Obamacare is radical? Vermont thinks even bigger, with single-payer plan.

When Dr. Alan Binnick decided to retire after 34 years, he tried for more than a year to find someone to take over his dermatology practice in the southwestern Vermont town of Bennington – free of charge.

Last November, he gave up, saying his search failed in no small part because of Vermont’s health-care reform effort, perhaps the most radical in the United States.

“There’s a sense of uncertainty that made (potential doctors) choose other positions elsewhere, where they know they’re in demand,” Dr. Binnick says.

Tiny, quirky Vermont is at it again, tackling pressing social concerns with a progressive vengeance. This time, it’s health care, and if all goes well, by 2017 or even earlier, the state of 626,000 plans to become the first in the country to adopt a single-payer system. But there’s serious uncertainty about what it will look like, and how it will be paid for.

“It’s one model for solving the health-care problem, and it’s quite different from what the rest of the country is heading toward,” says Elliott S. Fisher, director of the Center for Population Health at the Dartmouth Institute in Hanover, N.H. “I think it’ll have tremendous significance.”

The Supreme Court’s June 28 decision cleared the way for President Obama’s Affordable Care Act, with some provisions kicking in as early as next year. The act drew much of its framework from the landmark 2006 Massachusetts law that for the first time mandated that all residents have health insurance.

Last year, the Green Mountain State one-upped the Bay State when its Democratic-controlled legislature passed “An Act Relating to a Universal and Unified Health System,” laying out a roadmap for a single-payer system.

Such systems have been used in other countries – Canada, notably – but in Vermont, the idea is that everyone would be insured through a state-funded pool called Green Mountain Care. A five-member agency called the Green Mountain Care Board ultimately would all but govern the health-care delivery system, including setting rates for everyone from primary-care physicians to cardiologists and for everything from broken bones to open-heart surgery. For now, employers with self-insured plans – such as IBM, a major employer in Vermont – would be able to keep their current coverage.

The Vermont program would cost between $8.2 billion and $9.5 billion a year by 2020, according to a report released in November by the Legislative Joint Fiscal Office and the state Dept. of Banking, Insurance, Securities, and Health Care Administration. That compares with the estimate for what the existing system would end up costing by 2020: $10 billion.

State health-care spending currently stands at $4.7 billion as of 2009, or about $7,460 per capita. That compares with about $7,681 per capita in health spending nationwide.

Backers, including Gov. Peter Shumlin and most Democrats, say single-payer care will hold down costs by changing the way doctors or hospitals are paid, and simplify the entire system of medical billing.

A report by William C. Hsiao, an economist at the Harvard School of Public Health who consulted for the Vermont Legislature, estimates it would create 3,800 jobs, result in annual savings of 25.3 percent, cut employer and household spending by $200 million, and boost the state's overall economic output by $100 million.

That’s little consolation to a growing number of skeptics like Jeff Wennberg, a former Republican mayor and state environmental commissioner who now runs a nonprofit group called Vermonters for Health Care Freedom. Mr. Wennberg argues that lawmakers have rushed through the legislation without considering the potential fallout, or even how to finance it.

“It’s a stem-to-stern, top-to-bottom takeover of the insurance market. They’re blowing up the entire system,” he says. “You want to set up a practice? The Green Mountain Care Board will control it, will control all compensation, whether you can work in town A or town B, the number of procedures you will be allowed to perform. It’s crazy.”

Many critics insist single-payer systems end up rationing care, letting government officials make medical decisions rather than doctors. They argue that Vermont’s existing shortage of physicians will be only worsened as payments to doctors are capped, and as the state’s aging population gets even older and needs even more care.

“We’ve married ourselves to the single-payer model without looking at other models that might be doing the same thing,” says Rutland dermatologist Dan McCauliffe, an outspoken critic. “There’s better ways of getting universal access. Universal access does not have to follow from single-payer.”

Many of the details are still being worked out, most importantly how it will be paid for. By January, the Shumlin administration is supposed to submit a financing plan to the legislature. Last week a top administration official quashed a 14.2 percent payroll tax proposed by the Hsaio report, and said it was unlikely a plan would be ready by the deadline.

In an interview, Governor Shumlin says a mix of payroll taxes and other revenues, including federal, will help fund the system, which he wants in place even earlier— by 2016.

“You will be eligible for the Green Mountain health-care system by virtue of your residency, no mandate needed,” he says. “Your health care will be paid for by all, by a publicly funded system.

“Instead of someone paying a $1.50 for a dollar’s work and another person paying nothing for a dollar’s work, we will have a fair, equitable payment plan,” he adds. “Most importantly we will spend less money on health care for better outcomes. Financing is the easiest part. We won’t push ‘send’ on the public financing until we’ve designed a system that costs less than they otherwise would have paid for better outcomes.”

But while lawmakers and regulators hammer out the details of the new system, the uncertainty over the outcome could make Vermont a less desirable destination for young doctors.

“What makes physicians nervous is uncertainty, and who wants to, you know, take their family and start their career someplace where you aren’t going to be in a stable environment,” says John R. Brumsted, CEO of Fletcher Allen Health Care in Burlington, the state’s largest medical provider. “To the extent that there’s uncertainty about what will happen in Vermont or anywhere else, that makes physicians nervous.”

The uncertainty has kept the Vermont Medical Society, which represents about two-thirds of all practicing physicians in the state, from taking a position. It’s not a sure thing that Vermont will be able to get the necessary waivers from the federal government, says Executive Vice President Paul Harrington. Coming up with new taxes to fund the system might also be a hard sell in a different political climate.

“If I were to state with a high degree of confidence that something would happen, something contingent on Congress passing necessary legislation, well, let’s just say that I’d like to have the other side of that bet,” Mr. Harrington says.

Under the Affordable Care Act, a state-run health insurance exchange is supposed to be up and running by 2014, letting Vermonters shop for policies. Federal subsidies are supposed to help middle-income families afford policies, but people will be barred from buying policies privately, outside of the health exchange, which will dramatically affect the state’s three main insurers.  

“This legislation would reduce patients’ access to health plans’ innovative programs and services that they rely on today, and will put Vermont taxpayers on the hook for the soaring cost of medical care,” says Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, an industry trade group.

As with many things in Vermont, it seems unlikely that the single-payer experiment, if it even goes through, will be replicated elsewhere. The size and homogeneity of its population, its left-leaning politics and the general confidence most Vermonters have of local and state governments differs markedly from many other states.

Even Dr. Binnick, despite his failure to pass off his practice, says he supports the Vermont program. And he’d go even further.

“Ideally, what we’d have is single-payer universal care for the entire country,” he says, “a national health-care system.”