Monday, May 09, 2005

Single payer in Vermont

Or maybe that should read "Single Non-Payer in Vermont." The Wall Street Journal contains this story about Vermont's efforts to pass single payer health care legislation.

I found this comment particularly interesting:
From 1995 until late 2004, health care "reform" in Vermont consisted of Gov. Dean's constant expansion of Medicaid to higher income workers, known as the Vermont Health Access Plan. Since the plan's costs rose much faster than the revenues assigned to pay for it, Gov. Dean financed the expansion by progressively underpaying doctors, dentists, hospitals and nursing homes.
We have all experience this with MediCare cuts and, here in Tennessee, cuts in TennCare. In addition, delays in payment from TennCare have, in effect, caused health care providers statewide to subsidize the state with interest-free loans.

As health care payers, whether commercial or government based, continue to decrease what they pay to health care providers or just hold the payments steady despite inflation, income for participating providers drops. As this happens, more and more providers drop out. It has become very difficult to find participating specialists in TennCare nowadays.

Let's take a situation where a state legislates universal health care with the state as the single payer. The state will, undoubtedly, try to control costs by limiting and reducing payments to participating providers (including hospitals.) As reimbursements decline to unacceptable levels, providers will drop out or refuse to enroll more patients. This, as with all price controls, will result in a shortage of providers and lack of access. In addition, privately insured patients will be fewer and fewer, as employers will have no reason to continue to provide this benefit. Those companies providing private health insurance will likely refuse to reimburse at rates higher than those mandated by the state.

So, you see, the state will now have a "crisis" of access. This will lead the state to mandate participation. If you want to practice medicine in this state, you will have to accept the state-run program beneficiaries. Hospitals will go bankrupt and physicians will leave the state in droves.

Price controls don't work. Period. The short term looks good, but, in the long run, the only consistent results are shortages. Look at price controls of gas prices in the '70's, rent control in major cities and the dismal failure of central pricing in the Soviet Union. Nothing but shortages.


Cut to Cure has comments on this as well.