Archive for January, 2011

I caught up with State Representative Adam Greshin this week on the dramatic changes being considered to Vermont’s health care system and the pivotal Wednesday address by Beijing, China born Dr. William Hsiao at our State House.

As Adam put it, these proposed changes are likely to affect all of us and in fact Vermont’s entire economy. Given the magnitude of the issue, Maple Sweet Real Estate brings you a synopsis of Dr. Hsiao’s statement including links below to both his full statement this week and the 138 page report issued by him, Steven Kappel & Jonathan Gruber.

Single-payer health care is the financing of the costs of delivering universal health care for an entire population through a single insurance pool out of which costs are met.

This from Dr. McCanne’s Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on the Physicians for a National Healthcare Program  PNHP’s website.

Excerpt from Harvard School of Public Health Professor of Economics Dr. William C. Hsiao’s January 19th, 2011 Statement Before Vermont’s Legislature on Single Payer Healthcare Evaluation

“Act 128 calls upon our team to develop three options. The Legislature requires that we evaluate a state government-administered and publicly-financed single-payer health benefits system. This system, which we refer to as Option 1, would provide all Vermonters with a uniform benefits package. Within those parameters, we looked at costs of both a “comprehensive” benefits package and a leaner, “essential” benefits package, which I will define and discuss later. The second option is a state government-administered, public option that would allow Vermonters to choose between public and private insurance coverage. Option 2 is designed to allow for and promote competition between the public and private plans, while keeping in place the current multiple payer system. Act 128 allows our team to develop a third option that we design after analyzing all aspects of Vermont’s health care and assessing the positions of key stakeholders across the State of Vermont. We call Option 3 a public/private single-payer system. It provides an “essential” benefits package, is administered by an independent board with diverse representation, and it employs a competitively-selected third party to manage provider relations and claims adjudication and processing.

In analyzing the three options, we determined that all will yield significant savings. However, our research and analysis indicate that the single-payer options will have a more dramatic impact on reducing cost than the public option because they incorporate a uniform benefits package and reduce much of the administrative structure needed to compensate multiple payers. Therefore, we estimate that Option 1 will produce savings of 24.3% of total health expenditure between 2015 and 2024. Option 2 will produce savings of 16.1% of total health expenditure between 2015 and 2024. Finally, Option 3 will produce savings of 25.3% of total health expenditure between 2015 and 2024. Option 3 produces additional savings as compared to Option 1 because it incorporates a public/private partnership in governance and administration.

In 2015, the first full year of implementation, PPACA would reduce the number of uninsured by 18,000 people; however 32,000 Vermont residents will remain uninsured. Ultimately in 2019, PPACA will reduce the number of uninsured by 22,000 in 2019. PPACA will likely add an additional $240 million of federal funds in 2015 to the State of Vermont, which will eventually rise to $420 million in 2019. All of these dollar values are expressed in 2010 dollars.

In comparison with option 1 and 3, Option 2 would still leave approximately 30,000 Vermonters uninsured. Option 2 would not expand the current benefits to cover some dental and vision care nor bring up the benefits for those who are currently under-insured.

The comprehensive benefit package under option 1 covers all health services with minimum cost sharing. As a result, it costs more and requires more funds to finance it. Under a payroll contribution scheme of financing, employers and workers will have to pay more than what they would pay if no reform takes place. This comprehensive benefit option would also increase the total health spending in Vermont which would make this option less feasible.

The essential benefit package under option 1 and 3 have leaner benefits and they can be financed through payroll contributions without increasing the amount that most employers and workers would have to pay as compared to if no reform takes place. It would reduce the total health spending in Vermont slightly in 2015 when the proposed reforms are implemented.”

Piggy's Crutches

Dr. Hsiao’s full statement in front of Vermont’s Legislature

Full report – William Hsiao, Steven Kappel and Jonathan Gruber (138 pages)

From Wikipedia:

William C. Hsiao (Traditional Chinese: 蕭慶倫; Simplified Chinese: 萧庆伦) an American economist, is the K.T. Li Professor of Economics[1] at the Harvard School of Public Health in Boston, Massachusetts. He is internationally recognized for his work on health care financing and social insurance.

Professor Hsiao is a graduate of Ohio Wesleyan University and received his Ph.D from Harvard University in Economics. He is a member of the National Academy of SciencesInstitute of Medicine, the Society of Actuaries, the National Academy of Social Insurance, and holds several honorary degrees.

He has been awarded teaching awards by Harvard graduate students on several occasions. He resides in Cambridge, Massachusetts with his wife, Ruth, a former lecturer at Tufts University. He has two sons and two grandchildren.


Professor Hsiao was born in Beijing, China and as a teenager emigrated to the United States, where his father was an economic advisor to the Kuomintang(KMT) delegation to the United Nations. He grew up in Forest Hills, Queens of New York City, and attended New York public schools. Following graduation from college, Professor Hsiao began his career as an actuary for Connecticut General Life Insurance Co. in Hartford CT, which was a predecessor company toCIGNA. Following this corporate stint, Professor Hsiao moved to Washington DC and was employed as an actuary to the Social Security Administration in 1968. When the Chief Actuary of the SSA resigned, Professor Hsiao was appointed the acting Chief Actuary in 1970.

During this time, the Social Security Administration was roiled by efforts by the United States Congress to reform the social security system and maintain its solvency. Professor Hsiao headed up two blue-ribbon panels and testified several times before Congress regarding the actuarial viability of the system under the funding mechanisms in place. Eventually, in 1977, the Congress passed and President Jimmy Carter signed into law one of the most comprehensive legislative efforts to bolster the Social security system.

Following this government service, Professor Hsiao commenced studies at the Harvard University Institute of Government, which later became the John F. Kennedy School of Government. He then entered the Ph.D program in the Department of Economics at Harvard University. His doctoral thesis was advised by Martin Feldstein, who later was Chair of the Council of Economic Advisors under President Ronald Reagan. Professor Hsiao was appointed to the faculty of the Harvard School of Public Health as an Assistant Professor in 1979. He became a full professor in 1986. He was appointed to the K.T. Li chaired professorship in 1992, named for the Taiwanese policy-maker Kwoh-Ting Li.

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