Let's be honest about the overall cost of health care

Rob Roper

by Rob Roper

It’s important to repeat the message articulated in the January 23 Burlington Free Press editorial regarding a single payer health care system, “The key is for the governor to show how any plan sticks to his campaign promise to reject any single payer plan that will increase the cost of health care for Vermonters, especially those who are already paying their fair share.”

Indeed, the fundamental parameter Dr. Hsiao had to adhere to in formulating his plans was, “There must be no increase in overall health spending….” As he said in his presentation to the legislature, “In our stakeholder analysis, we heard from every group – business, labor union, grassroots, public – they all say we are spending enough for heath care. It’s taking away our spending for education, for environment, for creating jobs, or just to enjoy other parts of living.”

Whether this money leaves are pockets from taxes, cost shifts, private purchases, or anyplace else, it doesn’t matter. Overall, the number has to be reduced.

That number is roughly $5 billion, which includes all money spent on heath care by Vermonters – public money, private money, state and federal money, all of it. This number forms the baseline by which future savings are calculated under the single payer plan.

However – and this is a huge problem — the “savings” estimated in the Hsiao report do not rely on a similarly comprehensive accounting of post-single-payer health care costs. Either omitted or forgotten is the cost of supplemental insurance Vermonters will have to buy if a single payer system is adopted, and this could be a considerable amount of money.

The Hsiao’s plan would provide all Vermonters with an “essential care” package (as opposed to a “comprehensive” package found to be too expensive) which is based on the average of what all Vermonters receive for coverage today. In other words, anyone who receives better than average coverage under their present insurance will have worse coverage moving forward under single payer. This hit lands hardest on people who are already paying their fair share.

Hsiao recognizes that these folks probably won’t be satisfied with an “essential” benefits package that does not offer comprehensive dental or vision care, offers no coverage of nursing home or home health care, requires higher cost sharing for specialty services, surgical procedures, brand name drugs and high-technology tests. Therefore, he specifically allows in his plan for Vermonters to purchase of private, supplemental, “wrap around” insurance policies.

In practice, anyone who wants to maintain or achieve a “comprehensive” level of health care coverage will have to pay additionally out of pocket to do so. Naturally, when they do it will in reality (and should on paper as well) add to the “overall” amount of money Vermonters spend on health care – and this is the number this reform effort is supposed to reduce.

If the amount Vermonters feel compelled to spend on supplemental policies meets or exceeds level of “savings” the plan currently predicts, we’re not really saving anything at all under a single payer system. In fact, using an apples to apples comparison of what Vermonters spend in total before single payer to the amount spent in total after single payer health care, we could find ourselves spending significantly more for health care under a single payer system.

As our representatives turn the Hsiao report into legislation, they need to be honest enough to establish an estimate of how much supplemental insurance Vermonters will have to buy under single payer and at what cost. They need to include this amount in their calculations, and formulate a plan that reduces the true overall amount Vermonters spend on health care.

If they don’t, and if Governor Shumlin is as good as his word, it will be incumbent upon him to reject any such single payer legislation that lands on his desk.