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Avalere Suggests Vermont May Need to Increase Funding For Single-Payer Plan

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Avalere Health says the state of Vermont may need between $1.9 billion and $2.2 billion to finance the single-payer plan contemplated by Act 48 - otherwise known as Green Mountain Care.
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Vermont Partners for Health Care Reform, a group comprised of Vermont health care providers, a health plan provider and employers, asked Avalere to make an independent assessment of the state of Vermont’s Financing Plan’s cost estimate and its key assumptions. Avalere concluded that funding needs could be 20 percent to 35 percent higher than the current estimate of $1.61 billion, by applying what Avalere considered to be more reasonable assumptions for provider payment rates and administrative savings.

Only when the governor issues his proposal for ways to raise the necessary funding will it be possible to assess the true effects on the costs – taxes and others – and benefits to different groups of Vermont residents and businesses in general. Avalere can say that the effects on the health care sector could be adverse: As envisioned in the financing plan, providers would likely see significantly lower average payments, and health insurers would see substantial enrollment declines calling into question the need to continue to operate in the state. To inform the appraisal, Avalere conducted an extensive review of Vermont’s health reform documentation and interviewed key Vermont stakeholders.

The State of Vermont arrived at its numbers through a study commissioned to estimate the cost of the single-payer plan contemplated by Act 48 and then to lay out options for financing that cost. The state’s analysis, or “Financing Plan,” concluded that Vermont would need to raise $1.61 billion from Vermont taxpayers in 2017 to fund the plan. The amount to be raised is comparable to Vermont’s tax collections from all sources today. Some of the new tax burden would be offset by the elimination of direct costs for private health coverage, since the State expects to become the health insurer for most Vermonters.

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