MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Vermont lawmakers have advanced a bill that puts it on the path to becoming the first state to adopt universal health care. This has been one of the goals of the new Gov. Peter Shumlin. But there are still some hurdles to pass even if the bill does make it to the governor's desk, one of which has to do with national health care reform. Joining me in the studio to talk about what all this means, Michael Cannon of the Cato Institute, Julie Rovner of NPR and Dr. Robert Zarr of Physicians for a National Health Care Program. We hope to be joined by the governor in Montpelier shortly. We'll let you know when we have him. Good morning to all of you. It's good to have you here.

MS. JULIE ROVNERGood morning.

DR. ROBERT ZARRGood morning.

MR. MICHAEL CANNONGood morning.

REHMJulie Rovner, I know that you talked yesterday with Secretary Sebelius about Vermont's plan. Tell me what her comments were.

ROVNERWell, of course, it's difficult, what Vermont wants to do. They're planning on doing what they call a single-payer plan, which is going to really have the state try and get everyone insured through the state. And, of course, that would be not exactly what the new health law has in mind, so -- and, of course, the secretary has the authority to allows states to do that, but not until the year 2017. And, actually, there's a bill that's in Congress right now, sponsored by Sen. Wyden and Sen. Brown of Massachusetts, that would allow states to do that earlier in the year 2014, which, of course, is when most of the law takes effect.

ROVNERAnd I asked her if she actually has the authority to allow Vermont to do this, and she says, you know, it depends on how they do it on -- and, of course, what's going through -- the law that's going through Vermont right now is really just a law to plan how they would do this. So she says she's been in talks with the governor. And they're really trying to devise a way that they could do it so that she could give them permission. So there is, in fact, a possibility, depending on how they do it, that they could do it as soon as 2014.

REHMJulie Rovner of NPR. And joining us now is Gov. Peter Shumlin. He's Vermont's Democratic governor, leading efforts to create a single-payer health care system in that state. Good morning to you, Governor. Thanks for joining us.

GOV. PETER SHUMLINWell, thanks for having me on, Diane.

REHMPlease talk about what you are hoping to pass.

SHUMLINWell, we're hoping to pass -- and I'm proud that the Senate and the House have now passed the bill, so I expect it to come to my desk as soon as they iron out their differences. Really, we're trying to do three things. The first is have the first health care system in the country where health care is a right and not a privilege. The second is to ensure that we have a system where health insurance follows the individual and isn't required by the employer. I think that's a huge jobs creator, in terms of competing with the other states for jobs, if we can get this burden off the backs of employers.

SHUMLINAnd the third part -- perhaps the most important -- is to contain cost, to design a cost containment system where we're spending our health care dollars not on insurance company profits, not on waste, not on efficiency in what I call the non-system, but on delivering health care to Vermonters.

REHMI gather from what I've read that, if this goes through, it could give Vermont a kind of Canadian-style, publicly financed health care plan. Is that right?

SHUMLINWell, I wouldn't say Canadian style. I would say that we would be joining all of the rest of the developed world in having a system that is publicly financed. And, you know, folks say to me often, Diane, Governor, you know, this seems so tough. How can you do it? This has never been done before. And I say, now, wait a minute, slow down. It's actually being done by everybody else in a developed world, except for us. And I see this as an economic development issue. You know, we, governors -- we have more new governors elected last November than in any time in American history or since 1923 -- I don't know which -- but we all have different strategies. And we're all trying to create jobs and economic opportunities.

SHUMLINThe biggest obstacle for my businesses in Vermont is the rising cost of health insurance. The biggest challenge for my struggling middle class is the rising cost to health insurance. Now, let me just tell you sort of what I inherited here. Vermonters, on average, are making the same amount of money they were making 10 years ago, yet when they pull up to the gas pump, it's four bucks a gallon. College tuitions are up. Food costs are up. We all know the cost of living is rising. So my challenge as a governor is to go after the real issues that are driving cost for Vermonters and try to make a better business climate for all of us. You know, when you talk to business, they say, hey, 20 percent increases a year, 30 percent some years, this is killing us.

SHUMLINWe're all spending more and more money for less and less insurance. So we have a health care system, in my judgment, that's not sustainable. I think the other 49 states probably face the same challenge, but I want to face it head-on and be the first state in the country that does use public financing, but, most importantly, that treats health care, as I said, as a right and not a privilege and gets costs under control. We spend more money on health care in America per capita than anywhere else in the world. And our outcomes are behind many developed countries.

REHMGovernor...

SHUMLINWe've got to catch up.

REHMGov. Peter Shumlin, he is Vermont's Democratic governor. Turning to you, again, Julie Rovner, are any other states around the country looking at enacting this kind of legislation?

ROVNERNo.

REHMNo?

ROVNERIn a word, not this kind.

REHMOkay.

ROVNERBut there are certainly other states who are looking at doing their own thing, as it were.

REHMAll right. And, Michael Cannon, what's your assessment of this move?

CANNONWell, what's interesting about -- first, about the health care law that we passed a year ago is that the U.S. government was facing $1 trillion deficit and $1 trillion deficits as far as the eye can see. And yet we created two new health care entitlement programs. Here, the state of Vermont is facing a $150 million deficit, which is big for Vermont, and they are doubling down on that strategy. They're trying to create a new government entitlement program. If you create one of these government-run health care systems that Vermont wants to create, that -- you can really have two varieties. One is the unaffordable kind, and that's what we've got with Medicare. That's the main reason that federal deficits are growing so rapidly and will grow so rapidly in the future.

CANNONYou can also have a government-run health care system, or you could have a government-run health care system that denies care to some people. We have that in the Medicaid program. There are serious access problems in the U.S. Medicaid program. You see that in Canada, which has the sort of single-payer system that Vermont wants to adopt. And it looks like they're going to end up in Vermont with the former kind, the unaffordable kind, because the cost controls that they talk about implementing here are just implausible.

CANNONAnd the supporters know that because of the way they created a board of unelected government -- an unelected government board that's going to make decisions about how much doctors get paid, how they organize their practices, how they practice medicine even. They had to create that unelected board insulated from the democratic process because they knew if patients and doctors got a hold of that board, then it would be disbanded, and costs would explode.

REHMMichael Cannon, he's director of health policy studies at the Cato Institute. How do you respond, Gov. Shumlin?

SHUMLINWell, what Michael has just said is absolutely inaccurate. We have created a five-member board to help us design the first health care cost containment system in the country that works. And, you know, where I agree with Michael is where health care reform has failed in America, whether it's been on a federal level or the state level, is in designing systems that allow us to use our health care dollars to make people healthier, get the insurance companies out of our providers' way, and let them make the decisions they were trained to do, which is to make people healthy.

SHUMLINWhat Michael says that isn't true is that we have insulated this board from democracy and so on and so forth. Listen, this is the most democratic, transparent process you've ever seen. We're going to include providers, hospitals, consumers, businesspeople in designing this system. We simply created the board because we need five smart people to create the first cost containment system for universal access that works, and none of us have the recipe exactly for that. So...

REHMAll right.

SHUMLIN...they're going to do their work. They're going to come back to legislature. We'll figure out in 2013. We'll adopt their plan and, in the same time, adopt a payment mechanism, so I think it's an unfair criticism.

REHMTurning to you, Dr. Robert Zarr, as co-chair of the D.C. chapter of Physicians for a National Health Program, you think that Vermont's plan doesn't even go far enough.

ZARRWell, I think, probably the first thing I should say is that many of us here at the table should applaud the actions of the governor in having a very open debate discussion about single-payer. If anybody saw the campaign ads when he was running for governor, I think it was an odd moment in our history in America to actually see a candidate talking openly about what single-payer is. Having said that -- and I have actually looked at the bill, H202, and I don't know if anybody here has looked at it besides myself -- but all of the words single-payer have been taken out of the bill itself. So, you know, I think we should be realistic here, that what's being -- what's on the table right now in Vermont is clearly not single-payer.

REHMHow do you see it?

ZARRWell, it's, I think -- my opinion is that this may be a step in the right direction, and the idea of public financing is really important. Not only public financing, but I think it's important to get the message across that single-payer, which is not what this bill is currently, is a perfect blending. It's the perfect partnership between public and private. And that should make Michael happy. It should make others on the other side happy because the delivery of care is not provided by the government. So what we always hear from the Cato Institute, in this instance, is that government control, government take or government care -- this is nothing like that. This is letting the doctors actually practice medicine.

ZARRThe issue here is the payment and administrative overhead. And the governor knows that very well, and he said that on many occasions. And so, in order to have -- it's ironic. But in order to have cost control, you have to cover everybody -- but not just cover everybody, you have to do it in one unified system.

REHMRobert Zarr, co-chair of the D.C. chapter of Physicians for a National Health Program. Short break. And when we come back, we'll be talking further to the governor, taking your calls. Stay with us.

REHMAnd as we talk about Vermont's efforts to adopt a universal health care program with Gov. Peter Shumlin of Vermont, Robert Zarr of the D.C. chapter of Physicians for a National Health Program, Julie Rovner, health correspondent for NPR, and Michael Cannon of the Cato Institute, I want to go back to you, Robert Zarr, and get you to explain precisely why you do not call this a single-payer plan.

ZARRThere are a few basic principles that need to be satisfied to call it single-payer. The first one is the most obvious one, is that you have one single unified payer, and that is not what's in the bill right now. There's still going to be multiple payers in the state of Vermont, including IBM, which self-insures. There is still going to exist, as it stands right now, Medicaid and Medicare and various other mechanisms to put forth.

REHMAnd how many people of the population would be covered?

ZARRWell, we -- in terms of the bill, we're looking at about 200,000 people, one-third of the population of Vermont who are either under or uninsured, approximately. So going back to your question, what does it mean to be single-payer? You need to have one payer. The reason for that is you simplify the process of billing. So the overhead for the payer, which, in this case, would be the government of Vermont, and the overhead for the actual practices -- the hospitals, pharmacists, doctors who are practicing medicine -- go down. So that's a very, very important concept.

REHMGov. Shumlin, how do you see this, as a first step or…?

SHUMLINWell, thank you for asking the question. And, well, Michael is defining single-payer absolutely accurately. I would just argue that it's exactly what our bill does. In fact, it reads, Green Mountain Care means a public/private universal health care program designed to provide health care benefits through a simplified uniform single administrative system. That's what the bill does. We have definitely passed and will sign a single-payer bill. We need to do that because, right now, as an example, Vermont is spending 8 to 9 cents just chasing money around in the system. We're doing that all across America. We're going to have one single uniform payment system so that we can gather that administrative waste and use it to make Vermonters healthier.

SHUMLINSo I agree with Michael on what the definition is. The only place we disagree is I am very clear that the bill passes just what he is describing.

REHMAnd, actually, you were referring to the comments of Dr. Robert Zarr.

SHUMLINI'm sorry.

REHMSo, Robert Zarr, as the governor talks about how he sees this bill, you see it differently.

ZARRWell, there's a number of steps that have to happen.

REHMRight.

ZARRAnd we can talk about those waivers probably later in this discussion. But as it's written right now, you know, that's a -- it's a good first step. I'm not saying -- but that's a very important first step. But we have to keep the big picture in mind. We have to keep our minds on the goal, and the goal here is to provide everyone with high-quality lifetime comprehensive coverage and control cost.

REHMJulie Rovner, does this make a first step look good?

ROVNERWell, one of the things that's very difficult is that you've got a single state trying to do this...

REHMRight.

ROVNER...you know. And people get -- you know, I've spent time in Vermont. You know, people go to New Hampshire to get care. People go to New York to get care. It's very difficult to create a single-payer system within a state where you have people who are going elsewhere to get care. So this is a very, very tricky thing that Vermont is trying to do.

REHMAnd why are they doing that? Why is Vermont -- why are Vermonters going outside of state for health care?

ROVNERBecause -- just because of where they live. I mean, because, you know, there's parts of Vermont where the nearest health care is right over the line. You know, in parts of Vermont, Dartmouth is -- the Dartmouth Medical Center is the nearest major hospital to it...

REHMYeah, right.

ROVNER...a big swath of Vermont if you don't live near Burlington. That's going to be your hospital. It just happens to be there -- same thing in Southern Vermont. There are major medical centers in upstate New York that are going to be nearby. So it's just the matters of geography. And that's true in lots and lots of different states, where your nearest major medical center happens to be across the state line. So it's difficult to do this in a state. And I know that Vermont is wrestling with this fact, that a lot of their residents go to a nearby state to get their medical care.

REHMWhat about that, Gov. Shumlin?

SHUMLINWell, Julie identifies a challenge that is clear. But I just want to make the point, we're solving it. We're meeting with the providers out of state, including them in this process. And, you know, I just want to make a point. Vermont has the best access, perhaps with the exception of Massachusetts -- we rival for that -- the best access to health care in the country. And we have a single-payer system right now. Under Gov. Dean, Gov. Kunin, we were the first state to pass Dr. Dynasaur, to have all of our children insured.

SHUMLINThat is a single-payer system. We have 176 -- 160,000 Vermonters in our publicly financed VHAP plan and Catamount plan. All of those single-payer systems that we have right now include in a network, all of the out-of-state providers that you're talking about. In other words, we've already made single-payer deals with them, so all of this is surmountable. It's not a big challenge. Our big challenge -- and what we're really missing here in this discussion -- is getting the waste in the system, the profit, the folks who are making money off our misery out of the system, and spending our health care dollars, making Vermonters better.

REHMI'd sure like to see that happen as well. But at the same time, a single-payer plan is not sanctioned in the National Health Care law. Julie, how does Vermont get around this?

ROVNERWell, this is what the secretary was talking about yesterday, is that there will have to be a waiver. You know, I think a lot of people are watching this with great interest to see if Vermont can devise a way to go forward. You know, the bigger debate that's going on in the country right now -- not just with the health law but, I think, with Medicare also, and, you know, this is something that everyone today is talking about -- is how do we get our arms around the rising cost of health care?

REHMOf course.

ROVNERAnd the big debate is, is it -- would it be more efficient to have one single-payer, i.e. the government, do something with -- you know, with major -- you know, be the single-payer and do something with economies of scale or -- as Michael, I think, would like to see -- let the market do it? And I think it would be interesting to see another state do a major experiment using market forces, have Vermont go ahead, do this experiment, you know, using single-payer and see which works.

REHMMichael is shaking his head.

ROVNERI mean...

CANNONI would like to see that, too. Unfortunately, it's impossible as long as the recent health care law is still on the books. Look, what Robert and the governor are saying about reducing administrative waste and containing cost that way by having a single-payer, it sounds very appealing. It has some intuitive appeal to it. But it's completely at odds with the facts. The U.S. Medicare program provides universal coverage to seniors and the disabled. It is, by far, the largest purchaser of health care, not just in the United States, but in the world.

CANNONIt dwarfs the next largest purchaser of health care in the United States. That -- the fact that Medicare has one payment process, you know, it's simplified -- well, it's even laughable to say that Medicare is simplified billing for health care for the elderly. Medicare's payment processes are inefficient. They have led to problems like uncoordinated care, no electronic medical records, rampant medical errors -- and health care researchers will tell you this, that Medicare's payment system is largely responsible for this.

CANNONAnd Medicare is rife with waste, fraud and abuse. It was recently estimated that the fraud and other improper payments in Medicare amount to $48 billion per year. That is four times the combined profits of all private health insurance companies in this country.

REHMRobert Zarr.

ZARRYou know, I have to say there is a preponderance of data and evidence over the last 25 years looking at health care financing. We don't need to have this debate anymore about whether a single-payer system is going to save money and cover everybody in the country and provide quality care. That is not something that, I think, is worth our time discussing here. Country after country has shown that Medicare, when it was started in 1965, it was -- we had over 80 or 90 percent of the seniors enrolled in Medicare within one year. It's an amazing program. It still is an amazing program. If there are any deficiencies in Medicare, which we all agree exist, it is in large part because of the privatization of Medicare that's happened over the last 15 years.

REHMGov. Shumlin, let me ask you this. If you have to wait for a waiver, why move forward on this legislation now? Why not wait until you already have the waiver?

SHUMLINBecause my job as governor is to create jobs and lift the economic woes of Vermonters. And we can't afford to wait. Let me just tell you how the math works in our little state. Ten years ago, we were spending $2.5 billion collectively on health care. Ten years later, we're spending $5 billion on health care. And my bank and the insurance folks tell me that by 2015, we'll be spending an additional $1.6 billion every year on health care. That's $2,500 out of the pockets of every single living Vermonter every single year in a state where my folks are making the same money they were making, on average, 10 years ago. So I have a crisis. Now, the other problem I have is that under the current system, I'm on a small rural state.

SHUMLINUnder the Medicaid and Medicare reimbursement rates, I'm losing my rural health care providers. My hospitals are in trouble, particularly my small ones. And everyone agrees in the system, or almost everybody, that the current system isn't sustainable. So, Diane, we talk about this sort of as if it's an academic question. Should we do single-payer? Should we do cost containment? Should we do universal access? I keep saying, hey, I don't know what the other 49 states are thinking.

SHUMLINBut as a governor, I'm going to go where the problems are. And it's health care. It's killing jobs. It's killing business. It's killing the middle class. We're all spending more and more money for less and less coverage. We have a crisis in Vermont, and my challenge is to fix the crisis. Now, one thing we haven't talked about yet is -- we're arguing about Medicaid and Medicare. You know, that's an old argument. This is where we're going. Here's the future.

SHUMLINWe're going to win Vermont, pass a single-payer system that gets the administrative ways that I was talking about that provides universal access to Vermonters, but, most importantly, that moves from the current fee-for-service payment plan to a system that rewards providers for keeping Vermonters healthy. That is the future for medicine in America. It's the future for medicine in Vermont. And I say if we're the first state to get all of this right, we get the jobs, we get the economic opportunities. So the answer, Diane, is I can't afford to wait.

REHMAll right. Robert Zarr.

ZARRYou know, I also have to add that there is incredible public support around the country for single-payer. The public has been polled year after year. A vast majority of Americans support the idea of creating a national health insurance system. You have 59 percent of physicians in this country who have been polled, as recently, I believe, as 2007, who support the creation of national health insurance. You have the nurses on board. You have faith groups on board. You have a majority of the mayors on board. The country is ready for this. There are invested interests who would like to see this not happen. But the fact of the matter is...

REHMWhy? Why?

ZARRBecause, right now, in the current non-system, there's a lot of opportunities to make profit off of the ill, off of the sick. You make money off of denying care.

REHMJulie Rovner, do you want to comment on that?

ROVNERWell, going to single-payer would basically take away the insurance industry. That would be -- that's a very large obstacle in this political environment.

REHMJulie Rovner of NPR, and you're listening to "The Diane Rehm Show." I'm going to open the phones now. I know many of you would like to comment. First to St. Louis, Mo. Good morning, Robert. You're on the air.

ROBERTHi, Diane.

REHMHi.

ROBERTI'm a cardiologist in St. Louis. And I just wanted to, first, compliment the governor for the most clear and concise statement of the fact that most of these problems, if not all of them, have been solved by virtually all other industrialized countries. This is something that doesn't really come out clearly in the discussions, including the ones you've had, you know, previously on this topic. I want to make this one comment. The single-payer system, clearly, the inefficiency of the insurance industry, the amount of -- a percent of your dollar, 25 to 30 cents of every medical care dollar that gets drained away in insurance company administrative cost and profits is, of course, one of the big problems.

ROBERTBut, in addition, I just like to put in -- I know this concept that the -- one of the other problems that we have here that has been largely solved in all these other industrialized countries is the litigation and malpractice problem. And it -- you know, there's been controversy about this, but from the physician's point of view, this does result in a -- in quite a large amount of useless testing and even treatments. It probably accounts for another -- at least 15 cents out of every dollar, maybe as much as 30 cents out of every dollar. And physicians see this every day.

REHMAll right. Michael Cannon.

CANNONWell, I think that one of the myths that we've heard over and over again in this discussion is that, somehow, other countries have solved the problem of rising health care spending, the rising health care cost. But every country, every advanced country, whether they have a single-payer system or some mix -- other mix of public and private health insurance, they all generally have the same rate of growth in health care spending as we do in the United States. So it's not accurate to say that Vermont will contain health care spending if they move to one -- to a single-payer system or something close to it.

CANNONThey're going to start at the baseline of spending there -- where they're at right now -- and spending is going to keep growing at the same right it always has, if other countries are any judge or any guide. And that fact, combined with the fact that Vermont's own budget number crunchers have estimated that revenues will not keep up with the spending underneath this program, means that Vermont is going to be put in a position where they either have to deny care to people or they're going to have to raise taxes.

REHMOkay. Let's let the...

CANNONBut one of the options here is...

REHMI want to hear the governor's point of view on this.

CANNONBut one of the other options here is that -- and they've said this explicitly -- they're going to try to get the money, fill the gap with money from the federal government, which means that people in other states are going to be paying for Vermont's experiment.

REHMGov. Shumlin.

SHUMLINWell, that's all pretty creative imagination. None of it's true, in all due respect. What we're trying to do here is -- first of all, if you look at what we're spending nationally, we're spending roughly 28 to 30 percent of our gross national product on health care. There's no other country in the world that's doing that. But the point is, we have an opportunity here to do health care right, and I believe we can get it done. And if we don't, it's going to cost tremendous harm to the business community and to the middle class. So all I can say is we're not rationing care.

SHUMLINYou know, all the old scare tactics that the industry uses, that the folks that are making so much money off of our health use to argue this case -- that may work in other states. I don't think it's going to work in Vermont. Vermonters are smart. We're pragmatic. We know when we're wasting money, and we know when we're creating a system where health care providers can't do their job anymore.

REHMJulie.

SHUMLINThey're looking for insurance companies. They're being second-guessed. We want a system where our health care providers who have extraordinary quality can make us better. And we want to get the waste, the profit, the abuse and, I might add, the crazy payment system, where they get reimbursed for fee-for-service instead if making us healthy -- we get all that right, and I say we'll not only create jobs, but our little state of Vermont will be the envy of the country. And other people will follow.

REHMJulie.

SHUMLINAnd that's our goal.

ROVNERThe governor is correct that the United States spends way more than any other country. But Michael is correct that no other country had solved the rise -- the rate of cost problem, which is kind of depressing that no matter how -- no matter what kind of system any other country has, everybody is suffering from -- or all the other industrialized countries are suffering from the same two problems, which is demographics and aging. In Western cultures, we have pretty much aging societies and new technology.

ROVNERAnd, you know, lots of other countries have devised various ways of trying to ration care. It's a terrible word. But you got to figure out how to do it 'cause you can't -- if you give everybody everything as they're getting older, your costs are going to explode. And that's what this whole debate is really about at its core.

REHMJulie Rovner, she's health policy correspondent for NPR, author of "Health Care Policy and Politics A-Z." And we'll be right back.

REHMAnd we've had lots of comments, like this one from Robin who says, "I've had my fill of these right-wingers from America talking poorly about the Canadian system and the health care. Nobody goes bankrupt, nobody gets turned away because of any condition, and nobody pays for their health care out of their pocket. I'm tired of people lying about my country." Do you think people are lying about the Canadian health system, Julie?

ROVNERI think there are some people who are exaggerating about the Canadian health system. But, you know, in Canada, there are people who do have to wait a long time. And as I say, there's, you know -- if you only have limited budget sometimes and then there are, you know -- you have what's called rationing by queue, and that's when you have to wait. And in England, they have the -- there are people who they approve certain things and they don't approve certain things based on their -- you know, on their cost-effectiveness. There are various ways of, you know -- basically, as they say, of not giving everybody everything. In the United States, we have -- basically have rationing by people who don't have health insurance.

REHMTrue.

ROVNERI mean, we have rationing by default.

REHMTrue.

ROVNERSo there's rationing everywhere. It's just whether it's, you know, basically rationing by a system or rationing by a non-system.

REHMAnd, also, a lot like this email from Kim in Rochester. She says, "At last, someone who understands that for-profit insurance is part of the problem, not part of the solution. The insurance companies simply take 20 to 30 percent off the top before a penny goes to health services. Maybe Vermont will be the U.S.'s Saskatchewan which led the way to Canada's national health care system." What do you think of that, Gov. Shumlin?

SHUMLINWell, you know, we're trying to take on a very ambitious project, and we don't want to over-promise. We're going to try very hard to get it done right. I just want to echo what Julie just said about the exaggeration of the Canadian system. And that seems to be something that we all know that for-profit insurance companies and others have exploited in America whenever we talked about real health care reform. But I had a fascinating lunch with the Premier Charest, from Quebec recently, and he said to me in a joking away, gosh, I love eating your lunch on jobs every single time when the company is debating whether to move to Canada or to Quebec or Vermont.

SHUMLINI said, well, what do you mean? He said, well, I get them every time. I said, well, could you stop that? I need jobs. How are you doing it? He said, well, I just point out that it cost $10- or $12,000 an employee to provide health care down in the United States. And, here, it's shared by everybody, and they ought to move to Quebec. I seem to land them more times than not. So I, frankly, want to start bringing those jobs to Vermont.

REHMHere is a tweet from Andrew, Governor. He says, "The governor fails to explain just where the cost savings will come from."

SHUMLINLet me explain that because it's a great question. The first, low-hanging fruit, 8 to 9 cents in $1 -- what our consultant from Harvard, Dr. Hsiao, estimates to save us 500 million bucks in the first year -- is from a system where we collect money instantaneously when you come out of the provider's office. You come out of the provider's office, you go up to the counter, you take out your Green Mountain health care card, you -- they say, listen, we just did $1,000 of work to you. You know, we're paying $900. You're paying 100 bucks, check, cash, or credit card. And you don't leave that provider's office without the due -- without paying your bill anymore than you'd walk into Hanover or Shaw's grocery store and walk out with the groceries and not pay your bill.

SHUMLINThat saves us 8 to 9 cents. That's what we call the low-hanging fruit. Second, that same Green Mountain health care card is a pipeline to your medical records so that we know exactly what happened to that patient for the next provider, what they're prescribed, who's done what, what cash, so that we're not duplicating services as we do in the current system. And third and most importantly -- and this is the big money -- moving from a fee-for-service to an outcomes-based payment plan, so that we give our providers money, fair money, for keeping us healthy, not the crazy system we have now where they have to bill based on fee-for-service, number of procedures to try and keep up with the system that under-reimburses them.

REHMOkay.

SHUMLINThat's where the big money is.

REHMRobert Zarr.

ZARRI would like to see that Green Mountain card when you'd go to get to pay for the bill, there is no bill. I don't believe that there is any evidence to suggest that having that co-pay, having that deductible is going to improve health outcomes. All the data is actually the obverse of that. So, once again, there are parts of this that need to be brought out. We talked about state poorest -- poorest state borders. The answer to that, really, is House Resolution 676, Conyers bill, because you can't jump a chasm in two leaps. It's one leap, right? And so the movement for single-payer has been a national movement. That is a very important message. And if you read the bill, which isn't a very long bill, it talks about these basic principles of how you save money, how everybody is included, and how you can do it with one-payer.

REHMYou know, we're always in critical mode, always. So what are you saying about the governor's plan to collect instantaneously, to have a pipeline to medical records? I realize you're not too happy with his outcomes-based portion of it, but what about the first two principles?

ZARRIt's not that I'm unhappy with the outcomes-based. Let's just take the country, for example, of Taiwan, went single-payer in 1995. I actually personally met the chief financial officer of the Taiwanese health care system, and he gave two brilliant examples. The most important one was the day they went to single-payer -- and very similar to what Gov. Shumlin is suggesting here -- is that every single day, at the end of the day, the government knows what's been done and what to pay for. And they found out, for the first time in their history, that the ERs, the emergency departments, were seeing an enormous number of head injuries. And so a public campaign for wearing helmets happens shortly after that.

ZARRAnd then they continue to watch the billing that happened in their emergency rooms for head injuries. And, lo and behold, what happened? They reduced. This is a great example of how, just by the billing process alone, by simplifying the billing process alone, you know at the end of every day what's happening and to give you an idea of how to implement prevention to decrease the overall cost and to get people to be -- to lead healthier lives.

REHMGov. Shumlin.

SHUMLINWell, Robert hits it on the head. That's exactly what we're trying to do. And as you move to a outcomes-based payment system -- which is what exactly what he's talking about -- everybody, schools, communities have an interest in promoting healthier living, better outcomes based upon exercise, getting off the smokes, eating well, buying Vermont-grown cultural products instead of, you know, industrial farm food, making sure that we're living in a culture where we're all invested in healthier outcomes. Preventative care and access helps deliver that, so...

REHMAll right. To Chantilly, Va. Good morning, Leslie.

LESLIEGood morning. How are you?

REHMFine. Thanks.

LESLIEI actually was calling just to comment. First, I wanted to say to the governor from Vermont how happy I am to hear him talking about this one-payer system. It's really frightened me that the political climate -- you have people screaming about, you know, no unified health care, ObamaCare, ObamaCare, whatever, and missing the point, as far as I'm concerned, which is, really, taking care of people, making sure every one is healthy. And that the gentleman -- I think his last name is Mr. Cannon -- that had comments about -- negative comments about the Medicare and negative comments about the Vermont proposal.

LESLIEI would love to hear him talk more about the solution instead of picking apart. That takes away all his validity as far as I'm concerned. And, I guess, I'll end with saying that I hope that this goes well 'cause when I heard that, I was like, maybe I'll move to Vermont, you know, 'cause this is fantastic. I'm excited.

REHMAll right. Thanks for calling.

SHUMLINWell, we'd love to have you.

REHMDr. -- Michael Cannon.

CANNONWell, I would be happy to spend an entire show on the solutions. Unfortunately, mine aren't on the table. But let me contrast one of them to what they're proposing to do in Vermont. The governors talked about adopting a payment system that rewards people -- that rewards providers for keeping people healthy. What he's actually talking about doing is creating or adopting a Canadian-style payment system. This is one where the government gives health care providers a fixed amount of money to care for a population of patients. And what happens under that system is whatever they don't spend providing care -- on providing care to you, the providers get to keep.

CANNONSo it does exactly what Robert says a free market would do, which is it allows doctors to profit by denying people care. Now, what I would like to see in terms of a solution is, I would like to see you choose between whatever kind of payment system you want to have between your insurance company and your providers, so that if you like that sort of payment system -- and, frankly, I think, in a competitive marketplace, I would sign up for that sort of payment system, which is available in plans like Kaiser Permanente or Group Health Cooperative. You can sign up for that.

CANNONBut if you would prefer a different kind of payment system, like the one that -- the fee-for-service payment system that predominates in the United States right now, you'd have that choice, too. But under a government-run system, the government makes that choice for you, and you get all the ills of whatever payment system they'd choose.

REHMGov. Shumlin.

SHUMLINWell, I would say that we have all the ills of the current payment system, which isn't...

CANNONWhich is put in place by Medicare, Governor.

SHUMLINWell, what we intend to do with Medicare and Medicaid, with a little help from our friends in Washington, is get a waiver so that we can pull all of this into a single system, all the current dollars. We're not asking for -- as you stated earlier, was actually incorrect. We're not asking for one single additional dollar that we're not getting from the federal government. All we're asking of in Washington is for them to give us the dollars that we have and let us charter our own course. It's actually a very Republican argument. Now, President Obama has been extraordinarily supportive, as has many members of Congress. Secretary Sebelius, we've been communicating with her and meeting with her right from the beginning.

SHUMLINThey've been really helpful and cooperative in helping us to try to get this done. But the answer is, we can look at the models of every other country, except America, and see what they're doing well, adopt what they're doing well, throw out what they're not doing well and come up with the first system in America that works, that grows jobs, grows economic opportunities and uses less dollars on waste in profit and inefficiency in our health care system so that we can use those dollars for other things that will grow jobs and economic opportunities. And I just say, you know, we keep talking about this as if this is so radical.

SHUMLINI keep saying, folks, what if we join the other nine (sic) states -- this is what I said to Vermonters. What if we join the other 49 states and pretend that everything is beautiful and just leave the system alone? Then, where are you? And everybody universally agrees, with very few exceptions, we're in huge trouble. We lose our rural health care providers, our hospitals are in trouble, our businesses can't afford the 20 percent increases that they're getting on their premium increases every year, and our system is broken. So, you know, I'm not doing this because it's politically popular. I'm not doing it because I'm looking for a fascinating project. I'm doing it because -- to grow jobs and economic opportunities in Vermont.

SHUMLINThis is a critical piece that's killing jobs. You know, I was on a panel last week with my friend Scott Walker from Wisconsin, the governor down there, you know. He's going after the plow truck drivers and the teachers in saying, well, this is how I'm going to solve my budget problems. I'm saying, Vermont, that isn't where my challenge is. The guy that's making 15 bucks an hour driving a plow truck in a 12-hour storm with (unintelligible) pass him on one side and, you know...

REHMAll right.

SHUMLIN…(unintelligible) in the other, my challenge is health care costs.

REHMGov. Peter Shumlin of Vermont, and you're listening to "The Diane Rehm Show." Julie Rovner, you've heard the entire program. You've heard what the governor has to say. You've heard what Michael Cannon has to say and what Robert Zarr has to say. Where are we in the whole medical care debate as to what is truly possible?

ROVNERWell, you know, certainly, the states are struggling at the moment to figure out how they're going to come to grips. I mean, right now, the states are figuring out how they're going to come to grips with the new health law. That's really what's going on. Obviously, the bigger debate is, as the governor put it, you know, what's going on with health care cost? Now, this is not happening in a vacuum. Every state is in a budget crisis, driven mostly by the Medicaid program. There was extra help from the federal government from Medicaid costs that is ending on June 1. So every state is looking at a budget crisis of its own, driven by healthcare cost. Every business, every individual, as we know, is looking at rising health care cost.

ROVNERAnd I would add, parenthetically, that the majority of those are not driven by the new health law, that those were happening anyway. Some small portion of those are due to the health (word?) -- but most of them are not as -- just due to health care inflation. So everybody is looking at, as we've discussed, how to get a handle on health care cost.

REHMAnd does Vermont's approach, even as a first step, begin to make sense around the country?

ROVNERWell, everyone is talking -- you know, it's funny the governor is talking about, you know, paying for outcomes. That is something that the new law talks about. That's something that Republicans are talking -- or have been talking about. At least, but for now -- now that it's in the new law, and they want to see the law repealed, they're not talking about it so much. But that was something that was in Sen. McCain's health plan when he was running for president. So there's a lot of things that people seem to agree on as a possibility, but the big difficulty with it, as we've discussed, is that nobody really knows how to slow down health care cost.

ROVNERI mean, one of the doctors earlier talked about malpractice, but, you know, all of the studies that come out -- and there's study after study after study -- shows that's a very small driver.

REHMReally. Really.

ROVNERIt really is. It would be a good thing to solve because it's a problem, but it's not one of the huge drivers. The huge drivers are new technology and demographics, and so it is something that, as a society, we really have to get a handle on, and nobody is really sure how.

REHMRobert Zarr.

ZARRYou know, the reason why Vermont is doing this is simple. It's because the new health law will leave 23 million Americans still uninsured and at least another 23 -- if not more -- million Americans underinsured, and it doesn't control cost. If we have to come back to those very important issues, as was mentioned earlier, they have a budget shortfall of $150 million. They have to do something. I also have to point out single-payer is very middle of the road. That's -- we have to keep that in mind. It's the private delivery of health care that's paid for by everyone through taxes.

SHUMLINAnd, Diane, if I can just chime in here because both Robert and Julie made good points about the national health care bill. I just want to tell you, the national health care bill -- President Obama's effort is a huge friend of ours in this effort. What a lot of our bill does is create the exchange, a single exchange, that allows us to build a bridge to this system in 2014, so I just want to be clear...

REHMAll right.

SHUMLIN...as Vermont's governor. That's a great bill. It's a huge help to us. It doesn't go as far as some of us wish, but it is a tremendous start.

REHMGov. Peter Shumlin of Vermont, Dr. Robert Zarr of the Physicians for a National Health Care program, Julie Rovner of NPR, Michael Cannon of the Cato Institute. Obviously, lots more to be said and to be heard in regard to these problems. Thanks for listening, all. I'm Diane Rehm.

ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Susan Nabors, Denise Couture, Monique Nazareth and Sarah Ashworth. The engineer is Tobey Schreiner. Dorie Anisman answers the phones. Visit drshow.org for audio archives, transcripts, podcasts and CD sales. Call 202-885-1200 for more information. Our email address is drshow@wamu.org. And we're on Facebook and Twitter.