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Vermont Leads the Way in Health Care Reform

When Vermont Businesses for Social Responsibility polls its members about what is working and not working for their companies, one message is always clear: The cost of health insurance is crippling our economy.

Year after year, our members identify the double-digit premium increases as the number one obstacle to the success of their businesses. That outpaces concerns over taxes, regulations, and workforce training.

Many of our businesses see offering health insurance to workers as a responsibility in our employer-sponsored insurance system. It’s what companies have done since the wage and price controls of World War II.

But today’s costs far outpace the burden of the 1940s: 60% of VBSR businesses offering health insurance as a benefit pay more than 10% of their payroll for that benefit. Another 20% of members pay upwards of 20% of payroll for that benefit. When these costs increase year after year, there is no money left over to expand business services, hire new workers, or increase wages.

Health Insurance

This experience has lead VBSR to believe that we can no longer rely on employer-sponsored insurance as the backbone of our health care system. Vermont’s experience is reflected in national trends as well: A recent analysis by Georgetown University’s Health Policy Institute shows that the number of employers offering insurance benefits dropped 7% over the last decade while cost to employees over that same period has doubled, greatly outpacing any growth in income.

Part of my job has been to advocate for VBSR’s health care vision at the Vermont Statehouse. Our policy is pretty simple. We believe that Vermont needs a system that (1) covers all Vermonters (2) cuts unnecessary waste and spending (3) is funded in a fair and sustainable manner and (4) decouples insurance and employment.

Luckily, VBSR is not alone in this vision. Gov. Peter Shumlin, a Democrat, was elected in 2010 partly on a platform to create a single-payer health care system in Vermont. And the Vermont Legislature moved quickly, and in 2011 passed Act 48, which puts the state on the long road to reforming our health care system.

“We want to be the first state where health insurance follows the individual and is not a requirement of the employer,” Shumlin said soon after taking office. “I think that will be a huge jobs creator.”

Vermont’s plans are both simple and startling complex. Act 48 led to the creation of the Green Mountain Care Board, a five-member body appointed by the Governor and the Legislature to oversee payment reform and cost control efforts. That work is already paying off: The budget for Vermont’s 16 hospitals will increase by only 3.75% next year and the average premium increase for 2013 will be a modest 7%.

Meanwhile, state officials will soon begin merging insurance risk pools together as the first step toward a comprehensive and consolidated health care system. But big questions must first be addressed: How does Vermont fund a public health care system? What will the basic benefit package be that Vermonters enjoy as a right of citizenship?

These issues will be hashed out in the Vermont Legislature over the next several years. Because of the complexity of the changes—and the need for federal waivers to enact some of the reforms—our single-payer system is still at least four years away.

The state’s reform plans come at a time when federal reform—via the Affordable Care Act—will change the way people buy insurance across the country. But many of the insurance reforms in that law, while revolutionary in some markets, have already been enacted in the Green Mountain State over the last two decades.

Vermonters know we can’t wait for help from Washington. We have a history of frugality, self-sufficiency, and pioneering. Vermont was the first state to outlaw slavery and among the first to recognize that same-sex couples deserve the same rights as straight couples.

That history positions us to be the “laboratory of change” that our country’s founders envisioned states to be. If we do nothing, the $5 billion Vermonters spend each year on health care will double by 2020, dragging the state and the economy down with it.

But if we succeed—and Vermont has a record to run on and strong political will to see change realized —we can show the rest of the country that there is a way forward that allows a sustainable economy to grow and protects the health of all residents.

Daniel Barlow is the public policy manager of Vermont Businesses for Social Responsibility, a statewide business organization with more than 1,100 members. For more information, visit