Single-payer savings could hit $1.8 billion, report says

The Joint Fiscal Office this morning unveiled an in-house analysis examining the potential long-term savings under Act 48 – the health care reform law passed earlier this year.

Headlines will likely focus on the number “$1.8 billion,” the amount by which Vermont could reduce overall medical expenditures by 2020 under a best-case scenario, according to the report.

Really, though, it’s impossible to say.

The report, prepared by members of the Joint Fiscal Office and BISHCA (with “assistance” from Policy Integrity, LLC, a firm that specializes in the development of health care policy), compares two parallel realities: one with Act 48, and the other without it.

Act 48, the controversial law that aims to create a publicly funded, universal system of care, will produce savings – anywhere from $553 million to $1.8 billion annually by 2020 – the study’s authors say.

Without Act 48, or any of the reforms contained therein, total health care expenditures will rocket from $4.7 billion in 2009 to $10 billion in 2020.

The 45-page report, however, is saturated with caveats underscoring the difficulty of producing statistically meaningful savings projections.

“It is important to understand that projection of health care spending and estimation of savings are inexact sciences,” the authors write in the executive summary.

Despite basing the findings on the “best available information and methodologies,” the findings, authors say, “will still have a substantial margin of error.”

Members of Joint Fiscal and BISHCA will hold a press availability in about an hour to brief reporters on the document.

One Response to Single-payer savings could hit $1.8 billion, report says

  1. As predicted in the article, the headline focuses on one number, and doesn’t even explain the number very well.
    Lost in the details is that most of the “savings” don’t come from having a single payer; they come from reforming clinical care and reforming the methods used to compensate providers. These methods do not require Vermont to create a single payer.
    Also, the article points out that the estimates are incredibly inexact — the range of possible savings is $500 million at the low end, to $1.8 billion at the high end. Not only is the range a three-fold variation from low to high, but if we overestimate (which the headline might lead people to do), we’ll be hundreds of millions of dollars short.
    The authors of the report (and the reporter, if not the headline) are open about the inexactitude of the estimates. What is very useful about the report, actually, is not the estimates, but the detailed descriptions about the many opportunities for cost containment, and how they might be implemented.
    What we cannot know, however, is whether they will work, and to what extent or magnitude.
    For that reason,let’s be very conservative in estimating, and let’s not spend the money before it has actually been saved.