Spoiler alert: VT state senator details cost of single-payer health care

By Bruce Parker | Vermont Watchdog

For two years, Gov. Peter Shumlin has concealed his plans for financing single-payer health care. His lead consultant, Jonathan Gruber, has admitted to deceptive policymaking and called lack of transparency “a huge political advantage.”

But at least one man knows what Vermonters can expect to pay for Green Mountain Care and isn’t afraid to tell.

Peter Galbraith, a former U.S. ambassador and two-term Democratic state senator from Windham County, holds the distinction of being the only lawmaker to have put forward a plan for financing Act 48, Vermont’s publicly financed health care program.

Although his bill never became law, the senator has a clear picture of what Vermonters can expect when Shumlin reveals his single-payer financing plan in January — a plan that will attempt to lay a $2.2 billion tax on the backs of about 630,000 Vermonters.

“If you do it on the sales tax, it would require a sales tax of 30 percent. If you do it on the income tax, you would have the bottom rate be 15 percent and the top rate be 30 percent. That would make the top effective tax rate in the state of Vermont about 73 percent,” Galbraith told Vermont Watchdog.

According to Galbraith, such taxes are highly impractical, making the only real options a payroll tax, mandatory premiums or a combo.

“If you want to raise $2 billion, there’s only a couple of ways you could do it. One is to have a payroll tax, which would be painful, but would more or less track how health care is paid for now,” Galbraith said.

The Galbraith plan proposed an 11 percent tax on employers and a 2 percent tax on employees, which he said aligns with current health care expenses for business.

“I think that’s the only way you practically could do it. All taxes are going to be very steep, but a payroll tax as a practical matter would work, because, for most people, it wouldn’t actually be different from what they’re already doing.”

The other option — one Galbraith doesn’t like — is mandatory premiums.

“If you just used premiums, every Vermonter not excluded from Green Mountain Care — and my proposal would have excluded seniors — would have to pay $5,200 dollars. That’s about $20,000 for a family of four.”

For Vermonters who find such costs unacceptable if not wholly impossible, Galbraith suggested a possible combo approach.

“If you used each source, you’d have a payroll tax of 4.25 percent, a public premium of $1,325, a 7.5 percent increase in marginal tax rates, and a 5.75 percent hike in the income tax — so, the income tax rate would be 12 percent. … All of these ideas are very difficult to sustain,” he said.

On Wednesday, the Shumlin administration released a campaign video to begin prepping Vermonters for what’s coming. In the animated clip, the administration argues Vermont must embrace a taxpayer-funded health care system because people without employer-based health insurance currently pay for their own plans.

Shumlin failed to win re-election in November after garnering less than 50 percent of the vote. Although the governor’s race is still undecided, the Democrat-controlled Legislature will appoint the state’s next governor in January.

Deborah Richter, president of the single-payer advocacy group Vermont Health Care for All, said she didn’t believe the election was a protest vote against Shumlin’s health care policy.

“I don’t think this was a referendum on single-payer. … People were angry about a lot of different issues,” she said.

Richter said taxpayer-funded health care will advance despite election losses for Democrats.

“It will be a bit more challenging, but we’re going to still keep going full steam ahead.”

Single-payer advocates held a rally at the Statehouse on Tuesday to urge elected officials to move forward with Green Mountain Care.

At the rally, Peter Sterling, director of the single-payer group Vermont Leads, said the election was not a call to abandon Green Mountain Care. He predicted widespread support for the Shumlin plan after January.

“Once we can tell Vermonters this is how much it’s going to cost, this is what you’re going to get and yes you can see your doctor, we’ll see strong public support for the program,” he said.

Asked if he thought Shumlin’s financing plan would be compromised due to Jonathan Gruber’s consulting role, Sterling offered a one-word response: “No.”

As for Galbraith, he said the extreme taxes required by Green Mountain Care may explain why Shumlin hid his plans for so long.

“The governor wasn’t prepared to do a payroll tax at the level I proposed. … So either you do mandatory premiums or you do an increase in the sales tax … or a big increase in the income tax. I don’t think he finds any of them politically palatable, which is why we haven’t had a plan.”

Contact Bruce Parker at bparker@watchdog.org