Three weeks after the House of Rep­re­sen­ta­tives vot­ed to repeal last year’s land­mark health­care reform leg­is­la­tion, and one week after a fed­er­al judge ruled the bill’s insur­ance man­date uncon­sti­tu­tion­al, Vermont’s lead­ers decid­ed to take mat­ters into their own hands.

On Feb­ru­ary 8, new­ly inau­gu­rat­ed Demo­c­ra­t­ic Gov. Peter Shum­lin unveiled his plan for a pub­licly fund­ed sin­gle-pay­er health­care sys­tem, which was intro­duced into the state’s leg­is­la­ture. If enact­ed, which appears like­ly, it will be the first sys­tem of its kind in the Unit­ed States and Ver­mont would become the first state to abol­ish most forms of pri­vate health insurance.

“In five years, I pre­dict the Unit­ed States will go through anoth­er major debate of how to reform the health­care sys­tem,” Har­vard School of Pub­lic Health Pro­fes­sor William Hsiao told the state’s leg­is­la­tors in Jan­u­ary, not­ing his belief that the fed­er­al reform leg­is­la­tion passed in March 2010 will not solve the nation’s health­care cri­sis. ​“The ques­tion for Ver­mont is, do you want to walk ahead of the Unit­ed States? Do you want to be a mod­el for the Unit­ed States?”

Last year, law­mak­ers passed a bill to hire a team of con­sul­tants led by Hsiao – an econ­o­mist who helped to devel­op uni­ver­sal health­care plans in Tai­wan and reform Medicare and Med­ic­aid in the 1970s – to design a new health­care sys­tem for the Green Moun­tain State. Accord­ing to Hsiao’s research, about 32,000 peo­ple, or rough­ly five per­cent of the state’s pop­u­la­tion, would still be unin­sured after fed­er­al reform mea­sures take full effect in 2014. (Fifty sev­en thou­sand, or 9 per­cent, of Ver­mon­ters are cur­rent­ly uninsured.)

What Hsiao and his team end­ed up rec­om­mend­ing to the state was a sin­gle-pay­er sys­tem that would ensure cov­er­age for all res­i­dents. An inde­pen­dent pub­lic body would over­see the sys­tem and con­tract out admin­is­tra­tion of all claims. Pri­vate insur­ers could com­pete for this work, as they have done for years to admin­is­ter the state’s Medicare pro­gram. The bill, cur­rent­ly in com­mit­tee, would take an esti­mat­ed three to six years to implement.

“I know what I’m going to present is not nec­es­sar­i­ly pop­u­lar for every­one,” Hsiao said as he began his Jan­u­ary pre­sen­ta­tion in Mont­pe­lier. ​“A health sys­tem is a com­plex sys­tem.” The annu­al sav­ings that would be cre­at­ed by the sys­tem, how­ev­er, do appear to be pop­u­lar among law­mak­ers and pub­lic offi­cials. Hsiao’s team esti­mates the sin­gle-pay­er sys­tem could save the state at least $580 mil­lion year­ly, or $1.2 bil­lion by 2019, and cre­ate 4,000 jobs because the bur­den of ris­ing health­care costs would be lift­ed from businesses.

On Feb­ru­ary 24, the Repub­li­can May­or Christo­pher Louras, of Rut­land, urged the state to adopt the sin­gle-pay­er leg­is­la­tion, not­ing that more than a third of the city’s $7 mil­lion annu­al pay­roll is con­sumed by health­care costs. ​“The only way to fix the prob­lem is to blow it up and start over,” Louras said.

The intro­duc­tion of the health­care bill comes in the first months of Demo­c­ra­t­ic Gov. Peter Shumlin’s first term in office, which fol­lows eight years of Repub­li­can rule under Gov. Jim Dou­glas. Shum­lin sup­port­ed a sin­gle-pay­er health­care sys­tem dur­ing his cam­paign, call­ing Vermont’s cur­rent sys­tem ​“bro­ken.” Anya Rad­er Wal­lack, the spe­cial assis­tant to Shum­lin on health­care, cit­ed waste and ​“crazi­ness” as fac­tors trou­bling the state’s cur­rent health­care sys­tem dur­ing tes­ti­mo­ny before Ver­mont House and Sen­ate com­mit­tees on Feb­ru­ary 8. Three pri­vate insur­ance car­ri­ers oper­ate in Ver­mont, along with Medicare and Med­ic­aid and var­i­ous sup­pli­ers of work­ers’ com­pen­sa­tion insur­ance, a struc­ture Wal­lack called ​“mis­guid­ed.”

Dr. Deb­o­rah Richter, pres­i­dent of Ver­mont for Sin­gle Pay­er, which has advo­cat­ed for a new health sys­tem since 2003, says that ​“on the whole” the group sup­ports Hsiao’s plan. ​“Esti­mates are that [Hsiao’s sys­tem] will not only be able to cov­er every­body, but for less mon­ey,” Richter says. ​“Ver­mont is unique­ly poised to get this done.”

The state can­not ​“get this done,” how­ev­er, unless it receives a waiv­er from the fed­er­al gov­ern­ment to bypass the fed­er­al reform leg­is­la­tion. Shum­lin thinks that won’t be a prob­lem; Vermont’s entire con­gres­sion­al del­e­ga­tion – Sens. Bernie Sanders (I) and Patrick Leahy (D) and Rep. Peter Welch (D) – sup­port the sin­gle-pay­er effort and intro­duced a mea­sure to allow states to receive waivers from fed­er­al reform require­ments as soon as 2014, as long as they cov­er as many unin­sured peo­ple as fed­er­al law would. (They cur­rent­ly have to wait until 2017.) On Feb­ru­ary 28, Pres­i­dent Barack Oba­ma told state gov­er­nors he would sup­port the ear­li­er date.

Hsiao seems opti­mistic. ​“I can say with full con­fi­dence that your bro­ken sys­tem can be fixed,” Hsiao coun­seled Ver­mont law­mak­ers. ​“But we require you to…adopt the right solution.”