By Amy Goldstein
April 29 at 10:09 AM - The Washington Post
Three and a half years after then-Gov. Peter Shumlin of Vermont signed into law a vision for the nation’s first single-payer health system, his small team was still struggling to find a way to pay for it. With a deadline bearing down, they worked through a frozen, mid-December weekend, trying one computer model Friday night, another Saturday night, yet another Sunday morning.
If they kept going, the governor asked his exhausted team on Monday, could they arrive at a tax plan that would be politically palatable? No, they told him. They could not.
Two days later, on Dec. 17, 2014, Shumlin, a Democrat who had swept into office promising a health-care system that left no one uninsured, announced he was giving up, lamenting the decision as “the greatest disappointment of my political life so far.”
The trajectory of Green Mountain Care, as Vermont’s health system was to be known — from the euphoric spring of 2011 to its crash landing in late 2014 — offers sobering lessons for the current crop of Democrats running for president, including Vermont’s own Sen. Bernie Sanders (I), most of whom embrace Medicare-for-all or other aspirations for universal insurance coverage.
Vermont’s foray into publicly financed health care — in a state that in many ways offered the optimal conditions — demonstrates the extraordinary difficulty of trying to convert liberals’ dream of a more just, efficient health system into reality.
Then as now, many of the advocates shared “a belief that borders on the theological” that such a system would save money, as one analyst put it — even though no one knew what it would cost when it passed in Vermont.
That belief would prove naive. The choices Shumlin favored would essentially have doubled Vermont’s budget, raising state income taxes by up to 9.5 percent and placing an 11.5 percent payroll tax on all employers — a burden Shumlin said would pose “a risk of economic shock” — even though Vermonters would no longer pay for private health plans.
The dozens of decisions the governor’s team made in designing the system — what benefits to include, whom to cover and the amount of out-of-pocket costs — required trade-offs with big winners and losers.
Other things got in the way, too, according to nearly a dozen and a half actors and observers in the fight for Green Mountain Care interviewed for this report. Vermont’s leaders were too optimistic about the financial help they could lure from Washington. They were late in writing the financing plan, losing political momentum in the process.
Far and away the biggest hurdles, though, were untamed health-care costs, which were growing faster than the U.S. economy and making care increasingly unaffordable no matter how it was paid for.
“What I learned the hard way,” Shumlin said, “is it isn’t just about reforming the broken payment system. Public financing will not work until you get costs under control.”
Those building a national single-payer model would confront many of those same dilemmas. But as the 2020 campaigns get underway, few Democrats show signs of acknowledging, let alone wrestling with, the gritty complexities. Even Sanders, eager as he was for Vermont to become the first single-payer state, seldom mentions that it did not come to pass.
“I see no evidence from the Medicare-for-all advocacy community of a serious effort to understand and learn from the lessons from Vermont’s failure,” said John McDonough, a was a senior aide to Sen. Edward M. Kennedy (D-Mass.) and is now a professor at the Harvard T.H. Chan School of Public Health. “Those who ignore history are cursed to repeat it.”
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If any state offered fertile terrain to create a single-payer version of universal health care, Vermont was it.
It has some of the nation’s healthiest residents, with some of the lowest rates of uninsured. It is small and homogeneous. It shares a border with Canada, putting an existing single-payer system within sight. And it has just one main insurer, the nonprofit Blue Cross Blue Shield of Vermont, repeatedly ranked the most efficient Blue Cross Blue Shield plan in the nation.
In a bastion of liberal politics, state lawmakers had flirted with single-payer plans as early as the 1990s. But the grass-roots crusade really took off on May Day of 2009, when more than 1,000 people, toting red signs saying “Healthcare is a Human Right,” gathered at the gold-domed statehouse for the largest weekday rally at the capitol in Vermont history.
In a state with two-year governor terms, 2010 was an election year, and Shumlin, then the state Senate leader, was running in a crowded Democratic primary field.
“His first TV ad was for single-payer,” recalled James Haslam, then-executive director of the Vermont Workers’ Center, which organized rallies.
After Shumlin won the governorship, he laid out a bill for Green Mountain Care on the first day of the next legislative session, quickly followed by a Harvard consultant’s estimates, commissioned a year earlier, that such a plan would lower total health spending, eliminate health-care fraud and abuse, and cover more people. The consultant “was doing a 36,000-foot view, not ‘we are landing the plane,’ ” Shumlin recalled. “No one in their right mind was relying on those numbers.”
As liberals still contend, Shumlin said the newly enacted Affordable Care Act signed by President Barack Obama “wouldn’t take us far enough,” recalled a former legislative leader who spoke on the condition of anonymity to avoid a professional conflict.
Early that May, the legislation, called Act 48, passed the state Senate, 21 to 9. Two days later, it passed the state House, 94 to 49.
Under a brilliant spring sky later that month, Shumlin signed the bill at a wooden table on the statehouse steps, surrounded by cheering legislators and activists. People wept, recalled Peter Sterling, a leading advocate at the time: “You couldn’t believe the day had come.”
A few noted the idea would be divisive.
“We all have to be ready to fight the fight that surely will be coming,” John Campbell (D), who succeeded Shumlin as the Senate’s president pro tem, told the crowd.
Still, the governor sounded resolute. The law was “an opportunity and an obligation,” he said. “We will get this done in Vermont.”
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As with any attempt to dismantle one American health-care system and replace it with another, Green Mountain Care was always going to be a long game. For starters, it would not be until 2017 that any state could get federal permission to change the way it used insurance subsidies created under the ACA.
Shumlin and a top aide traveled to Washington to cajole the Treasury Department and the Department of Health and Human Services to allow Vermont to start sooner. They argued the state should be able to take the tax advantages available to employers that offer health benefits and count that money toward public financing.
The requests were rejected because they were premature or not allowed under what the federal health-care law and tax law permitted, recalled Jason Levitis, a Treasury Department official at the time specializing in the ACA.
Act 48 was 141 pages — far more specific than any plans from Democrats now running for president or Senate legislation Sanders recently reintroduced. Still, it left scores of knotty decisions for Shumlin’s administration.
“It’s easy to write a bill saying we are going to cover everybody,” said a member of his staff who worked on the plan and spoke on the condition of anonymity to avoid a professional conflict. “It’s much harder to figure out . . . what exactly your benefit coverage will be [and] are you going to have co-payments.”
On the fifth floor of the Pavilion, the governor’s office building, the small team of Shumlin’s staffers divided the tasks. Under the law, the deadline to present a financing plan to state lawmakers was January 2013 — just as the state was creating the machinery for its ACA insurance marketplace.
“Its political timing couldn’t be worse,” Shumlin recalled. Like a number of states that created their own insurance exchanges, Vermont’s online marketplace malfunctioned. “Voters were saying, ‘If this guy can’t get an exchange running, how could we trust him to revamp our entire health-care system?’ ” Shumlin said.
It was nearly two years after he had signed the bill when Shumlin assigned a tax specialist to begin developing Green Mountain Care’s financing.
By then, the governor had been under intense pressure on other decisions. Single-payer advocates and unions pressed hard for generous benefits. In a state with workers coming in from Massachusetts, New Hampshire and New York, some employers argued that their out-of-staters needed to be included.
In the end, Shumlin agreed that businesses should not need to exclude part of their workforce from the system and that it would be unfair to offer benefits less than public employees already had. The plan would have covered, on average, 94 percent of Vermonters’ health-care costs.
Meanwhile, small businesses that did not offer health benefits, such as Vermont’s “creemee stands” selling soft-serve ice cream, feared the specter of higher taxes, recalled Bram Kleppner, a chief executive of a pewter company who supports single-payer and was on a Shumlin business advisory council. “We never figured out the creemee stand — the notion we were going to put all these beloved little businesses run by our cousins and our neighbors out of business by imposing a payroll tax.”
And big companies that were self-insured, such as IBM, resented the prospect of being taxed more to help other Vermonters get coverage.
Consultants had said that the amount Vermonters and their employers were paying in insurance premiums and patients’ out-of-pocket costs was more than what would be needed in additional tax revenue. But the prediction that Vermont’s overall health spending would decrease, while more people got coverage, was unproven — and, in any case, was a hard sell in the face of big new taxes.
Shumlin’s team developed 14 alternative financing concepts, according to the governor’s former staffer. “The pressure on us was to see if we could get the payroll tax under double digits, which we couldn’t figure out how to do without making the income tax” on individuals too high, that staffer said.
The governor promised to announce the financing soon after the 2014 elections. With liberals fearing he was losing political will to launch Green Mountain Care, amid other controversies, Shumlin won a third term over a GOP political neophyte in a contest so close it ended up being decided by the legislature.
By then, the computer runs kept showing that the only way to set taxes at rates as low as they were striving for was to provide skimpier coverage than most insured Vermonters already had.
“As we completed the financing modeling,” Shumlin said at a news conference at which he abandoned his quest, “it became clear that the risk of economic shock is too high at this time to offer a plan I can responsibly support for passage in the legislature.”
Green Mountain Care would have cost $4.3 billion in its first year, with less funding than the state wanted from the federal government and $2.6 billion in new state tax revenue. By 2020, Shumlin’s team estimated, the cost would have swollen to $5 billion.
“We were pretty shocked at the tax rates we were going to have to charge,” he recalled.
Health-care activists delivered a platter of burned toast to his office, saying it symbolized his political future. At Shumlin’s inauguration the next month, 29 single-payer demonstrators were arrested in the House chamber, and he was escorted out a back door for his safety. Months later, he said he would not run for a fourth term.
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The day Shumlin announced that Green Mountain Care was dead, Vermont’s junior senator, Sanders, was in Iowa, testing liberals’ receptivity as he considereda first run for president. The day before, he had talked up single-payer in two appearances, news accounts show. But that day, he did not mention its demise in his state, according to the accounts and people interviewed for this report.
When Congress adopted the ACA in 2010, Sanders had fought to build in flexibility for states to try experiments, so that Vermont could become the first with a single-payer system. Later, it was two other Senate Democrats, not Sanders, who introduced an unsuccessful bill to allow such experiments sooner than 2017.
Shumlin recalled that when he made trips to federal agencies to advance his plan, “Sanders was the one who got in the car and came with me to those meetings.” Back in Vermont, though, the senator was hands-off, neither helping on the technical work nor pressing state lawmakers to support the taxes that would be needed.
Haslam, one of the leading health-care activists, said: “I’m not sure any senator would play that role in their statehouse. We were just hoping, because he’s such a champion.”
Sanders declined to be interviewed for this report. The policy director for his2020 campaign, Josh Orton, said the senator “has focused tirelessly on health-care policy at the federal level. . . . If we are going to pass Medicare-for-all, we will need a national grass-roots movement.”
To some who still bear the battle scars of Green Mountain Care, the state’s unrealized vision is a neon warning for Sanders and other disciples of single-payer health care.
“If you can’t do it in Vermont, with one private health plan and low uninsured rates, then the amount of disruption you would have nationally with winners and losers would be enormous,” said Kenneth Thorpe, an Emory University health-policy researcher who worked as a consultant to Vermont.
Advocates, however, are undeterred.
“Health care is not free,” acknowledged Deb Richter, a family physician who moved to Vermont three decades ago to crusade for single-payer. “There is no Santa Claus.” But, she argued, “there is more than enough money already floating on health care” — it just needs to be removed from the control of private insurance companies, she said.
Shumlin, who has returned to private business, has come to believe it is not that simple. In his last two years in office, he pursued innovations to drive down health-care spending, including an experiment approved by the Obama administration.
After reflecting on what he tried and failed to do, he sometimes thinks a national single-payer effort might be easier to pull off. But when he listens to the 2020 candidates, their health-care pitches strike him as shallow.
“I kind of know why,” he said. “Their job is to try to build support for an idea. I did the same thing when I ran. Listen — changing health-care systems is wonky work.”
Still, he said, “if I were running for president of the United States, I would have a team working on a plan so I don’t sell an idea to Americans that you can’t achieve. That’s the mistake I made.”