There is a health insurance crisis in Vermont caused by its failed attempt to create a single payer health insurance system. Mandates such as "community rating" -- which requires insurers to charge the same premium to all consumers regardless of age, gender, health status or personal habits -- drove all competition out of the market. Without competition, the premiums for private insurance began to rise annually by 15 percent to a high of 37 percent, and yearly increases now average 20 percent.

Although the state legislature defeated an attempt to adopt universal health coverage, in 1994 Gov. Howard Dean, a physician, began expanding Medicaid to create universal coverage. Eligibility limits were increased to 300 percent of the poverty level, allowing families with incomes up to $50,100 to qualify for the program. By January 2000, over 53,000 (36 percent) Vermont children were covered by government programs, and 40 percent of those also had private coverage.

Hospitals that have lost money due to lower reimbursement rates from the state have shifted $35.5 million in costs to private pay customers. This expansion has had serious affects on the health care market in Vermont:

• The young, healthy and poorer are subsidizing the sicker, older and richer.

• Individuals have moved from privately insured to uninsured to government insured.

• Medical Savings Accounts (MSAs), one of the most promising health reforms, were effectively eliminated.

• There is costly overuse of health care by government patients who regard it as "free."

Experts say reviving a competitive health insurance market requires making individuals responsible for their own wellness and health expenses, encouraging the creation of MSAs for individuals and families, repealing community rating, and reducing and/or repealing all government mandates requiring specific items be covered by insurers.

Source: John McClaughry, "Reviving Health Insurance in Vermont," April 2000, Ethan Allen Institute, 4836 Kirby Mountain Road, Concord, Vt. 05824, (802) 695-1448.