Single payer

Vermont's Single Payer Health Care Plan Failed For One Big Reason: It Cost Too Much

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Gov. Shumlin via Twitter

There are a number of reasons why Vermont's proposed single-payer health care plan failed: It was too complex, too ambitious, too difficult to achieve within the context of the rest of the U.S. health care system.

But biggest reason was that it simply cost too much. The financing wouldn't have worked.

As Vox's Sarah Kliff reports in a long post-mortem on the proposal, which Democratic Gov. Pete Shumlin killed last week in a surprise announcement, the final estimates indicated that the plan would have required the state to raise an extra $2.5 billion in revenue annually. This is in a state that typically only raises about $2.7 billion total each year. In other words, it would have cost nearly the amount that the entire rest of the state government cost—and that's presuming that those estimates were accurate, and that the one-of-a-kind program encountered no unexpected cost overruns. 

Raising that kind of money would have required significant tax hikes—a payroll tax increase of 11.5 percent and a 9 percent income tax increase. Even in liberal Vermont, with a governor who campaigned on single payer and who was dedicated to the cause, that was just too much. This was perhaps the best possible environment for single-payer in the United States, and it failed. 

Kliff has spent a fair amount of time reporting on Vermont's plans, and her entire piece is worth reading. This bit from the end, in particular, is notable: 

"You'd think that, if there was any state where this could fly politically, it should have been Vermont," said Matthew Dickinson, a political science professor at Middlebury University. "But in this case, the price was so big that even a state as solidly blue as Vermont wasn't able to swallow it."

When I interviewed Shumlin in March, he said that whether or not Vermont succeeded at its single-payer push would have huge national ramifications. Back then, his state had the potential to serve as a model. It could be what Romneycare was in Massachusetts: a template for national reform. But if single-payer couldn't succeed in deep-blue Vermont, Shumlin and others mused, how could it possibly move forward anywhere else?

"If Vermont gets single-payer health care right, which I believe we will, other states will follow," he predicted. "If we screw it up, it will set back this effort for a long time."

I'm not sure this quite counts as a screw-up, exactly; faced with the reality of the costs the plan would impose, Shumlin chose to walk away. But I suspect that Shumlin wasn't far off in his prediction, and that the failure of Vermont's plan will end up keeping future single-payer plans at bay for quite a while. 

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  1. “Government is the great fiction through which everybody endeavors to live at the expense of everybody else.”
    Bastiat

    1. My favorite Bastiat quote is:

      “If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind?”

      Such a clear rebuttal of TOP MEN in so few words.

      1. When all those flawed humans get together to choose leaders they are magically able to choose the best among them. Then, the day after election day, they go right back to being selfish idiots.

        1. The voting booth is just like the Great Teacher from ST:TOS.

          1. Sorry, my memory only goes back to ST:TNG. But I’ll take your word for it.

          2. Democracy and democracy! What is democracy!?

            1. “It is so simple a child could do it! A child could do it!”

      2. 1. Because.

        2. No, as they are Homo Superior

        3. Of course they do.

      1. Piketty concurs.

      2. That rules. Nice one.

      3. Nice, Doc. Also, love the rainbow gadsden.

      4. I can plug my Tesla motors into that!

  2. In other words, it would have cost nearly the amount that the entire rest of the state government cost

    Raising that kind of money would have required significant tax hikes?a payroll tax increase of 11.5 percent and a 9 percent income tax increase

    So where was the rest of the money going to come from? Because if you need to double revenue you need to increase taxes by more than ~10%; an order of magnitude more.

    1. I suspect they mean an increase in the percentage level, not a percentage increase in the level.

      E.g., a payroll tax increase from 0% to 11.5% and an income tax increase from 9% to 18%.

      1. That would be absurd. No wonder they scrapped the idea. They’d be run out of the state on a rail.

        1. Even though anyone who took math in high school and thought about it wouldn’t be surprised.

    2. Just to clarify, these are the absolute increases over existing rates, not percentages of the existing rates.
      So in the case of the payroll tax, the 11.5% would be added on top of the existing payroll taxes for things like Social Security and Medicare. By way of comparison, the payroll tax for social security paid by the employer is currently 6.2%. With the new tax, the employer would be paying well more than double the existing taxes.
      The 9% income tax (it would have actually been a bit more than 9% I think), which would affect the top bracket, more than doubles the existing rate for that bracket, leaving it at more than 18%.

      1. Duly noted, thanks. I assumed the other interpretation because that was the only one that seemed even remotely possible, politically.

      2. To be fair: offsetting the increase in payroll and income taxes would be the elimination of medical insurance premiums.

        At least for a little while. Eventually, the state-run single payer system would become so crappy that affluent folks would privately pay for alternatives.

    3. We should have asked for federal money, then single payer would have been free!

      1. That’s pretty much the mindset these days.

      2. Actually, apparently they tried to do that, but it didn’t work out. They expected to get something like $400 million from Obamacare in 2017, but it turned out to be nothing near that. They also hoped to get another $150 million in federal Medicaid matching money, but that isn’t going to happen either. They also sought waivers to give control of Medicare benefits to the state as well, but failed to get them.
        I am not sure how getting 20% of the cost from the feds would have changed things though.

        1. Does Vermont have a state exchange?
          If not, things stand a good chance of getting more expensive yet.

    4. Who do you think is paying for medical services now? Those with employer paid coverage are paying through lower wages and salaries. The consumer pays through higher prices. Taxpayer pay higher taxes.

      The best solution is a true free market in health care. First step towards this is repeal of prescription laws that give doctors a government enforced legal monopoly over access to medical drugs. This means people who can access medical knowledge bases or already know what they need can take care of their own medical needs at a much lower cost.

      This of course also “solves” the so-called “shortage” of primary care physicians. They will only be seeing those who can’t solve their medical problems on their own. The decision to see a doctor first before obtaining the needed medicine to deal with their own medical problem will be their decision.

      Multiple tiers of hospitals so that you only use the level of technology needed. Instead of paying for stuff that you don’t need or use.

      Of course the “organized professions” will fight ideas like this “tooth and nail” since a considerable portion of their incomes comes from government “protection” that gives them a “closed market” where their services can be priced much higher than what they would be otherwise.

  3. Your lunch time derp: Vox gives 6 reasons Fauxcahontas should run for president

    http://www.vox.com/2014/10/24/…..-president

    “Elizabeth Warren is an unusual politician: she ended up in politics because she had big ideas that people really liked. That’s a departure from most politicians, who basically don’t have any original ideas at all, and who end up in politics because they badly want to be politicians.”

    [raucous, wheezing laughter]

    1. Derpetologist, you might want to get that laugh looked at. I think you’ve been reading too much BS. Might want to cut back.

      1. I heroically risk my health and sanity for YOU!

        I’m like one of those Alaska crab fishing guys.

        1. They get paid (relatively) lots of money, though. What’s your excuse?

          1. Stupidity makes fine entertainment when you are super bored.

          2. He’s maniacally obsessed with pursuing and killing the great white stupidity (Moby Derp) who bit off his frontal cortex years ago.

            That is why he is always being reprimanded for shouting “from hell’s heart I stab at thee; for hate’s sake I spit my last breath at thee” from his terminal at the county library.

          3. What?!? There are commenters here who don’t get paid for it!?!

    2. Look at what the Serious Intellectuals at Vox subtitled one of the sections of that article:

      “And if she loses? ?\_(?)_/?”

      Are you blown away by the tremendous mental energy that must have gone into the construction of that emoji?

    3. Did she have big ideas or original ideas? Because those aren’t the same thing.

    4. Clicked the link, but I’m not gonna read that entire pile of horseshit. I just wanted to ask, does anybody know if every single article on that site ends up getting at least one correction affixed to it?

    5. I heard Warren on the radio recently. She sounds really condescending and preachy. Unless she gets a really good speech coach and applies herself that’s going to sink her.

      1. She sounds really condescending and preachy.

        There are a lot of people who think that is a feature, not a bug.

        1. It worked great for the current occupant of the position.

    6. I have a seventh reason; she would add a touch of farce to an election cycle that will probably need all the humor,it can get.

    7. I’d rather see her run for the Dem nomination than Cunton. I’m tired of all the “inevitability” talk surrounding Hillary.

  4. I’m not really sure how much credence I can give Kliff. In an article noting that the proposal was scrapped because of excessive costs, she talks at length about how such a program would be cheaper.

    1. He managed to outlast John Belushi, who did this dead-on impersonation on SNL in 1976.

      1. That’s what I get for taking the time to compose careful sentences.

        1. Looks like sarcasmic was so stunned by your confession that he was speechless.

          1. Sarc, Three times a lady is a Commodores song. Not a Cocker song. Get it right before trying to make such a subtle post(s).

            1. Lionel Richie is going on tour. You won’t see me there.

              1. Because you’re working the night shift?

    1. You know you just posted the same Vox article cited in Suderman’s article, right?

      1. Yeah, I didn’t read that far.

  5. This simply cannot be true. Unless. Unless.

    Unless Tony lied.

    Then again, he may not know his ass from pulled pork.

    1. That is a misidentification no one wants to make.

      *shudders at the thought*

  6. Economic reality is racist.

    1. “Realist” and “racist” have remarkably similar spelling.

  7. The law and order right is freaking out over at the WSJ.
    A lot of cognitive dissonance out there.It’s so strange that the left and right see themselves as enemies while working together to advocate a police state. Or that the same people on the right who recognize that NYC government is about 1,000,000% too big and out of control think its awesome that the NYPD operates like the praetorian guard.

    1. You mean the opinion article where the WSJ hallucinates about anti-cop politicians that exist only in the head of the writers? Fuck them, we’re still winning.

  8. This is why we need national single payer.

    /prog

    1. Nay, GLOBAL single payer!

      1. UNIVERSAL, as in the entire universe!

        1. We’ll fund it by getting the richest 1% lifeforms in the universe to pay their fair share!

          1. Everyone knows that the Ferengi are a bunch of big-nosed cheapskate merchants who don’t share their ill-gotten wealth.

    2. See Double You|12.22.14 @ 2:07PM|#
      “This is why we need national single payer.”

      One of our more recent lefty ignoramuses made this exact comment when this issue was posted last week.
      S/he was not intending sarcasm.

  9. Virtually all of the proposals I have seen claiming to fix medicine in the United States do nothing to address the underlying causes of those problems, almost all of which are economic.

    1) The persistent physician shortage (http://bit.ly/1fY77Qy), principally due to an AMA cartel that limits physician immigration, and the creation of new physicians via medical school slots and internships.

    2) The corruption of the patent process, whereby drugs and devices get patents extended functionally indefinitely. A good example of this is the Epi-pen (http://bit.ly/13sFn5r).

    3) The intervention of third parties into first-dollar care (http://theatln.tc/1D8rHJC).

    4) In states having them, “certificate of need” restrictions that limit competition between hospitals (http://bit.ly/16JPjcx).

    1. 5) FDA regulations that make drugs more expensive.

      6) Laws prohibiting interstate sales of health insurance.

      7) Laws and regulations restricting what nurses and pharmacists may do.

    2. Yes, but how can any of those problems be solved by giving the government enormous power over our healthcare decisions and centralizing the care of 300 million people into a vast, amoral bureaucracy centered around Washington, D.C.?

      Why don’t you come back when you have something serious to add to the conversation and realize that the solution to all problems is a gigantic increase in federal authority.

    3. 2) The corruption of the patent process, whereby drugs and devices get patents extended functionally indefinitely. A good example of this is the Epi-pen (http://bit.ly/13sFn5r).

      A good rule of thumb is to savagely hate anything with “Epi” in it.

    4. @Scareduck:

      All the problems you list are not economic but political, traceable to government. The solution is a free market in health care.

  10. When I imagine a truly free market for health care services (including elimination of government medical licensing), I am sure that costs would go down and quality would improve. But I don’t know what to do with the moral hazard question. Just as businesses must be allowed to fail to allow efficient markets, people would have to die of preventable illnesses to provide the right incentives in the health care market. Now, most of the time, I’m OK with people making deleterious choices, but sometimes people are required to make health care choices for others, minors, the incapacitated etc.

    So efficient health care markets would require that people suffer from the poor health care choices of those who care for them, or else risk moral hazard that undermines the efficiency of the whole market. There has to be a sufficient number of recent, relatable examples of significant negative consequences, so that everyone else is incentivized to make better choices.

    There could be criminal liability for those who make deadly health care choices for their wards, but that is just steps away from government control over health care for minors. I’m sure that I’m missing something. What is the market solution for health care that doesn’t demand, as a price for efficiency, dead or crippled children?

    1. What is the market solution for health care that doesn’t demand, as a price for efficiency, dead or crippled children?

      Dead or crippled dependents is a given under ANY health care solution. No matter what, these people are going to be at the mercy of their caretakers, be they family, charities or agents of the state. So the best solution is a free market solution where whoever cares for each individual most will be responsible for that person. Couple that with enforcement of existing criminal law and you have a solution where the fewest people will slip through the cracks. It is impossible to protect everyone who needs protection. Anyone who says otherwise is ignorant or lying.

      1. “It is impossible to protect everyone who needs protection.”

        I know. But it is still tough to advocate for a market solution that requires such a steep price, even if everyone else benefits as a result.

        1. There’s no way to prove that the price would be any steeper than single-payer.

          It is highly unlikely that there would be masses of people dying of preventable illnesses, as long as we already have the means to treat them.

          1. I don’t mean a financial price, and I don’t think there would be masses of people dying.
            In a free market, some people would have to be allowed to die because of dumb decisions their families made for them, or else the market would become less efficient. That’s just the cold, hard truth of it, I guess. I am not saying that it would be worse than single payer, but TANSTAAFL, you can’t have an efficient market without some examples of failure.

            1. In a free market, some people would have to be allowed to die…

              But there’s a huge moral difference between people making bad decisions (or having bad decisions made on their behalf by family) and the state pointing at you and saying “no treatment for you.”

              1. “In a free market, some people would have to be allowed to die…”

                In a truly coerced economy, some people aren’t always give the option of ‘being allowed’ to die.

              2. In the 1880s, when there was practically nothing in the way of medical regulations, towns, counties or charitable aide societies would pay country doctors to provide care to the indigent. It wasn’t universally practiced, it certainly wasn’t federally mandated, and it was sometimes paid for by voluntary charitable giving. I imagine something like that would happen today if medicine were completely deregulated. Does a minimal financial-hardship safety-net create a moral hazard? I honestly don’t know.

                1. Federal, state, and local governments spend $7T every year. That’s out of a $17T economy. It’s $20K per person, every single year.

                  Do you really think that if people had $20K back in their pockets that they would not donate to charity far more than they do now? Do your really think people are so callous that if they knew of a neighbor or friend being mistreated, or doing the mistreating, that they wouldn’t speak up?

                  I have a lot more faith in humanity than that.

              3. But there’s a huge moral difference between people making bad decisions (or having bad decisions made on their behalf by family)

                Unfortunately, it won’t be the people making bad decisions who get blamed.

                I’m reminded of a story I heard some months back: Canadian guy goes on vacation to Mexico with his family, and doesn’t read his cell phone contract about international roaming charges. Kid uses the phone’s internet to watch a movie or something, and racks up a very high bill. CBC blames the service provider because they have a lot of money, not the idiot who couldn’t read his contract.

            2. I didn’t mean a financial price either.

              There is literally no way to know how big the human price would be for a free market vs. single payer healthcare system would be because those people are allowed to die now due to poor decision making.

              1. I am informed by my every experience with the government trying to help me. There’s no doubt in my mind that lacking coercion and having to compete, with the danger of going bankrupt, would have noticeable benefits within days, and within a year everything would be so much better than Tony would be reduced to a whimpering gibbering idiot, even more so than now.

              2. Last year a study was published that estimated there are anywhere from 200,000 to 400,000 preventable deaths in US hospitals every year.

                How much worse could it be to open it up to the free market? I suspect that you would have fewer deaths, but that is only speculation. But it couldn’t be a lot worse.

  11. Vermont can’t print its own money. The feds can. A state’s failure doesn’t rule out the feds taking acrack at it.

    1. They took a crack at it and Obamacare has not worked out for them.

      1. Obamacare is not single payer.

        1. True, but it was a left-wing reform. ‘A crack at it’ that didn’t pan out.

  12. I just noticed that, according to the Vox link, the 2.5B$ price tag comes straight out of the models of The Jonathan Gruber. Yeah, they actually paid a known liar as a consultant.

    1. Didn’t he only lie about their intentions?

      Did he also lie about what it would cost?

      1. Lurker Kurt|12.22.14 @ 3:21PM|#
        “Did he also lie about what it would cost?”

        He lied about how the costs were budgeted so it appeared as if it was going to cost less.
        So, yeah, he lied about ‘what it would cost’.

  13. Who could have foreseen this?

  14. Vermont can’t print its own money. The feds can.

    “Hey, Rocky! Watch me pull a rabbit outta muh hat!”

  15. Sadly, the only opposition to Vermont’s single payer plan was on the basis of cost. I cannot recall hearing any Vermont politician even suggest that such a plan is not within the sphere of proper government action and, if a way was found to actually implement it, would be a violation of the rights of every citizen in the state. Even among Republicans the resistance to it was either that it would cost too much or, believe it or not, that such a system should be at the national level rather than the state level. Not an iota of resistance based on the understanding of the principles of a government limited to just protecting the rights of the individual.
    http://wp.me/p3HNap-lO

    1. Nobody gives a shit about principles anymore except those silly libertarians. Fairness is what is important. And people having to pay for their own medical care is just plain unfair. You see, it’s a basic right. Like food, shelter, clothing, cell phones, cable television on a flat screen, internet, transportation… All those things that stupid people work for should be provided by the government. After all, the rich don’t pay their fair share as evidenced by the fact that they are rich. Make them pay for it.
      /derp

    2. We’re talking about Vermont here.

    3. It’s a start.

      Vermontcare got stopped — on the drawing board, no less — by REALITY. When Big Ideas fail basic math that early in the game, people actually do lose faith in them. The lefty-net is full of commenters today saying “Single-payer isn’t going to work, because the numbers aren’t there.”

    4. I think the opposition knew to keep quiet, sit back, and watch it fail. Something about never interfere with ypu enemy when they are in the process of destroying themselves.

  16. Vermont’s Single Payer Health Care Plan Failed For One Big Reason: It Cost Too Much

    Lies, it was murdered by the Kochtopus and rethuglicans!11!1

  17. The funny thing is that the cost estimates were probably WAY over-optimistic, and they still couldn’t figure out how to make this work.

    In (tepid) defense of the Vermont plan, it was never going to work given how much a role the federal government already plays in health care. 45% of the public gets its health insurance from employers and another 25% are on a government plan of some sort (medicare/caid, veterans bennies). That’s 70% of the public who are already getting insurance through other costs- taxes or as a part of their salary. Do you think out-of-state employers are going to give employees a bump in salary to pay for Vermont’s healthcare? Of course not.

    The left and the right should take this as an opportunity to work together to get the Federal Government out of health insurance. They need to end the tax advantages of Employer Sponsored health care and allocate federal health-spending to the states.

    Only once that is done can states experiment with how consumers- taking home more salary- and Med- funds can be allocated. I am confident that a mostly private system using Health Savings Accounts and catastrophic insurance is the most efficient since it will make people price sensitive again. However, waiting on something at the federal level is likely to be a forever wait.

    1. The cost estimates came from known liar, Jonathan Gruber. That should tell you all you need to know about them.

  18. High speed rail is the solution. Don’t ask me how; I just know it.

    1. Haha. I’d like to see you in a debate with that “The Rent Is Too Damn High” candidate.

  19. Worth noting that the projected cost (which undoubtedly a fraction of what it would actually cost) is about $4,000 per resident.

    If you apply that to the country as a whole, which has demographics that would be far more costly than Vermont’s relatively healthy demographic profile, you’re looking at $1.5 trillion annually.

    1. It would be interesting to see if they factored in the increased demand for healthcare once it is “free.” Germans apparently visit the doctor more than 5 times a year, while Americans visit 3 times. I doubt Germans are any sicker, but with the U.S. paying most of their military budget, they can afford a more generous health plan. Vermont would not be the only state bankrupted if people started visiting doctors 2/3 more often at the taxpayers’ expense.

      1. German doctors earn far less per patient visit than do American doctors. On the other hand a German doctor likely had his or her educational costs paid for by the German government. US doctors often end up with student loans of $250,000. Figure in interest on the loan and you can see the big financial burden that a doctor starts out with. Plus due to our system of private health insurance along with Medicare and Medicaid, the US doctor has to hire professional medical billers whose salaries and benefits have to come from what people are charged to see the doctor. Add to this malpractice insurance and you start to see why US doctors have “overheads” far larger than those in other countries.

        What you are paying for health care isn’t all going to the medical provider. Probably 1/2 of it is going to pay off educational debt, staff salaries, malpractice insurance, etc.

      2. creech|12.22.14 @ 3:07PM|#
        …”I doubt Germans are any sicker, but with the U.S. paying most of their military budget, they can afford a more generous health plan.”…

        I have a feeling this is also the reason French street cleaners can take an hour or so to clean one block!
        We (the US taxpayers) support them!

  20. If you want to find out how expensive something can get, give it away “free”.

  21. Of course it’s going to cost too much if a single state does it.

    Single payer health care systems lower costs to the degree that they can act as a monopsony, giving them almost complete control of the costs, and to the degree that they can engage in rationing. Basically, the government has to be able to stick it to doctors, telling them “here’s the price you’re going to take, here’s the patients we’ll allow to have it, and anyone doesn’t like it, they can go screw themselves.”

    Vermont alone can’t do any of these things. They’re not very popular, and the degree to which they attempted it, doctors would flee to other states.

    Therefore, universal healthcare advocates will conclude that the obvious answer is to screw doctors in a federal system. That way, sure, you can leave, if you like moving your family to another country. Otherwise, enjoy taking what we’ll dictate you can have and waiting in line for it, or pay out of pocket, with whatever money we let you have left after we take care of everyone.

    It’s really all quite glorious, if you don’t mind screwing people.

  22. One result of Vermont’s single payer system was that everyone in the state could obtain health care at affordable prices. Thus, the huge influx of new patients could bode not so well due to the system’s “cart before the horse” implementation:

    “People respond to incentives, although not necessarily in ways that are predictable or manifest. Therefore, one of the most powerful laws in the universe is the law of unintended consequences.” -From the book “SuperFreakonomics”

    Hint:

    “Chelsea Byers of Flagstaff is insured for the first time in her life through Healthcare.gov and couldn’t be more pleased. She might even go skiing for the first time, now that any injuries from an accident would be covered.” -Arizona Daily Sun, January 21, 2014 – http://azdailysun.com/news/loc…..f887a.html

    That in mind, see:

    “Will Obamacare make a bad situation worse?” http://relevantmatters.wordpre…..ion-worse/

  23. I read Sarah Kliff’s article and I found this, utterly shocking, phrase:

    Some countries, like Canada, own the health insurance plan but contract with private hospitals and doctors. They pay claims in the same way American health insurers do. Others, like the United Kingdom, own the health-care providers themselves.

    That she would use that language speaks volumes about our “ruling class”.

    Atlas Shrugged was supposed to be a warning, Not A Newspaper!

  24. I’m guessing that the real problem is that Vermont does not have the ultra wealthy class to tax. Vermont is some sort of cheese making town, and the weather at this time is terrible in New England. The rich and the immigrants, the two groups in America that count, have no reasons to move there.

  25. They got Grubered.

  26. Start working at home with Google! It’s by-far the best job I’ve had. Last Wednesday I got a brand new BMW since getting a check for $6474 this – 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, go to tech tab for work detail

    ———————- http://www.paygazette.com

  27. just before I saw the receipt which said $5461 , I didnt believe …that…my mom in-law woz like they say actually bringing in money in their spare time at there labtop. . there sisters roommate has been doing this 4 only about twenty months and by now paid the mortgage on there house and purchased themselves a Audi Quattro . this link………..www.netjob70.com

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