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While the US House of Representatives voted this week to repeal the health care reform law, Vermont legislators heard on Wednesday from Dr. William Hsiao, Professor of Economics at Harvard and the designer of the much acclaimed Taiwanese health care system. Dr. Hsiao and his team of 20 experts were asked by the Vermont legislature to analyze the current health care system in Vermont and make recommendations on three systems to replace the current system.
Dr. Hsiao noted that the current system is broken and headed to failure despite the excessive cost of the system. His plans were a single-payer system completely operated by the government, a system with a “public option” and a public-private single payer system. His recommendation is for the third option: a public-private single payer system that would cover all Vermonters but would use existing private companies to administer the program.
His analysis shows that this could be funded with an 11% payroll tax and provide essential health care coverage to all Vermonters. Further, he demonstrated how that could save the state over $2 Billion by 2024, create 5,000 jobs, reduce employer and employee cost of insurance, attract 3,500 new residents and increase the state’s domestic product by over $150 million.
Of course, he identified several challenges and barriers to implementation; however, in the current political climate in our state with both a Governor and a legislature committed to reform, there is a very strong possibility that his suggestion or some modification of it will be adopted in Vermont. I know that our analysis of Dr. Hsiao’s proposal shows that our cost to insure our employees would drop 50%. We currently estimate about 22% of payroll to cover health insurance, Dr. Hsiao estimates a payroll tax of 11% and some percentage of that would be born by the employees. This would allow us to hire more people and to pay our current employees higher wages.
This sensible approach to health care reform simply makes intuitive sense as well as economic sense. The current “system” is nothing more than an accident of history and a Rube Goldberg contraption that is on the verge of total collapse. You can read Dr. Hsiao’s presentation to the Vermont legislature here.
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