Any public health financing program has a couple of major moving parts that must be resolved in order for the program to work.
a) Who gets covered and how is eligibility determined?
b) Who provides the services and how/how much are they paid.
c) How does the money for A and B get raised?
The Veterans Administration determines that vets with service related injuries are covered for all relevant medical services by providers employed by the VA at VA owned facilities and the funds are raised by general taxation.
CHIP covers kids whose families make under certain thresholds to receive subsidies, or any kid at full price. Services are provided by the private sector and they are paid at near commercial rates. Funds are raised through cigarette taxes and general taxation.
Medicare covers people over 65 or the long term disabled. Services are rendered by private providers on a fee for service basis (usually) at rates that are based on roughly the average cost of services. There are three funding streams. The first is FICA taxation. The second is Part A and B premiums paid by recipients of Medicare, and the third is a series of deductibles and co-pays for services.
PPACA Exchanges have services rendered by privately employed providers on a variety of fee structures ranging from roughly Medicare to roughly commercial. People are eligible for subsidies if they make more than 100% but less than 400% of FPL, and anyone can buy an off-exchange policy. The services are paid for by a reduction in Medicare Advantage payments, increased income taxes, user premiums, and c0st-sharing.
So how does the Vermont single payer program answer these questions?
Single payer in Vermont has answered the first question. Everyone in Vermont would be covered by virtue of residence in the state. The second question was being worked on. It looked like the plan would be similar to most of Europe where the providers are privately owned/employed. Payment details had not been worked out to a publishable degree yet, but some type of capitation or accountable care organization model with gain sharing was highly probable.
Vermont had not come up with a viable answer as to how to raise the money and this is leading to the cancellation of the single payer dream in Vermont at this time.
The Washington Post Gov Beat blog has some details:
Vermont Gov. Peter Shumlin (D) has abandoned a years-long push for a universal health-care system in the state after budget analysts said the program would require what he called “enormous” new taxes….
Michael Costa, Shumlin’s deputy director of health care reform, concluded the plan would have required an 11.5 percent payroll tax on all Vermont businesses and an income tax hike of up to 9.5 percent. Those taxes wouldn’t have covered transition costs to the new system…
The single payer advocate response to the argument that massive tax increases would be needed for single payer would be something along the lines of
“No duhhh… it is the removal of hidden and embedded healthcare costs from the books of the employers in the state to the state’s books. Of course it is a lot of money. HOWEVER, since there will now be a single purchaser of medical services in the state, bargaining power for cost and quality will lie on the buying side instead of the selling side so NET costs will be lower… It is still a good deal.”
And from most policy analytic perspectives with a broad enough scope of analysis and outcome, they are right. The net costs are either break even or significantly lower with a much stronger buyer. However, single payer and the associated taxes needed to finance it are a massive disruption to the current economic matrix. It will create wide spread pain with only a few winners who don’t have a ton of political power at the moment. Someone working for Medium Size Evil Corporation in Burlington will have lost their Platinum level employer sponsored insurance, seen a bit of a raise that is immediately eaten up by the new income taxes. It is a hard sell, and it is why single payer is an elegant policy that was never on the table of any leading Democratic coalition in 2007-2009 because the transition is an absolute bitch.