Vermont passes health insurance exchange, pushes forward on single payer

Vermont Governor Peter Shumlin has signed a new health care bill into law that will create a health insurance exchange and continue the state’s push toward a single payer health system. Several hundred million dollars in federal subsidies will be available to make the policies more affordable. The bill follows another which set up a statewide managed care partnership.

Shumlin has made health care a key part of his economic development strategy. He is working to decouple health care from employment in his state by encouraging residents to use federal subsidies provided under federal health care reform legislation to purchase their own insurance when the bill goes into effect in 2014.

Shumlin is pushing for this in order to drive his state toward single payer health care, which requires a single pool of potential policyholders. The US Supreme Court heard a challenge to the federal bill brought by 26 states earlier this year and is expected to issue a final ruling in the coming months. State officials admit it will be harder to implement single payer in Vermont without subsidies provided through federal health reform as it stands now.

The state wants to be on a full single payer system by 2017, three years after federal health care reform insurance rules come into effect. The move to single payer would be heavily reliant on federal rules such as rate affordability/premium allocation requirements and the prohibition on excluding individuals with pre-existing conditions under current rules. Federal rules also include an individual mandate requiring individuals to purchase health insurance or pay a fine.

The individual mandate is a key part of the Supreme Court challenge brought by states who say the federal government is reaching too far into areas that states typically manage. If the Court sides with the states, Vermont will face an uphill battle in creating the single pool required for single payer. Governor Shumlin has not yet offered an alternative plan if the ruling goes with the states.

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