Shumlin administration disputes claim it has withheld tax plan costs to support single-payer health care

February 22, 2013

VTDigger

Posted By Andrew Stein On February 22, 2013 @ 4:47 am In Health

A group of Republican representatives and opponents of a single-payer health system allege that the Shumlin administration withheld critical tax analyses from a so-called financing plan for a universal health care system.

Vermonters for Health Care Freedom alleges that state officials are purposely witholding a tax analysis that would have provided lawmakers with details about how such a financial plan would be implemented. The 501(c)4 group that opposes the governor’s single payer plan says the Shumlin administration didn’t disclose the information for political reasons.

Secretary of Administration Jeb Spaulding flatly denied the charge on Thursday. “That is simply not true,” he said.

The administration had initially planned to include tax plans tied to instituting single-payer in the document, Spaulding said. But after it learned the state would not be eligible for a federal waiver to implement a single-payer system until 2017, he said the governor’s top health care advisors decided against a tax analysis before it got too far along.

“Does it make sense, now that we’re clear we’re not going to be asking the Legislature to pass a finance plan for another two years, to put a specific finance plan on the table?” Spaulding asked. “The group’s conclusion after considerable discussion was, no, it doesn’t. The governor has said we’re not going to pull the trigger on this thing unless it saves us money.”

When the administration submitted the financing document to the Legislature in January, it called for roughly $1.6 billion in new taxes for a publicly funded system. But it did not specify from where those revenues would come. [2]

Many legislators panned the report for failing to propose concrete public financing measures, and a group of legislators — many of the same ones — alleged that the administration broke the law at a press conference in January. [3]

The administration disagreed.

The University of Massachusetts was hired to provide cost figures and draw up two financing plans for the state at a cost of $300,000. One plan was for a single-payer system; the other was for funding portions of the state’s new health insurance marketplace, Vermont Health Connect, which will go into effect in 2014 as required by the federal Affordable Care Act.

Vermonters for Health Care Freedom filed a public record’s request to learn more about the arrangement between UMass and the state. After reviewing more than 1,600 pages, the group says that UMass was paid for drawing up a tax scheme, but was called off by the administration in late November.

“The consultants billed and were paid for nearly $40,000 through the end of November for work on a taxing plan. Work that never appeared in the final report,” said Jeff Wennberg, director of the organization.

“As late as Nov. 16, the consultants were still analyzing tax systems to support single payer, but by Nov. 26, someone in the administration had told them to stop work on that report.”

To support his arguments, Wennberg points to an October document that outlines how UMass planned to proceed with cost modeling. The document is labeled “Confidential — for policy development only” and was sent to the administration’s top health care officials. It outlines the UMass consultants’ intent to draw up plans for an employer payroll tax and an individual income tax.

Another letter dated Nov. 26, includes an agenda item from an earlier meeting that says, “Review what we are not doing on financing.”

A November invoice from UMass totals $39,540 for “Financing Options” and “Economic Effects of Financing Models.” As part of that work, Wennberg speculates that a tax plan was created. He has submitted a public records request to UMass and is submitting another public records request to the administration to find out what work was completed for that sum.

“Clearly they’ve paid for it and there’s some product out there we haven’t seen yet,” he said, adding that if he has reason to believe the administration is withholding information, his group would take the administration to court.

Spaulding says he has been completely transparent with Wennberg, pointing to the more-than 1,600 pages the administration already gave him.

Spaulding conceded that the state lost some money by deciding to scratch a tax proposal from the study after it was already contracted — although he did not have an exact dollar amount at hand.

“When we signed the contract with UMass … it was a comprehensive contract that included everything from payment reform cost-savings to what the actuarial would be,” Spaulding said. “Were there some small amounts of funds that were sunk costs that were lost because we didn’t ultimately ask them to do a financing report? Yes. It was very small.”

Wennberg said his organization conducted some rough tax analyses, and he argues a universal health care system would require about a 10 percent to 12 percent employer payroll tax and double the current income taxes. With such steep tax hikes to publicly fund such a health care system, Wennberg speculates that the governor is posturing.

“Let’s put it this way,” he said,” if I were running for office, I’d be hesitant to promote that.”

Updated at 7:25 on Feb. 22, 2013.