they can’t afford, might get ideas.
Vermont won’t get the waivers, because the WH has been told by the corporations not to approve them. Ask Max Baucus and he’ll give you the full scoop from one of his staff/lobbyists.
I still hear nothing about how the left wants to encourage and foster medical progress. Yes, the pharmaceutical industry is guilty of “me too” drugs and of investing in blockbuster lifestyle drugs. Sure, there are ethical issues with the patenting of genes and biological products. But, how is the left going to promote the advance of fundamental and applied research, create new cures, and improve the health of citizens beyond the abilities of modern-day science? I argue that we should be agitating for a massive public investment program in medical research, simultaneous with the adoption of universal single-payer, on a greater scale than is currently conducted through the NIH.
Or should I understand that the goal is a steady-state medicine stuck in circa 2011? Or worse, that we should retreat to the use of home remedies, homeopathy, and wild roots to cure disease?
True – his model claimed 30% savings but the actuary in charge reported that he expected as little as a 5% cost savings (Maryland Medicare waiver and set up of Maryland reimb. rate setting board for each service paid by a third part payer is required to get us onto a controlled budget health care system)
The waiver mentioned as needed is perhaps not needed but if not granted would likely kill the system – namely letting the State of Vermont use the “Exchange” subsidies that begin in 2014 for the under $88000 a year crowd instead as income to the single payer pool so as to reduce the payroll tax that will be needed to fund the system in lieu of Exchanges. HCA bans even applying for the waiver for next couple of years.
The EU did not need the gov funded research program for their single payer/controlled drug prices and studies show their new discoveries exceed what we get with high drug prices.
Vermont single payer using the Exchange subsidy, plus control on what can be paid by 3rd party payers for each service gets us all the way home.
We do not need gov owned hospitals – the Brit system – or indeed anything other than the above.
Expected savings in these schemes are never realized. Actual expenditures are always higher than budgeted.
Government-run hospitals and clinics competing against private ones gives any Medicare-for-all system “inside information” on what a procedure actually costs, and thus allows them to dictate and not guess what a fair reimbursement price to any private provider should be.
Besides, what you have against government-run hospitals and clinics? We used to have them at the state and county level, and they worked fine.
-stewartm
I hardly disagree with fundamental and applied research of any kind.
But with that, if you’re going to use universities, must come some sort of cost control on the government being ripped off by universities. (In fact, the runaway cost of higher education rivals that of health care).
-stewartm
Gov owned health care facilities do work fine (see the VA setup)- but it is a fact that we do not need to build or buy them to have a cost controlled single payer plan.
True – but higher than budgeted in single payer with annual national budget (as in the Maryland ins reimb payment level setting board) means running 10.1% of GDP for the health care system rather than 10% of GDP.
In contrast to this over budget, we have the US no budget result of the percentage of GDP, now at 17% of GDP, increasing at 5% to 15% above both the CPI and the Wage index each year – meaning the math has health care US style eating up more than 100% of GDP shortly – an impossible result which warns of the crowding out of all other economic activity that must exist to support the health care cost.