Dr. Deborah Richter has advocated state-sponsored health insurance for every Vermonter, at nearly fifty Rotary Clubs plus chambers of commerce and boardrooms. The reservations she heard from the business community are (1) they don’t trust the government with healthcare, and (2) they fear that initially acceptable tax rates would soar as people came to view universal health coverage as a “blank check.” “I agree with the business community to some extent,” Richter told me. Under universal healthcare, decisions would have to be made about “egalitarian rationing,” so as to meet everyone’s basic needs while denying some things to anyone.

To pay the bills, public funds now financing Medicare, Medicaid and other government programs would, with a federal waiver, be funneled into a unified system. Payroll taxes–5.8 percent on employers, 2.9 percent on employees–would replace premiums and deductibles. There would be a $10 co-payment for most services. The annual cost to employers would be about $1,450 per worker, far less than the cost of insurance premiums. “Savings could go to prevention and public-health improvement, further reducing long-term costs,” Richter said. “Losing or changing jobs would not mean losing or changing health insurance. Most families and employers now paying for insurance would have decreased costs. Family impoverishment and bankruptcy due to illness would be eliminated. The cost-shifting that plagues our hospitals would be eliminated.”

Richter senses “an increasingly positive response” to this plan because business people, especially manufacturers, are “getting killed” by the rising costs of healthcare. And they are disturbed–“feel like they’re reneging”–when they must cut back benefits, she said. One employer of 100 Vermonters, hit by a 58 percent rise in a single year and expecting a 15 percent increase on top of that the next, told Richter he was thinking of moving his operation to Canada.

Richter believes the current system focuses excessively on payment for care of the sick–“pay as you go,” she calls it. The “nutshell problem” with this is that it demands “a massive bureaucracy to limit individual utilization and to administer payments,” she says. “The number of healthcare administrators needed to limit individual utilization” increased 2,500 percent between 1970 and 2000, while the number of doctors increased by only 150 percent, she pointed out.

“Yet pay-as-you-go does not guarantee healthcare to each of us should we get sick or be injured,” Richter continued. “People who need disease management to avert, delay or moderate serious medical disorders don’t get it. Diabetics are an example. How can they get disease-management without health insurance? And how can they get that insurance when for insurers–businesses whose first obligation is to the shareholders–the game is to insure healthy people? “We’re headed for a train wreck,” Richter warned. “We must replace pay-as-you-go, with its emphasis on individuals, with the ‘investment model,’ in which the whole society invests in a public good that we all may need but cannot provide for.”