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State Health Policy Reform Innovation

State Health Policy Reform Innovation

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State Health Policy Reform Innovation


For this State Health Policy Reform Innovation essay, identify the rationale for the policy, how it was adopted, the funding structure, its impact, and ethical outcome based on evidence.




           A single-payer healthcare system is an international system in which a single public system caters to all the costs of crucial healthcare for the citizens. The single-payer plan system explains the methods by which no private authority can cater to health costs (Leichter, 1993). In 2011, the government of Vermont State authorized the first state-level law of the Single-Payer Plan in the United States. This policy ensures that Vermonters are given healthcare coverage and technological improvements to the current system. The main aim of the Single-Payer healthcare system is to improve the overall quality of health for the residents of Vermont, reduce medical bankruptcies, reduce the general cost of healthcare, support small businesses, and ensure that healthcare is an essential government service.

State Health Policy Reform Innovation


           In the battle related to the acquisition of the Affordable Care Act, various states concluded to experiment with their health plans and laws. The Single-Payer health plan of Vermont was initiated to ensure the residents’ general insurance coverage and expand the compensation rates to healthcare professionals under the Medicaid system. The plan was also established to assure citizens’ indemnity for patients’ vision and dental care and improve the quality of the gains received by individuals who are not insured (McElwee, 2013).

Adoption of Vermont’s Single-Payer Healthcare System

           The Legislature passed section 88 in 2010, which incorporated Act 128 elements that allowed Vermont State to start a commission to learn about various ways of Medicare delivery. In the reformation of Vermont’s health care system, Economics Prof. William Hsiao from Harvard University was requested to help formulate three suitable ways to improve Vermont’s Medical care system. Dr. William was chosen as a designer because he was consulted during Taiwan’s transformation to a Single-Payer health care system. Dr. William collaborated with Steven Kappel and Jonathan Gruber and came up with three options they presented to the government of Vermont as proposals in June 2010.

           The first option presented to the Vermont Legislature was in alignment with the requirements of Act 128. The alternative would initiate a single-payer health benefits system that is government-administered and publicly financed. The system also permits private insurance coverage as additional health assistance only. Even though this alternative was the easiest way to achieve a single-payer health system, it could involve a complex and inefficient process critical to proving the people’s requirements.

           The second option proposed was as set out in the essentials of Section 88. Public health gains regulated by the government would be established in this alternative. This option would allow residents to choose either the public option or private insurance coverage. In addition, this option permits the public and private plans to compete pretty for individual choice. The committee observed that the choice did not provide universal coverage. In addition, the option needed to provide the enforcement mechanisms in place in case of any feasible mandate enacted to attain more coverage.

           The third and final option was derived from Act 128. The system designed met several requirements in Section 2 of Act 128. Dr. William, Steven, and Jonathan integrated three studies to develop this option. The three studies ascertained the type of Universal health insurance, the ways to fund the system, and the type of single-payer system that is preferable and viable politically and practically for Vermont. This option was considered a favorable single-payer system in terms of political and practical viability for Vermont. It came after considering that Vermont is a small state with collective principles and consists of non-profitable medical institutions and hospitals. In addition, these non-profit institutions had indicated their support for state intervention and were ready to adopt universal health reform. 

           From the proposal, the single-payer plan was launched by the state’s senator Mark Larson and the unified health system in February 2011. In March 2011, ninety-four votes were in favor of the bill while forty-nine were against it, which led to the bill’s approval by the House (Thorpe, 2016). The bill was voted for in the Senate with twenty-nine votes in favor and nine votes against in April 2011. The conference report legislation later approved the bill, and finally, Governor Peter Shumlin signed the bill in May 2011. It was how the Single-payer health system was started and adopted in Vermont.

State Health Policy Reform Innovation

           The first year of the single-payer plan’s performance was estimated to result in 25.3% savings annually. With this, the state would reduce the expenses of households and employers by $200 million, which would aid in the creation of 3800 employment vacancies. As a result, it would increase the economic productive capacity by approximately one hundred million dollars (Hsiao et al., 2011). The approach was a brave trial for Vermont to test if the state government would assure its risk-averse residents of the nation to lower their anxiety concerning transitions in policies that impact the availability of healthcare. Vermont’s ability to examine its medical care policies was attributed to its consistent democratic residents, which granted the state’s government scope.

The Funding Structure

           The funding source for Vermont’s single-payer healthcare system was linked to tax increases. In Bernie Sanders’s speech, Vermont’s state senator said increased taxes would alleviate businesses. It means that, although the burden would rise, organizations would incur a reduction in the cost of catering to their employees’ benefits and health insurance. For this reason, the single-payer health care plan was associated with the shift of cost burdens in Vermont’s business. The companies would now pay higher taxes and no insurance premiums for their employees (Hsiao et al., 2011). In approximation, the firms would have a cost reduction spent on employee benefits of about $1896 per employee (McElwee, 2013).

             The analysts provided Vermont with a recommendation to use a flat payroll tax on employees’ wages that had to be divided between employers and workers at 75% and 25%, respectively. According to the analysts, the taxable employees’ income had to be enacted at the social security level, excluding the wages earned in low-income families, that is, below 200% of the federal poverty level (Hsiao et al., 2011). The plan assured the upcoming and financially challenged organizations in Vermont of protection to cover the case of low-income workers exemption.

Impacts and Ethical Outcomes

           Although Vermont State was optimistic about improving the accessibility of medical care services for its residents, the single-payer healthcare plan failed. The leading cause of the plan’s failure was the inappropriate and inadequate use of finances. It was because the governor of Vermont insisted on keeping high charges of insurance value at 94%, which led to the cost of the entire plan increasing significantly. Vermonters for Health Care Freedom president Darcie Johnson said the single-payer health plan would have succeeded if the insurance value was kept low, between 83% and 85% (Solheim, 2015). Also, the Single-payer plan failed due to the government’s attempt to institute taxes on individuals who had yet to expense their medical care before. It resulted in the inability to ascertain a suitable method to measure individual taxes for individuals whose organizations catered to their health needs.

Besides the inadequate funds, various economic factors contributed to the failure of the single-payer health plan. For instance, the state overestimated the funds it would receive to execute the single-payer plan. Vermont anticipated funds amounting to $150 million, resulting in shortfalls of about $75 million in the budget (Solheim, 2015). Furthermore, more than the state’s reserves from taxes were needed to cater for the plan’s expenses because they were $18 million less than the government’s projections.


           In conclusion, there requires comprehensive and careful planning of the strategies States use to upgrade residents’ access to medical care to attain success. Nonetheless, a more reasonable and durable method to cater to residents’ benefits and insurance is a worthy plan and requires the diligence and high-level cooperation of both the government and the general public.




Hsiao, W., Knight, A., Kappel, S., & Done, N. (2011). What other states can learn from Vermont’s bold experiment: Embracing a single-payer health care financing system. Health Affairs, 30(7), 1232–1241.

Leichter, H. M. (1993). Vermont: Health Care Reform in Vermont: A Work in Progress. Health Affairs12(2), 71-81.

McElwee, S. (2013). Can Vermont’s single-payer system fix what ails American healthcare? Web.

Solheim, N. (2015). Why Vermont’s single-payer system did not workWeb.

Thorpe, K. E. (2016). An Analysis of Senator Sanders’ Single Payer Plan. Unpublished paper, January 27.


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