Commentary: Health Care Reform with a Price Tag that Won’t Make You Sick

By Rob RoperRob Roper

On July 12, Vermonters received some news about our state’s efforts to help improve our healthcare system startling enough to cause some heart attacks. BerryDunn, an independent consulting firm, provided an assessment of Vermont Health Connect, the “exchange” being set up in accordance with the Affordable Care Act (Obamacare), but which Vermont is using as a launching pad for a state single payer system in 2017.

Vermont has already spent $168 million in state and federal money in setting up this “exchange,” described by proponents as something akin to Travelocity-like website for health insurance. We will spend more than $427 million on just the I.T. systems alone over the next five years — that’s nearly half a billion dollars.

Keep in mind that this is only what’s required to build the exchange. The cost of maintaining the website once it’s finished is estimated at $18 million per year, and none of this accounts for the cost of providing actual human beings with actual healthcare. Moving to a full, single payer system will require somewhere between $1.6 and $3 billion (that’s with a “b”) in new taxes to fund what will be a $5 billion plus government run program.

Vermont Health Connect is already behind schedule as well as over budget. With an October deadline looming, “The scope of work being done under this contract has not been fully defined,” BerryDunn reports. And, despite many promises of lower costs through this reform process, these efforts will “… not result in a tangible positive benefit in the first five (or 10) years after development.” Meanwhile, more than 100,000 confusedVermonters are about to be forced by law into buying insurance through an exchange that as of now doesn’t exist.

So, remind me again why we’re putting ourselves through all this agony and expense?

The problems Vermont needs to solve are, 1) some 6% of the state’s population doesn’t have health insurance, and we would like to see these folks have access to decent healthcare. 2) For those who do have health insurance, the cost of that insurance has been ballooning at what everyone agrees is as an unsustainable pace, due in great part to the “cost shifting” of publicly provided care onto the premiums of the privately insured. And, 3) Vermont is losing doctors, either because they are leaving Vermont or retiring from practice rather than deal with our current direction of “reform.”

There’s got to be a better solution, and there is.

Dr. Alieta Eck, who is currently running for the U.S. Senate in New Jersey, has proposed and piloted in her own community an elegantly simple plan that has the potential to solve all of Vermont’s healthcare/health insurance problems in one swoop. The idea, in a nutshell, is an arrangement between doctors and the state wherein the doctors will provide a certain number of hours of free care for the poor in exchange for the state assuming the malpractice liability of the doctors’ private practice.

As Dr. Eck explains, “The Federal Tort Claims Act of 1996 provides free medical malpractice coverage for professionals who volunteer at any free clinic.” Her idea is to simply expand this concept at the state level to a doctor’s full practice.

At the Zarephath Health Center, which Eck helped to found in 2003, volunteer physicians and nurses provide care to the poor, the homeless, the mentally ill, the jobless, undocumented immigrants, and Medicaid patients free of charge. According to Eck, “Physicians diagnose and care for patients with acute and chronic illnesses. Thanks to those who are willing to donate their time, currently 300-400 patients get free care each month.”

Now consider the implications for Vermont. In 2012, Vermont had the 6th lowest per capita malpractice payout rate in the country ($4.37 per person). Our total payout rate came to less than $10 million. So, under Dr. Eck’s plan, by assuming a potential liability that is historically less than $10 million, Vermont could barter free healthcare (not health insurance; actual walk-in-walk out, no-strings-attached free healthcare) for all of the uninsured people in the state, and according to Dr. Eck, potentially eliminate the need for Medicaid.

Less than $10 million is about half of the annual $18 million maintenance fee on the Vermont exchange alone. No $427 million “exchange” necessary. No $5 billion single payer, government takeover of the healthcare system necessary.

Dr. Eck’s plan would provide actual healthcare for the poor, it would eliminate the Medicaid/emergency room cost shift onto insurance premiums, because there would be no costs to shift. It would reduce or eliminate government healthcare billing fraud because no money would changes hands. And it would give doctors around the country a unique and compelling reason to move to (rather than quickly away from) Vermont – an escape from the nightmare of malpractice insurance.

– Rob Roper is president of the Ethan Allen Institute

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.

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