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Vermont prepares for all-payer health system

Written by Diane Archer

Democratic Governor of Vermont, Peter Shumlin, and Republican Governor-elect of Vermont, Phil Scott, both support all-payer rate setting in Vermont. And, unless the Trump administration undoes approvals from the Centers for Medicare and Medicaid Services, CMS, Vermont will be the first state to implement an all-payer health system in decades. With an all-payer system, every insurer pays the same rate for a particular service or bundle of services.

Back in the early 1980s, 12 states had some form of all-payer system. But, New Hampshire is the only one of those states remaining with an all-payer system, and it’s only for hospital services.

Like a single-payer system, an all-payer system ensures that providers in a given community all receive the same rate for the same doctor and hospital services but allows for multiple payers or health insurers. These insurers generally band together to negotiate the fixed rate they all pay. Under a single-payer model, like traditional Medicare, the government is the sole insurer and sets the rate. These egalitarian approaches to paying for health care, all-payer and single-payer–are supported by a substantial majority of the population.

According to health economist, Uwe Reinhardt, we need an all-payer system to “get a handle on health care costs,” and rein in health care spending. Hospitals would lose their monopoly leverage to drive prices up.

Governor Shumlin supports an all-payer system that allows Vermont to move away from a fee-for-service system that pays for each service delivered. Vermont’s all-payer system, as envisioned, would pay based on health outcomes and promote preventive services. That said, the jury’s still out on whether value-based insurance design, sometimes called a pay-for-performance model, will improve health outcomes for people or simply steer them to low-cost providers who may or may not deliver good care.

Vermont’s all-payer system will pay doctors a monthly rate to care for people with particular conditions and additional money when their patients’ health outcomes are good.

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