A bill introduced in the Vermont Senate promises to provoke discussion about how Vermonters will pay for the new single-payer health care system that the Shumlin administration is busily piecing together. The bill may provide an oversimplified revenue scheme, but discussion of the question is welcome.
Sen. Peter Galbraith, author of the bill, has proposed to use a payroll tax to pay for Green Mountain Care, the single-payer system due to go into effect in 2017. According to the bill, employers would pay an 11 percent payroll tax, and employees would pay 2 percent. The bill would also institute a 10 percent tax on non-wage earnings, such as capital gains, thus tapping into the income of those not on anyone’s payroll.
It is important for Vermonters to become familiar with the concept embodied by Galbraith’s bill. The imposition of a sizable payroll tax can be expected to produce howls of protest from those opposed to any sort of tax increase. Thus, if the Shumlin administration and Legislature expect to succeed, they will have to make sure Vermonters know that the new tax would be offset by the elimination of health insurance and the deductions coming out of the paychecks of most working Vermonters.
Many people probably don’t think much about the premiums that shrink their paychecks every payday. But insured workers are giving up a sizable portion of their earnings to pay for insurance. Employers are also shouldering a huge cost, which continues to rise, cutting into the income that we all take home. When we go to town meeting to vote on town and school budgets, we confront this escalating cost when we vote on budgets forced ever higher by the cost of insurance for town and school employees.
The new system will not relieve us of the cost of health care, but our money will be directed to the state rather than to an insurance company. Because a single payer is expected to be more efficient than a complicated insurance marketplace and will be without a need to return a profit, the total cost is expected to be reduced, or its growth to be contained.
For Vermonters to be willing to divert their health dollars from insurance companies to state government will require one essential ingredient: trust. The trust presently enjoyed by insurance companies sets a low bar — it is well known that insurance companies make their money by finding ways to deny people care. But by establishing a single-payer system, state government will be taking over responsibility for as much as one-sixth of the state’s economy. It is an unprecedented, complex, mammoth task, and the administration and Legislature have a big job ahead in persuading Vermonters to trust that they will be up to it.
The introduction of Vermont Health Connect has shaken that trust. Problems with the website and newly elastic deadlines have raised questions about the competence of state government and whether the challenge is too great. It appears that at the state and federal levels, website difficulties are being ironed out, but it will be important for state officials to be prepared to respond with candor and openness about future difficulties.
Delays in decisions about the financing plan for Green Mountain Care have raised questions about the administration’s candor, particularly among Republicans. But it is reasonable to believe that health care officials have a legitimate interest in working out the details of their plan before stirring up a public discussion.
Galbraith’s bill may kick-start those discussions, which will be helpful. Ultimately, the administration will have to come up with answers. If it takes officials extra months to figure out how much they need to raise and the best mechanisms for doing so, that is a small price to pay to give them time to get it right. Deadlines are approaching, and whether they like it or not, they’re going to have to say yes or no to a payroll tax or some other mixture of revenue sources. We might as well begin that discussion now, if only to prepare Vermonters for what is to come.