It’s old news in the United States that our level of health-care spending presents a serious threat to the country’s fiscal health. Although the rate of health-care spending growth has slowed since the economic downturn of 2008, spending continues to grow at a faster pace than the overall economy. As a result, health-care spending reached $2.5 trillion in the United States in 2009, according to the Centers for Medicare and Medicaid Services. That number represents 17.6% of the entire US economy, up from 16.6% in 2008. Diabetes contributes to this growth in spending: According to the American Diabetes Association, total direct and indirect costs of diabetes and prediabetes reached $218 billion in 2007. This number has only grown since then, with millions of new diabetes cases and growth in the cost of treatment.
Growing costs have been one motivation for health-care reforms in the United States, including last year’s controversial Patient Protection and Affordable Care Act, signed into law by President Obama. But in the name of cost control, one state plans to go further than any other in regulating the health insurance market. Late last month, the governor of Vermont, Peter Shumlin, signed a bill that will begin to build the framework for a single-payer health care system in the state. Under such a system, the government essentially acts as an insurance provider for everyone enrolled but does not actually administer care (as does, for example, the Veterans Health Administration in the United States). Examples of single-payer systems include Medicare in the United States as well as the Canadian national health insurance program (also known as Medicare).
According to a Reuters article on the Vermont law, whether a single-payer system will actually materialize in the state is still uncertain. The first step, under the law, is for the state to establish a health benefits exchange as required by the federal health-care law (where, initially, private insurance plans will be offered). The five-member board of that exchange, called Green Mountain Care, will then be charged with adopting a financing plan for a single-payer system by 2014 and ensuring that such a system would cost less, overall, than one of private insurance. There is substantial evidence that such a system could save money; according to Physicians for a National Health Program, the savings in administrative costs alone would be significant, even assuming no other cost-controlling measures, as Medicare spends about 3% on overhead compared with 14% for a typical private insurance plan.
What do you think — is Vermont wise or foolish to embark on the path toward single-payer health care? If the system is implemented as planned, could other states learn from Vermont’s experience? If such a system is shown to control costs and deliver quality care, should the federal government extend Medicare to everyone — or should states be left to adopt whatever system they see fit? Leave a comment below!