Metro Jacksonville

IBM uses "single-payer" style system to insure workers

April 12, 2011

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Editor’s note: Deb Richter is a family physician from Montpelier.


On Friday (April  business leaders met in private with Gov. Peter Shumlin to express concerns about health reform legislation. This legislation (H.202/S.57) passed the House and sits in the Senate’s Health and Welfare Committee, where the committee is now considering changes, some offered by business leaders.

Gov. Shumlin’s statewide reform outlines a path taking up to six years to transform health care into a system that works for everyone. It is a step-by-step process, each step depending on the success of the prior one. The goal is to create a publicly financed health care system that includes everyone and slows the rate of growth of health care costs.

From the audience with the governor emerged the spokesman for IBM, John O’Kane. IBM is Vermont’s top private employer. It makes legislators very nervous. O’Kane was quoted as saying, “We want to be able to manage our own health-care program and we have a track record of good success holding down health-care costs. If we are providing good health care, we shouldn’t be asked to pay for it again if the state moves to government financing of health insurance.”

It seems a reasonable statement and there is little doubt the Legislature and the governor will hear its message: that IBM stands apart, and no reform is necessary for them. However, this statement, conceals a surprise that legislators ought to examine more closely.

First, there is one mistake. And it is important one. The statement “If we (IBM) are providing good health care …” is completely wrong. It points to a basic misunderstanding that is widely shared by most businesses and most people. Neither IBM nor any other business provides health care. It pays for it. Health care comes from the services that provide it, namely, hospitals, doctors’ practices, labs and so on. It confuses “coverage” with our health care services. More on this in a moment.

Now this: “…we (IBM) have a track record of good success holding down health-care costs…” Perfectly true. The surprise is how IBM does it. It pools money, its own and its employees’, then hires an insurance company’s administrative apparatus to pay out claims from the health care services (hospitals, doctors, etc.). There’s a name for this: single payer.

The Shumlin administration wants to do the same thing. But it wants to do it statewide for everyone. Essentially, it wants to expand the IBM model across the state. The administration makes the exact same case: Putting in place single payer, or the IBM model, will have “good success at holding down health-care costs.”

But if the Shumlin plan is to work as well as the IBM plan does for IBM then IBM must be included. Not only IBM but other businesses that self-insure along the same lines as a single payer. And not only them but Vermont’s business community as a whole. To stand apart from system-wide reform on the grounds that they are doing OK brings them into conflict with two unalterable factors.

The first is that the costs to operate adequate health care services in Vermont can be factored down to some minimum constant amount, and that minimum constant amount is what the reform bill needs to identify and decide how to publicly finance.

The second factor is that health care services are shared services. Over a lifetime we all need them, admittedly at different rates, and we all share the certainty that the services will be up and running for us. These two factors define a public good.

Adequate health care services are a cost to everyone. Keeping down IBM’s costs or any other sector’s costs does not keep down the costs of the health care services. It doesn’t work that way. What it does do is shift some unexpected portion of the minimum constant cost of our health care services to another sector, to someone else. And therein lies the uncertainty.

Businesses want control of their expenditures. Who doesn’t? No one without the means like IBM to run its own single-payer plan has any control over costs that are subject to forces beyond their control. No unifying force exists to stop our descent into this chaotic mess we’ve allowed to happen around trying to find the money for adequate health care services.

The Shumlin legislation exists to create a unifying force, a system inclusive of everyone, and that includes IBM. Such a system replicates almost exactly what IBM is doing but on a statewide basis.

http://vtdigger.org/2011/04/12/richter-ibm-uses-single-payer-style-system-to-insure-workers/