Single-payer advocates offer slate of taxes to pay for it
By Peter Hirschfeld
Vermont Press Bureau | December 11,2012
MONTPELIER — A group that helped build the political will for single-payer health care in Vermont has issued a report telling elected officials how to pay for it.
The Health Care is a Human Right Campaign unveiled a 17-page proposal Monday in which it identifies a combination of income and payroll taxes as the most “equitable” means of financing the new system. More a conceptual framework than a solid proposal — the report doesn’t estimate overall system costs or calculate the dollar value of the new revenue streams — the report says its blend of financing options would place the lion’s share of the financial burden on those best able to afford it.
“And that’s been one of the key principles from the beginning,” said James Haslam, director of the Vermont Workers’ Center, which oversees the campaign. “The Shumlin administration is doing all the work to figure out how much it’s going to cost, and we’re essentially saying this is the most equitable way to come up with the money.”
Administration Secretary Jeb Spaulding said he was impressed with what he called a very well-written report. “It will be a helpful document as the dialogue on how to pay for single-payer takes place in the coming months and years,” Spaulding said.
As to the specific proposal, which would use a mix of corporate and personal income taxes, combined with a “progressive” payroll tax, Spaulding said, “In general they make a strong case.”
“There is no question that the income tax is, in a sense, the most fair way to raise money,” Spaulding said. “And I think you also have to balance that with some other things so that we don’t overwhelm any particular revenue source. So a balancing test is also going to be required.”
Act 48, the single-payer law that charts the state’s course toward a publicly financed, universal system of care, calls on the Shumlin administration to propose a means of funding the plan by Jan. 15. Shumlin, however, has said that the timing was “probably a mistake.”
“I pushed for that language because I wanted to get it done by 2015,” Shumlin said during an appearance on “The Mark Johnson Show” on Oct. 31. “In fairness to legislative leadership, they said you’re not going to be able to do it by then. And it was probably a mistake on my part to make it that specific.”
Now that he’s come to terms with the fact that Vermont won’t obtain the federal waivers it needs to proceed with single-payer until 2017, he said his administration won’t recommend a financing plan until 2015 at the earliest.
As for Act 48, the 2010 law that requires the administration to deliver to lawmakers a “financing plan” next month, Shumlin said, “We will comply with the law.”
“But we will not be ready for prime time,” Shumlin told Johnson.
Spaulding said Monday that he doesn’t expect the Legislature to spend much time debating the merits of specific financing options next year.
But John Franco, a Burlington lawyer who worked as a paid consultant for the Shumlin administration’s health care team in 2010, said he thinks the legislative debate should begin in earnest in January. Franco is a longtime health care policy analyst but doesn’t currently have an official role with those working on the issue.
“We need to start having this discussion now,” Franco said. “There’s this desire to kick the can down the road for another biennium and not even have a discussion about what we’re doing. That’s not good policy, and it’s not fair to the people of Vermont.”
Franco said the proposal from the Health Care is a Human Right Campaign would result in a “catastrophic dislocation of the economy.” He said a successful public financing plan would need to come up with the $1.7 billion that employers and individuals currently pay for private health insurance (that figure will rise as health care costs inflate between now and 2017).
In 2010, Franco said, Vermont’s income tax raised just shy of $500 million.
“So think about what you’re going to have to do to income taxes to get anywhere close to that $1.7 billion figure,” Franco said Monday.
Not only is the plan not “remotely viable politically,” Franco said, but it takes a financial burden currently shouldered by employers and places it on the backs of working Vermonters.
Haslam said the progressive payroll tax — to be assessed only on employers and not workers — would take some pressure off the income tax. He said the plan envisions ways to tweak the tax code on corporate income so as to capture more money from large companies.
The plan also aims to tax not just income but “wealth” — i.e., the dollar value of personal assets — and would raise about $31 million annually by ending favorable tax treatment for investment income. The Health Care is a Human Right Campaign also rejects the use of any user fees, like copays, deductibles or premiums, to help pay for the system.
The Shumlin administration inked a $300,000 contract with the University of Massachusetts Medical School this summer to help devise a series of financing options. The administration will present a report to lawmakers Jan. 15.