PUTNEY — I think there are a few things that really reflect on single-payer health care. Let me start by saying that Senator Bernie Sanders and Senator Elizabeth Warren have it right with their Medicare for All bill.
I say so as one who has been in the trenches, done more work on this issue than any other governor in America, I would argue, of actually figuring out how the mechanics would work.
If we can simply say that we have a great single-payer health-care system in America, the only reason we all wish to get to be 65 years old is because of Medicare. For all the other reasons, none of us wants to get that old. Why not reduce over time the age discrimination in America against affordable health care that should be a right not a privilege and reduce that age group until we finally get to zero?
That's the simple way and logical way to get there.
Having said that, I don't think there are too many people who believe that the current Congress and the current president are going to lead us to the promised land on health-care reform.
So the question is, what went wrong in Vermont? Why couldn't we get there?
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When you actually get into the numbers and you describe the changes to your people, when you move from a premium-driven system to one that's supported by taxes, the tax rates in Vermont would have to be quite staggering compared to what other people were paying.
Remember, we're paying for this right now. The problem we have in Vermont, as well as the rest of the country, is the health-care system is broken. I don't think there are many doctors, nurses, or hospital administrators who say, “Wow, this is a beautiful system. It's a bright future for us. Costs keep rising. Pay keeps reducing for primary-care providers. They're going out of business. The fee-for-service model is perfect. Let's stick with it.”
But I came out and said, “Listen, to move from a premium-driven system to a tax-based system, you're going to have an 11.5-percent payroll tax. You're going have to have a top 9.5-percent income tax on top of our current state income tax.”
But legislators were quietly saying to me, “Hey, governor, right now you have costs for the last 20 years that have gone up in health 7 percent or 8 percent on average a year for over 20 years. Are you telling us that we're going to have to raise taxes 7 percent or 8 percent every year?”
And I couldn't with a straight face turn to them and say, “No, we've got this figured out. There's going to be so much cost containment immediately. You won't have to do that.”
So I would argue, on the tax lesson for a state - not all 50 states, the United States of America - but a state, when you have neighboring challenges, it's very tough to make the sale to legislators and to constituents.
It's tough to say, “Hey, this is a great thing. You're finally going to have health care as a right, not a privilege. But you're going to have tax rates that are quite high replacing your premium. So it's not money you're not spending now. But there's winners and losers.”
You also have to have huge reserves like an insurance company, right? We found, in our little state, that the reserve was going to be roughly 10 years of our state bonding capacity.
We literally would have had to say to Vermonters that to build that reserve, there could be no investment in infrastructure for a decade.
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Another problem, and probably the biggest, was one of federal partnership. So as you can imagine, the challenge for a state is, since we have Medicaid and Medicare, frankly, the federal government pays more than the state for health care. The state of Vermont pays about 18 percent of health-care costs here. The feds pay a much larger percentage.
We had an unpredictable partner in Washington. So I kept flying down there, trying to figure out ways to work with a secretary, who really, the Obama administration wanted to work with us.
But recall that in Obama's last two years, the U.S. Senate went Republican.
The House, already Republican, had previously repealed Obamacare 54 times. They were obsessed. Now, they had a Senate that was going to do that, too.
I was trying to get waivers for our little state that would have helped equalize some of the challenges that we had when we moved from the current system to our new system.
And literally, the secretary said to me, “Listen, we want to work with you. We wanted to work with you. But we don't have the capacity to cut out special deals for Vermont, while we're up there on the Hill trying to defend Obamacare.”
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The biggest challenge I had was timing. And I say that looking historically at my leadership challenges. I and every other Democratic governor in the country with a brain embraced Obamacare. We thought it would reduce rates of uninsured people, which it did.
So we built our exchanges, which most Republican governors refused to do. That turned out to be my biggest downfall.
President Obama envisioned technology in place to allow you, for the first time, to push a button, choose your health-care plan. It was supposed to check with the IRS or state tax department on your income tax return. You'd get a bill in the mail. You'd choose your plan. And everything would be beautiful.
The technology simply couldn't deliver on the promise in the time frame. And as you know, there was no amending Obamacare. Because the Republican Congress refused.
So the result was that every governor in the country who built an exchange, and the president of the United States, had exchanges that couldn't deliver.
In Vermont, we had to fire our technology people, hire new folks, go in, and rebuild exchanges. And as you can imagine, I lost tremendous credibility as a leader on health care when I couldn't deliver something as simple, theoretically, as expanding uninsured on Medicare and Medicaid.
And then, you remember political history. Obamacare became a political football.
The timing couldn't have been worse.
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So all those things came together, and I couldn't look the Vermonters in the eye and say, this is the time to make this step. The biggest problem was we hadn't figured out cost containment.
So again, going back to the notion that taxes would be raised as fast as health-care costs are going up, those things all came together to deliver the most difficult thing that I've ever had to do.
That was to turn to the people who elected me and say, “Listen, we've done the work. We've done the research. We know how the system would work. But this is not fiscally responsible to do in Vermont right now, particularly until we get the cost containment piece under control.”
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John McDonough: Would you define the choice that you had to make - and it must have been a really wrenching choice for you - as a policy decision or as a political decision?
Peter Shumlin: It's always both. There was no way I was going to get the votes in either the House or the Senate to pass the single-payer plan that I wanted to pass. I had Progressive Party senators coming to me saying, “What if we should slow down? What if we just invited people into the state employee pool as a first step?” I was like, “Are you kidding me? We buy that from an insurance company.”
So I had to make a political leadership decision. I am a little unusual in that, as my wife who is here will tell you, we made a deal I was going to run for three terms and I would be done with political office. So I was trying to get done everything that I believed should be done. And I wasn't beholden to the notion that this was going to be a career and I would have to keep everybody happy. That was liberating for me.
Having said that, most politicians who had a political career would have gone out and said, “We've done research, here it is, this is what it would cost, this is how we should do it, I believe in single-payer - Legislature, go pass it.” And it would have died in the Legislature quickly.
And the governor would have said, “Those legislators are so incompetent. They've got no guts. Why can't they pass single-payer? It's the right thing to do. This is Bernie Sanders' state. Why aren't we doing this?”
I chose not to do that. I just felt that, really, this was my idea. I owned it. And I needed to own its failure.
McDonough: What's the relevance and lesson of Vermont for the rest of the country now, both in states and at the federal level? Is there a lesson from the Vermont experience that should inform the people who are thinking about whether or not to do this in California, and New York, and elsewhere?
Shumlin: I'm such a believer that this is the right thing to do - that Americans shouldn't be choosing between adequate health care, good health care, and paying their mortgage, getting sneakers for the kids, putting food on the table - that I'm not going to take my experience and suggest that every other state would have the same experience as Vermont. I don't want to jinx it in that way.
I will say this. The lesson is definitely that, if you can get all 50 states, the Bernie Sanders, Elizabeth Warren plan is the smartest way to go. Because you can negotiate pharmaceutical costs and take on the industry, which is where there can be huge savings. We've got to break the system of greed, or we won't get there.
I don't think small states can go it alone, at least little states like Vermont, with an unstable federal partnership. And if you don't believe in instability, I ask you to put in your head moving from a president like Barack Obama to a president like Donald Trump and the administration that comes with it. So that's an unstable federal partner.
The second piece is - and I think it's important - cost containment. You've got to be able to contain costs in any system, federal or state, before you can sell legislators or congresspeople on moving to a tax-finance system.
In Vermont - and this is one of the best-kept secrets, because most of the press didn't understand it - we got the first waiver to take Medicaid, Medicare, and private pay and put it all in one system, where we pay providers based on outcomes instead of fee for service.
If you could take those two things and make that work, along with being able to negotiate drug prices, you could actually get a much-more-predictable, stable cost projection that would allow politicians to have the courage to move to a public-finance system.
McDonough: When you looked at the financing, you realized it wasn't a sale to be made. Now, we see in D.C. Bernie Sanders and his colleagues are putting forward a plan for single-payer health insurance. And they're saying, “We'll talk about the financing later.”
Is there a parallel there and it's just that we haven't figured out how to communicate and be able to convince people, when they look at the cost of making the transition, that it's a feasible lift, either at the state or federal level?
Shumlin: Well, there is a parallel there. Probably the biggest arm that I had tied behind my back was all the other things I was doing as governor: from Tropical Storm Irene, where I literally had to spend a year just focusing on putting my state back together from a climate-change-induced storm, to getting the first state to pass universal pre-K, to making us a green, clean-energy state, an example of how states should do energy.
We were doing all kinds of other things: balancing budgets, doing all the things governors do, and trying to get this damn exchange to work, which was a huge effort. My team was constantly pulled off of the job of getting the numbers, figuring out how it would work, and getting it to me.
So that delay happened. It wasn't deliberate. It wasn't political - we just constantly only have that big a team. We were getting distracted from this huge mission of moving to a single-payer system. I had to take my best single-payer people and put them on Irene, put them on getting the damn exchange to work - all these things which we eventually did.
It was also a disadvantage not to be able to say to Vermonters, this is what your tax rates would be, but you'd never pay a health premium again.
I liken this challenge to civil unions and marriage equality. Vermont invented civil unions, and we did so years before anyone else tried to do so. People thought we were stark raving mad. And we had a political revolution.
But we did it not because we wanted to take on a tough challenge, we did it because people - little kids in hearings - were marching the streets, showing up at legislative hearings saying, “Hey, how come because I have two moms, I don't have the same rights that your parents have where, when one of them gets sick and they go to the hospital, the other one can't make the call what happens in their future or all the other things that married couples with benefits get?” And we said, “Yeah, they're right. This is a grassroots effort. We've got to move,” even though people thought we were nuts.
Employer-provided health care is the biggest obstacle to grassroots movement for single-payer in America. Because if you ask most Americans, “What do you pay for health care a year?” They'll go, “I don't know. My employer provides it. I just have a little bit taken out of my check.”
My point is on health care you don't have that grassroots. Because between employer provided, where no one has any idea what they get, and the fact that activists tend to be under 35 and they think they're going to live forever, we've got a challenge getting the grassroots organized. And that was one of my problems as well.
What should be driving change is the fact that costs are rising faster than we can sustain them. It's a jobs killer, which is what I kept telling folks in Vermont. Because we keep spending more and more on health care and less and less on rising wages in America as a result.
This isn't just about health care. This is about your pocketbook. Our competition has it baked into their tax system, not into the price of their car, the price of their refrigerator, or the price of technology. So they're out-competing us. And this will drown us, the economic engine of America.
McDonough: There's a principle in the newly emerging field of behavioral economics that says that people value hypothetical losses far more than they value hypothetical gains. And some people wonder if that's actually at play here.
For example, Bill and Hillary Clinton, in the early 1990s, were saying, “We're going to change health for everybody.” And 80 percent of people said, “Well, I like my health plan now.” And it never came up for a vote. Barack Obama, when he passed the ACA, really narrowed it to say, “Look, we're just going to take care of the uninsured and people with preexisting conditions. And if you like your care, you can keep it.” That statement turned out to be controversial, but it got him through the day.
Now, it's the Republicans who are threatening to take something away and saying, “Don't worry, we'll give you something better.” But isn't there a risk also with single-payer of the same thing, where you're saying, “Look, we're going to take away what you have and give you something much better, but a lot of people are going to be confused, and scared, and we might see the numbers of the taxes”? It's a tough sell. Where's that fall apart?
Shumlin: I think it falls apart by a very simple premise, which is you say to your family, raise your hand. Raise your hand if you'll give up on those high taxes and get rid of Medicare. How many hands go up?
No Republican or Democrat will do this - all politicians run for cover: “You're not taking my mother's health care away.”
One of the problems the Republicans are having now is they're going to repeal Obamacare. “It's going to be easy; we're going to do it in the first two weeks,” right? Well, that's not going so well.
Why? It's just like civil unions.
We didn't pass civil unions just because a whole bunch of people showed up who didn't have rights and wanted rights. We passed civil unions because too many Republicans and Democrats in Vermont - and independents - had a son, or a daughter, or a neighbor, or a friend who didn't have the same rights as they did. And they thought that was wrong. They thought that was fundamentally wrong. The reason Republicans can't kill Obamacare is you've got 24 million Americans who suddenly have health insurance, finally.
The biggest threat they had to their future - gone. They've got health insurance. And it's a good plan. It's Medicaid.
You try to take that away, it's not just the 24 million people. It's every one of us who knows someone who's got a health care story to tell, where they've now got that benefit.
And Republicans have admitted that's our big problem. Republican governors are going, “You're not taking that away from us. You guys say you're going to have a better plan? Show it to us.” And they keep churning and whurning and whirling and twirling, and they can't come up with a better plan.
So single-payer in America is not a mystery. Mom and dad have it. And what we have to do a better job of is convincing everybody else who is younger than 65 that this is killing your pocketbook. And the only way that America prospers is by finding a way to get everybody in, so that we can finally tell the pharmaceutical industry and others, “We're not going to be beholden to you. We're going to be beholden to our constituents. We're going to contain costs. And public financing will force you to finally contain costs, to take care of the patient, but not the money machine that is unique to the American health care system.”
McDonough: Colorado put single-payer on the ballot in 2016. And it was voted down, 20 percent to 80 percent. Is that a cautionary tale, in addition to Vermont's experience?
Shumlin: Well, look at California. They got where they are because of a referendum where it passed, where there is more support for it.
And I would argue that we're just talking demographics. Colorado is a purple state. Governor John Hickenlooper is a great friend of mine. And he's a great governor. I don't think he'd tell you that he thinks that Colorado is going to be the springboard for single-payer health care. They're still fighting over guns out there.
McDonough: Some people have been concerned, as we're looking at what's going on on Capitol Hill right now, where there's this newly emergent bill to repeal and replace called Graham-Cassidy, that the robust conversation over the past week, just this past week on single-payer with the announcement of the Sanders plan, is a distraction from the important work of defending the gains that have been made and pushing more incremental and realistic prospects, in terms of building on and expanding that. Do you have any concern about that? Do you think that's a legitimate concern?
Shumlin: I really don't.
I've known Senator Sanders for years. He's a friend. And what he's really good at is pushing the ball down the field. There is no better advocate in America than Senator Sanders for change. He makes the case in a way that no one else has made it and does make it.
I don't think that Bernie Sanders or Elizabeth Warren are sitting down in Washington saying, “Wow, we're on the precipice. Team, we're going to come home with Medicare for all.”
I think what they're saying is, “Listen, we have a vision of where we need to go. But we're going to also focus on killing these terrible ideas that the Republicans continue to come up with, where they're in the pockets of big business. They take health care away from people who were given it. And they try to tell you that this is good for you.” So I don't think you'll see them get distracted on the message, which is, “Don't touch the coverage that we fought so hard for.”
McDonough: So are you going to be involved in this moving forward? What are your own plans now that you're outside of the governor's suite? And how will you be engaged in all of this going forward, do you think?
Shumlin: Well, I think I'm out of politics. And I really mean it. I think there are different visions - God bless these folks who can spend their lives in public service. I'm not one of them.
Having said that, I do think that the Vermont story should be an example of how a little state tried, learned. And the lesson should not be “No.” The lesson should be, “Hell, yes, let's get it done. And let's do it right. Let's give this benefit to all Americans who get to get it when they're 65 years old anyway. And we've got to talk about jobs, economic security, our competitiveness in the world, and make this an economic issue, not a fringe lefty issue. That's our job.”