Vermont attempted to implement an alternate healthcare financing policy that would resolve the medical cost issues in the United States. The approach is known as a single-payer system, where a single public entity is funded by taxes and provides free essential healthcare for residents. The initiative failed, but the federal government can learn from it to plan future changes.
Rationale
Vermont’s government chose to switch to a single-payer system to mitigate some of the issues present in the state’s healthcare at the time. Medical aid in the United States is currently based on a fee-for-service model, which encourages physicians to assign unnecessary treatments and maximize the money extracted from a customer. As Vermont is among the smallest U.S. states, its leadership estimated that the change would have been simple to implement.
Adoption of the Reform
The governor who campaigned on the basis of implementing the reform was elected in 2010. According to Rambur and Holmes (2017), the policy was finished and put into practice in 2011 with the creation of the Green Mountain Care Board. The organization then began working on specific more minor reforms that would enable the shift to single-payer healthcare over an extended period. However, its policies were not met with enthusiasm by taxpayers because, as McDonough (2015) notes, the required tax increase would have been substantial and have the citizens’ attention, unlike the current insurance premium. As a result, the reform failed, and in 2016, the state attempted to switch to an all-payer system.
Funding Structure
As mentioned above, single-payer healthcare involves a public organization that is financed by taxes and pays for the citizens’ essential services. Procedures such as cosmetic surgery, ones that are not relevant to the person’s immediate health, are not supported and use out-of-pocket costs. Rambur and Holmes (2017) quote an analysis that describes the necessary fees as an 11.5% payroll tax on employers and a 9.5% income tax on households, leading to a 45% increase in the state’s budget. The government’s proposals projected significant savings for the consumers in the long term. However, the taxation figures above were not popular with Vermont’s population, and the financing laws were never approved.
Impacts
The reform plan ultimately failed, but the United States can learn a lesson from its results. Even though Vermont is a small state, the local government was unable to enact a shift from the current system despite the issues that exist in current American healthcare. McDonough (2015) cites a 2014 survey that shows significant division in the population regarding the case after three years of implementation efforts. Any effort to this effect will have to originate with the federal government and have its support before states can begin implementing solutions. The ACA serves as an example because it was put into practice successfully despite significant public opposition and the debate on its effects, which is still ongoing.
Vermont did not abandon its efforts to implement a healthcare system that is superior to the current American solution. It is currently trying to create an all-payer system with multiple Accountable Care Organizations (ACOs) whose members would pay fees based on the value of the treatment instead of that of the services. Any issues may be overcome in the future through the combined efforts of the government and Vermont’s healthcare providers.
Conclusion
Vermont’s failure can be explained by the political difficulty of introducing steep taxation that would replace existing insurance premiums. The idea of change, especially as radical as what the government proposed, became less popular with the population and eventually had to be abandoned. However, the federal government may successfully introduce single-payer healthcare to the United States in the future, and all-payer systems may succeed as well.
References
McDonough, J. E. (2015). The demise of Vermont’s single-payer plan. New England Journal of Medicine, 372(17), 1584-1585.
Rambur, B., & Holmes, J. (2017). From single-payer to all-payer: Why Vermont’s reform efforts matter to U.S. nurses and their patients. Nursing Economics, 35(2), 100-103.