Residents of the Green Mountain State have just been spared the catastrophe of single-payer, government-run healthcare. At a press conference Wednesday, Vermont Gov. Peter Shumlin surprised supporters and opponents alike by announcing that his state’s planned universal healthcare program would not become a reality, at least for the foreseeable future.
“In my judgment, now is not the right time to ask our legislature to take the step of passing a financial plan for Green Mountain Health Care,” Shumlin, a Democrat, said.
The move to a taxpayer-financed healthcare system in Vermont is required by Act 48, which Shumlin signed into law in 2011. But, just as the Obama administration has unilaterally postponed portions of the Affordable Care Act (ACA), Shumlin decided to postpone Green Mountain Care indefinitely. Likewise, just as many Americans have argued that the president does not have the authority to alter the ACA, so “advocates of a single-payer plan said Shumlin should not be able to cast aside Act 48 … without repealing it,” reported Politico.
Shumlin’s announcement was, in fact, a presentation of his proposal for financing the more-or-less single-payer plan. (As Politico noted, the plan exempted “large companies with self-insured plans” and would not have replaced Medicare for seniors.) The governor had missed two previous deadlines for submitting his proposal, all the while proclaiming his undying support for single-payer healthcare. Indeed, observed Vermont Public Radio (VPR), “The shocking policy reversal comes just six weeks after an election in which Shumlin had vowed, in unequivocal terms, to make Vermont the first state in the country with a publicly financed health care system.”
Assuming Shumlin wasn’t just keeping up appearances to win reelection — he claims he was unaware of the factors that led to his December 17 announcement “until just days ago,” according to VPR — what caused him to give up on single-payer so quickly? Reality.
“It was clear to me that the taxes required to replace health-care premiums with a publicly financed plan that would best serve Vermont are, in a word, enormous,” the governor said.
All businesses would have been forced to pay a new 11.5-percent payroll tax, and individuals would have been subjected to an additional graduated income tax of up to 9.5 percent. That maximum rate would have kicked in at an annual household income of about $100,000 for a family of four, with the tax capped at $27,500 for a single household. The necessary levies, Shumlin said, would create too great a “risk of economic shock,” and gradually phasing in the payroll tax on small businesses to reduce the shock would have created a $500 million deficit that then would have to be covered by hiking the payroll tax on large businesses and the individual income tax.
Win Smith, owner of the Sugarbush ski resort, “said business owners like him are breathing a collective sigh of relief,” wrote VPR.
“My healthcare costs would have gone up by 61 percent if that plan had gone through,” said Smith, who is also a member of a business council Shumlin had appointed to offer advice on the healthcare proposal. “If there were that 9 percent [income tax] on employees, many would have been paying more than they’re paying now. It would have been a lose-lose. So I’m not unhappy that that plan is not going forward.”
Taxes are, of course, always high and rising in “universal” healthcare systems, but there were other reasons for the exceptionally high rates in Shumlin’s proposal.
For one thing, “Green Mountain Care’s new-revenues requirement had ballooned to $2.6 billion — up from prior high estimates of $2.2 billion,” wrote Watchdog.org. “The overall cost for Green Mountain Care’s operations and coverage is estimated at $4.3 billion.”