By Angelo Lynn
In an interview with Lawrence Miller last week that ran in Thursday’s Addison Independent that explored Miller’s new position as the governor’s senior advisor and Chief of Health Care Reform, there were two take-home comments that can’t be emphasized enough: that the state won’t push forward with a single payer system that puts the state’s economy in jeopardy, while also saying the state would not go back to the status quo that saw health care costs escalate annually beyond the point of sustainability.
“We’ve got to have a financing mechanism that’s a positive for the economy of this state, and not negative. And these are clear triggers that the Green Mountain Care Board has to evaluate before we go forward. I’m going to be completely straightforward with the governor about our prospects for being successful with those triggers… If we don’t see the conditions that we believe will result in a high likelihood of success, we will simply continue to refine the system we have now. But certainly, going back to the status quo would not be acceptable. We have to do the cost-containment work. We have to improve health care outcomes, particularly for our most vulnerable population. We have to address the cost-shift.”
Those comments are reassuring as Governor Shumlin’s administration struggles to devise ways to pay for the $2 billion health care plan, and the business community is increasingly uneasy about the future tax burden they may see.
No one, of course, thought making the transition from the current system to a single payer model would be easy, but the early rhetoric may have gotten ahead of the hard-nosed realities of raising that amount of money through taxation. That rhetoric of three years ago included sweepingly optimistic scenarios of businesses flocking to the state because Vermont would free its business community of the expensive shackles imposed by rapidly increasing health care costs. Decouple health care from employment and the disturbing prospect of higher taxes would melt away like butter on hot toast. Get a handle on cost containment by moving away from a fee-for-service system, and presto, you’ll save billions of dollars annually and stem the rapidly rising costs.
Those prospects remain promising, but getting there — especially as a lone state in New England — will be risky and may leave the state vulnerable to outside forces; that is, to other states enticing businesses away from Vermont where taxes will be far lower.
What’s clear at this point is that the approximately $2 billion that needs to be raised in taxes (which is not new money, because previously it was being paid as health care insurance premiums, deductibles and co-pays) will present a very difficult public relations challenge as the state seeks to attract new businesses, keep existing ones or even attract telecommuters.
To raise that much money a wide mix of tax sources is a must, among them will be increasing the state income tax, which at roughly 9 percent is already the highest in the region and among the highest in the nation. Adding any percentage to the existing rate, while states like New Hampshire have none and others are half as much, makes moving here a tougher sale.
And that’s just the income tax. The property tax is likely to take a bump as well, as well as the sales tax and any other available taxes to raise the equivalent of 20 percent of the state’s budget.
The trade-off, of course, is that businesses would not have to pay for employees’ health care; but those are not apple-to-apple comparisons — making it even more difficult to assess the advantages Vermont will be proposing.
Miller’s appointment as Chief of Health Care Reform will test his ability to calm the waters that have been roiled by the absence of a payment plan that has been delayed two years by the administration. Much work will also need to be done to reassure them that the steps forward will not put them at a greater disadvantage than remaining with the status quo, and that the promise of health care reform will yield greater savings in the long term and create a stable and productive business environment in the not-so-distant future.
Making sure the governor is also willing to put health care reform on hold if the numbers are less than stellar, would also help reassure the business community that positive, practical outcomes take precedence over ambitious political agendas. Clear statements to that effect do help.
— Angelo S. Lynn