Tag: Vermont

Vermont Falls

I am Hal’s total lack of surprise:

Vermonters will not be part of a single-payer healthcare system.

Gov. Peter Shumlin had hoped to create the first state-based single-payer system in 2017, but skepticism from both state lawmakers and constituents has halted the idea.

“This is not the right time” for enacting single payer, Shumlin said in a statement.

Shumlin cited the big increases in taxes Vermonters would see that would be required to pay for the plan.

“These are simply not tax rates that I can responsibly support or urge the Legislature to pass,” the governor said. “In my judgment, the potential economic disruption and risks would be too great to small businesses, working families and the state’s economy.”

Federal funds available were also $150 million less than expected, Shumlin added.

Note that Jonathan Gruber was involved in this, just in case you might be wondering what his overall intentions for Obamacare were.

I’m sure this will be blamed on the “greed” of Vermont voters, wanting to keep more of their money. But Megan McArdle called this months ago. The plan was slated to cost $2 billion, requiring Vermont to raise taxes by 75% at least.

Especially when you consider that estimates for this plan’s cost are likely to err on the optimistic side, because, well, people drawing up proposed budgets for their pet ideas tend to be a little optimistic. Yes, yes, there may be fabulous cost savings from using the government’s monopoly buying power to bargain prices down with providers. But Vermont is already the beneficiary of significant monopoly buying power: One insurer has 74 percent of the state’s small-group business. It’s a Blue Cross/Blue Shield, so don’t count on fabulous savings from squeezing out profits. The large group market is even more concentrated, though on a for-profit insurer.

Nor can you get much administrative saving at the provider level, because they still have to deal with out-of-state insurers quite a bit. And the once-vaunted fabulous savings from preventative care have mostly turned out not to exist.

So this is going to be expensive. So expensive that I doubt Vermont is actually going to go forward with it.

Supporters of single-payer healthcare tell us constantly that such a system would be massively more efficient than what we have now. They base this partially on bogus claims that Medicare and Medicaid have low overhead costs. They base this partially, as McArdle points out, on comparisons to a healthcare system that is already, in many states, a monopsony, one that Democrats have fiercely resisted challenging by allowing insurance to be sold across state lines.

But, in the end, it’s mainly wishful thinking. We’re supposed to believe that socialized medicine magically keeps costs down. But the cost curve in the evil capitalist US system has basically matched that of socialized systems for the last twenty years. Most of the explosion of medical costs occurred in the 1970’s and 80’s and is baked into the system we have.

Vermont has now shown that switching to a single-payer system would be expensive and intrusive. Can’t we try anything else before we go there?