Can you hear Blue Cross screaming in the distance? Vermont is about to hit the road toward a real (if modified) single-payer health care–Medicare, but for everyone. Cut out the middlemen, save some money, cover more people.

In Washington, insurance companies are deploying their lobbying might to chip apart the gargantuan federal health reform–at least the parts that won't turn them a bigger profit. States governed by "kill all government" leaders are trying overturn the whole reform law in federal courts. But Vermont has turned its back on the catfight.

It won't be easy. Vermont has to persuade the federal government to hand over, in cash, the amount that it would otherwise cost to enable the privatized health reform passed by Congress last year. It still has to figure out how much single-payer will cost, how and how much its citizens and employers will pay and how the state will directly reimburse doctors and hospitals. (Large self-insured employers that choose to stay with private plan administrators may do so). But the state wll also shed a lot of expensive insurance baggage.

From a Kaiser Health Foundation report on the Vermont legislation:

Supporters of the change … point to statistics showing that health spending more than doubled in Vermont between 1992 and 2009. [Gov. Peter] Shumlin's office has estimated the state would save $500 million in the first year of a single-payer plan.

That would come from reduced insurance marketing and administrative costs. Hospitals and physicians also lose time and money in filling out claims information for every private health plan they bill.

Not to mention all the hours billed by backroom administrators and lawyers to stop patients from getting care. And all the trees and electrons that will be saved when doctors' offices can quit spending as much time on paperwork as they do on patient care.

As Gov. Shumlin signs the single-payer legislation Thursday, insurance companies will be gearing up paint Shumlin as a mad socialist intent on letting government killy granny. But the state has a strong reformist record, and already stretches its Medicaid dollars to cover more of its population than other states.

A New York Times story on the physician who's credited with getting the single-payer ball rolling in Vermont also contains the anecdotes that should sustain the push to get it done:

Dr. Richter said she embraced the idea of a single-payer system as a young doctor in Buffalo, where many of her patients put off crucial treatments because they were uninsured. As a medical student, she saw a patient with a life-threatening heart infection caused by an infected tooth that had gone untreated because he lacked dental insurance.

“He was in the hospital for six weeks, and I was like, ‘This makes no sense,’ ” she said. …

Once, she presented [to the Vermont Legislature] a printout of all the insurance companies her small practice in Cambridge had billed over five years.

“It was like 190 pages long,” she said. “Here we were, this tiny rural clinic having to bill all these different addresses. And all of them have different rules and reimbursements; I mean, it’s ridiculous.”

While insurance companies tremble at the idea of even a small, green and civil state actually instituting a Medicare-for-all system, Vermont's concept is also taking hits from the left. Hard-nosed advocates for absolute single-payer, including Physicians for a National Health Program, call the plan "well short of the single-payer reform needed.” They object to letting the largest employers keep using private companies to administer benefits. That's about the best example I've ever seen of letting the perfect be the enemy of the (very) good.

Other states including Oregon would also like to take the federal money and try to do more with it at less cost than private insurance. Oregon Sen. Ron Wyden has introduced a bill to allow states to ask for waivers that would fund alternative systems now, rather than in 2017 when the existing federal law would free up money for state plans.

Vermont, however, is a step ahead. It has a real single-payer plan and a backup plan–go along with the federal reforms while doing all the planning. Then whenever the state can break loose the federal money, it will be ready to break loose from the insurance industry. That's what's causing Blue Cross such unbearable pain.