Two weeks from now, Vermont Gov. Peter Shumlin will describe how he thinks the country’s first state-based single payer system will be financed. Whether the Green Mountain State keeps moving forward with its goal of achieving universal coverage while also reducing the growth of health care spending depends largely on how the state’s residents and businesses react to what Shumlin has in mind.
Vermont lawmakers passed a bill in May 2011 that set the state on the path toward single payer, but the bill left it up to Shumlin to figure out the financing. Although everyone has known from the beginning that the cash needed to operate the new system—estimated at $2 billion in its first year— will have to come from tax revenues, no one knows exactly what combination of taxes the administration favors.
Earlier this month, vtdigger.org reported that Shumlin would propose both an employer payroll tax and an increase in the state income tax. The money generated would then replace the premiums that employers and residents currently pay health insurance companies.
Even though Shumlin signed the single payer bill into law almost four years ago, Vermont can’t implement its plan until 2017 because the Affordable Care Act prohibits states from making significant changes to their health care systems until then. The ACA also stipulates that states will have to persuade the feds that any structural changes they want to make will not reduce the number of people with health insurance or increase costs.
The release of the Shumlin administration’s tax proposal will represent the insurance industry’s biggest opportunity to derail the state’s plans. Health insurers have reason to be concerned. Even though Vermont has just 627,000 residents, successful implementation of a single payer system there would show the rest of the country that health insurance companies are unnecessary middlemen that add costs rather than value.