Vermont legislators are considering the possibility of creating the nation’s first single-payer health insurance system to control health care costs.

The legislature signed a contract with a team that includes William Hsiao, a Harvard University economist who is credited with creating the single-payer system used in Taiwan, and Jonathan Gruber, a Massachusetts Institute of Technology economist who helped design Massachusetts’ health exchange system, according to a Stateline.org report.

The team’s suggestions are to be included in a report expected early in 2011, according to Stateline.org.

Vermont seems an unlikely place to try an approach that could be followed throughout the country. Less than 10% of the state’s population lacks health insurance, making it among the lowest in the nation, and the United Health Foundation deemed it the healthiest state in the U.S. four consecutive years, according to the Stateline.org report.

Peter Shumlin, the Vermont Senate’s president pro tempore who will become governor Jan,. 6, 2011, told Stateline.org that any move toward a universal health system is an attempt to contain health care costs. The annual cost of health care in the state has doubled – to $5 billion annually – in the last eight years, the governor-elect told Stateline.org.

The possibility of the nation’s second-smallest state creating a universal health system comes amid ongoing debate and discussions among states and the U.S. Department of Health and Human Services over the design of state-based health exchanges. The exchanges, where individuals and small business owners will be able to compare prices and buy health insurance, are part of the federal health reform law, passed in March and under its own attack in more than 20 civil suits filed around the country.

During the health reform debate led by President Barack Obama during much of 2009 and early this year, the idea of a universal health system was bandied about by some Democrats, who consider it the most efficient means of controlling health care spending. With a universal health system, all health insurance is paid by government funds.