Single Payer In Colorado? Learn From Vermont

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Colorado took a brave, or perhaps foolish depending on your perspective, leap forward by legalizing recreational marijuana a few years ago. For the state’s encore, it may take a stab at a single-payer healthcare plan. Proponents of ColoradoCare collected 156,000 signatures, well in excess of what’s needed to create a ballot initiative for November 2016.

Such a plan would replace not only the Obamacare exchanges, but also commercial insurance, Medicare, and Medicaid. Everything would be wrapped into one state-run insurance plan. Proponents say it won’t be “government-run healthcare” but instead administered by an elected 21-member board. How exactly is an elected insurance board member different from an elected government official?

Money would be saved by “cutting down administrative costs.” Isn’t that what we are always told. But how would it be paid for? That’s easy, “With a 10 percent ‘premium tax’ on payrolls or other income.” So what would ColoradoCare cost? Almost $25 billion annually, the same as the current state budget. Since healthcare costs are already part of the existing budget, ColoradoCare wouldn’t exactly double the budget, but would come close. Hence the need for an additional 10 percent payroll “premium” tax, two thirds paid by the employer, one third paid by the employee. This is on top of existing federal and state taxes. Rocky Mountain high taxes.

So in exchange for a mega tax hike, would Colorado residents all receive free healthcare? Not quite. “ColoradoCare would have no deductibles or co-pays on primary and preventive care, though co-pays would remain on other services and prescriptions.” Big deal. We already have this. “Obamacare includes preventive care at no out-of-pocket cost on most health plans.” So what’s the difference? On the surface it’s a big tax hike with healthcare as usual for most Coloradans. A true single payer national healthcare plan, as in New Zealand for example, is free to all residents, meaning zero out of pocket expenses for patients.

Kudos to Colorado for thinking outside the box, but can history be a guide to avoid repeating the mistakes of other states? Single-payer was tried in Vermont, and didn’t even get off the ground. About a year ago, Vermont Governor Peter Shumlin declared, “now is not the right time” for single-payer. Wonder why? Vermont would be the perfect state for such an experiment in socialism. A solid blue state, with Democrats running the state and representing its interests in Congress, Vermont is also home to presidential candidate and declared socialist Bernie Sanders. An ideal state for this grand experiment in healthcare reform. Yet it crashed before even reaching the runway.

Turns out the Vermont plan had some commonalities with the Colorado plan, such as an 11.5 percent payroll tax and a 9.5 percent hike in income tax for the state’s higher earners. For the Vermont plan, “All told the price tag for a single-payer system was now estimated to be $2.6 billion in a state with revenues totaling about $2 billion a year.” Vermont had the wisdom to realize that doubling the state budget and raising taxes through the roof was not going to work. Residents and businesses vote with their feet. Why not live or work next door in New Hampshire where taxes are lower?

Yet Colorado wants to try a similar grand experiment, the “proposed $25 billion a year in premium taxes — roughly the size of the entire state budget — is an expensive gamble on something no other state has tried successfully.” And what if that’s still not enough? Does anyone honestly believe that ColoradoCare will operate on budget?

Look at Medicare. “President Lyndon B. Johnson promised that Medicare would cost about $500 million a year.” Now it’s close to $500 billion a year, a thousand-fold increase. But fear not. The ColoradoCare “commission will have the authority to raise the 10 percent premium as high as it needs to cover costs.” Meaning hold on to your wallet.

The only alternative to upward spiraling costs is to ration care. Observe the UK’s NHS to see how their single-payer system is working. Or else cut reimbursement to physicians to the point that many quit medicine or leave the state. Think it’s hard to find a physician now, just wait.

There is no argument that our healthcare system is costly and inefficient. Colorado currently has a commission addressing these issues. Thoughtful analysis is welcome; turning the entire system upside down is not. Ultimately the voters will decide, at the same time they choose our next president. Bad choices on both fronts have consequences. If things go south for Colorado, at least weed is readily available.

Brian C Joondeph, MD, MPS, a Denver based retina surgeon and writer. Follow him on Facebook  and Twitter.