Case Studies

Vermont Single Payer Legislation

In 2011, Vermont passed a law which would have enacted a state-wide single-payer health care system. Green Mountain Care, established by the passage of H.202 (Act 48), would have guaranteed universal health care coverage to all Vermont residents. However, in 2014, Governor Peter Shumlin reversed his position and shot down the law before it could be implemented [1].

This has led to greater confusion about the single-payer health care issue, and provided a scapegoat for anti-single-payer advocates, who have characterized Vermont’s plan as an unmitigated failure, and as proof that single-payer is unaffordable, impractical and unsustainable.

Deeper analysis reveals a more complex picture. Vermont’s bill did not fail, because it was never actually implemented. So it cannot serve as an example of single-payer in action. One could argue that it was a failure because it failed to be implemented, but let’s examine the process which led to that outcome:

The bill had two parts: a framework, and a funding mechanism [2]. Vermont passed the framework in 2011, but when the funding mechanism received a separate vote in 2014, it was unilaterally struck down by Governor Peter Shumlin. In a public statement, Shumlin said, “as we completed the financing modeling in the last several days, it became clear that risk of economic shock is too high at this time to offer a plan that I can responsibly support for passage in the Legislature” [3].

Governor Shumlin offered no financial analysis to support his claim about the economics. Reporters did not follow-up for these facts and reported his version of the events uncritically. We do know, however, that all the studies done assessing Green Mountain Care’s potential economic impact -  the 2011 Harvard Study [4], the 2013 University of Massachusetts study [5], and the 2014 State of Vermont study [6] - found that the state would have saved money by implementing the program [7]. According to the 2014 report, which evaluated the most expensive version of the bill, “Green Mountain Care would yield savings of $378 million over the first five years of the program relative to current predicted trends” [6].

The first study, written by Harvard professor William Hsiao (who advised Taiwan during their transition to single-payer in the 90s), MIT professor Jonathan Gruber, and Policy Integrity principal Steven Kappel, concluded that a 14.2 percent payroll tax would have been necessary to finance GMC, with employers paying 10.6 percent and employees paying the remaining 3.6 percent. These taxes would have replaced health insurance premiums, co-pays and deductibles, yielding an estimated $100 million in savings in the first year. [8]

The Harvard group recommended delaying implementation of the bill until 2017 when State Innovation Waivers (under Section 1332 of the Patient Protection and Affordable Care Act) were to go into effect [9]. Vermont expected to win these federal waivers, but when they didn’t get them, it increased the cost of the plan. “[T]he 2013 report estimated federal contributions via the ACA waiver at $267 million,” whereas the 2014 report estimated these contributions at $106 million [10].

The 2014 study conducted by the Shumlin administration (which evaluated the most expensive version of the bill) estimated that GMC would have required an 11.5 percent payroll tax on businesses, and 9.5 percent income taxes on the highest-income Vermonters, with lower-income Vermonters paying on a sliding scale from 0 to 9.5 percent. According to the New England Journal of Medicine, “even Shumlin’s projections indicated that the plan would reduce Vermont’s overall health spending and lower costs for the 90% of Vermont families with household incomes under $150,000. Despite differing projections, all three studies showed that single payer was economically feasible.” [12]

So why the reversal?

Shumlin's narrowly-won election, combined with the Democrat's loss of their super-majority, led to a lack of motivation and hope throughout Vermont's government [15]. As such, the Democrats agreed to ALEC clause, where if Act 48 was shown to "'harm Vermont's economy' in any way", they would table the bill [15]. Although no evidence was provided to substantiate financial concern, this gave Shumlin enough power to pause the bill indefinitely [15].

So what other factors might have contributed to Governor Shumlin’s decision?

The insurance industry pushed back aggressively against GMC. Groups like the Partnership for America’s Health Care Future, Vermonters for Health Care Freedom, and Vermont’s libertarian community produced online ads, op-eds and letters to the editor, all dedicated to fighting single-payer [13]. Incidentally, the Partnership for America’s Health Care Future is a lobbying group which opposes any legislation that would lead to single-payer health care, and has been called a “dark money” organization by The American Prospect, and a “front group” for the insurance industry [14].

There will be interest-group opposition to single-payer anywhere it is implemented, but one place where it might be more likely to survive its legal challenges is in Massachusetts, where the risk of economic shock is lower. Vermont has the lowest GDP of any state in the country, while Massachusetts has one of the highest [15]. Massachusetts’ state budget for 2023 was $55.4 billion [16], whereas Vermont’s state budget was $8.4 billion [17]. Average income in Massachusetts is also higher [18]. As Linda Blumberg put it in an NPR interview about Vermont’s bill, “there are certain states that are high-income states that have a lot of private health care spending that could be shifted into the public sector already in the system, and those are the states that are most likely to be able to do something like this” [19].

A lot of people were discouraged by the failure of Vermont’s single-payer bill. But even though it was never enacted, Vermont’s bill represented the most comprehensive attempt to establish single-payer in the history of the United States. There have been attempts to move toward single-payer since at least the 1940s, but this was the closest we’ve ever gotten. In 2005, another bill was proposed in Vermont which would have led to a single-payer system, but it was vetoed by Republican governor, Jim Douglas [20]. One might have expected people in Vermont to be discouraged by this, but they weren’t. In 2011, they voted in Peter Shumlin, who ran on single-payer as his signature policy, and the second time around, they got a little further. Many political movements follow a similar trajectory of ever-closer failures on the pathway to success. The political will to enact it is there, and it’s increasing. It may take multiple tries, but if single-payer does pass at the state level, it is very likely to spread across the country. Massachusetts would be a good testing ground.

Summary Provided By Jackson Diianni and Kate Bigbee

[1] Eight Years After Shumlin’s Crushing Reversal, Single Payer Health Care Movement Presses On

[2] Why Single Payer Died in Vermont

[3] Shumlin: It’s ‘Not the Right Time’ For Single Payer

[4] Act 128 – Health System Reform Design

[5] Vermont UMass & Wakely Consulting 2013

[6] Vermont Agency of Administration 2014

[7] The Rise and Fall of Vermont’s Single-Payer Plan

[8] What Other States Can Learn from Vermont’s Bold Experiment: Embracing a Single-Payer Health Care Financing System

[9] Section 1332: State Innovation Waivers

[10] Vermont Agency of Administration 2014

[11] Vermont Agency of Administration 2014

[12] The Demise of Vermont’s Single-Payer Plan

[13] Single Payer Health Care Did Not Fail in Vermont

[14] Top Democratic Consultants Working for Anti-Medicare For All Campaign

[15] GDP By State

[16] MassBudget’s Look at the Governor’s Budget

[17] Vermont Gov. Scott Criticizes Legislature’s Budget Proposal

[18] Average Income by State 2023

[19] Why Bernie Sanders Single Payer Health Care Plan Failed in Vermont

[20] Bernie Sanders Wants the Single-Payer Health Care Plan His Own State Rejected system.html