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Avik Roy: 6 Reasons Why Vermont’s Single-Payer Health Plan Was Doomed From The Start December 22, 2014 , , ,

Forbes, By Avik Roy

Last week, Vermont Governor Peter Shumlin (D.) announced that he was pulling the plug on his four-year quest to impose single-payer, government-run health care on the residents of his state. “In my judgment,” said Shumlin at a press conference, “the potential economic disruption and risks would be too great to small businesses, working families, and the state’s economy.” The key reasons for Shumlin’s reversal are important to understand. They explain why the dream of single-payer health care in the U.S. is dead for the foreseeable future—but also why Obamacare will be difficult to repeal.

Leading left-wing economists worked on Vermont plan

Shumlin’s predecessor in Montpelier was a Republican, Jim Douglas. In 2009, Douglas announced that he would not be seeking a fifth two-year term; five Democrats joined the contest to replace him. Progressive activists demanded that each candidate promise to enact single-payer health care if nominated; all five complied. Shumlin got the nod, and assumed office in January 2011.

Shumlin got right to work. In Feburary 2011, a trio of health economists, including Harvard’s William Hsiao and MIT’s Jonathan Gruber, sent Vermont a 203-page report describing the feasibility, and the alleged virtues, of single-payer in the state. Gruber signed a $400,000 contract to work with Vermont on the project.

Hsiao has spent a good chunk of his career helping governments install single-payer systems; for example, he helped the Taiwanese government install “Medicare for all” in 1995. He’s also responsible for Medicare’s Byzantine price-control scheme known as the Resource-Based Relative Value System, or RBRVS.

Hsiao and Gruber promised that single-payer health care in Vermont could save $1.6 billion over ten years. With that endorsement in hand, Shumlin and the legislature passed Act 48, a law instructing the state to figure out how to finance a single-payer system. They dubbed it Green Mountain Care. “If Vermont gets single-payer health care right, which I believe we will, other states will follow,” pronounced Shumlin. “If we screw it up, it will set back this effort for a long time. So I know we have a tremendous amount of responsibility, not only to Vermonters.”

Spoiler alert: they screwed it up. But think of it like one of those murder mysteries where the victim gets shot in the first scene; the real story lies in what led to the poor slob’s demise.

Gruber you know; at a hearing to discuss the Vermont report, the Obamacare architect was confronted by a letter from a former state senator, who argued that “any Hsiao-Gruber type health care mega-system will inevitably lead to coercive mandates, ballooning costs, increased taxes, bureaucratic outrages, shabby facilities, disgruntled providers, long waiting lines, lower quality care, special interest nest-feathering, and destructive wage and price controls.” In response, Gruber wisecracked: “Was this written by my adolescent children by any chance?”

Continued…