Brattleboro Reformer: One of the primary reasons that Vermont is poised to become the first state to enact a single-payer health insurance system is because of about 25 years of grass-roots activism. A solid core of single-payer supporters have created the foundation that Gov. Shumlin and the Legislature can now build upon.
Over the years, those activists have made it their mission to educate and re-educate the public about the details and implications of a single-payer system. That effort has helped many people understand the pros and cons of this kind of system but, for the most part, people do not pay much attention until they believe that something is going to affect their lives soon.
Now that it looks like Vermont will try to legislate some sort of single-payer system, people want to know how it will change their lives. They have heard all of this before, but now that financial implications seem more real, they are hungry for details. Exact details are still unknown, but some things can be predicted with a fair degree of certainty. We have been hearing about an 8 percent payroll tax. I wrote about some of the implications of that last week but there are still many unanswered questions.
I have been hearing from employees who work for companies that are self-insured and they want to know what a move to single payer will mean for them. We won’t know until all the Is are dotted and all the Ts are crossed. But we can make some fairly accurate educated guesses based on leaked information and past studies.
About 40 percent of Vermonters are insured by businesses that are self-insured. What this means is that the company is large enough to assume the financial risk that a health insurance company would normally take on. The business hires a benefits administrator, which may be an insurance company, to handle insurance details so employees may not understand how their insurance works behind the scenes.
In order for self-insurance to be a viable option most experts believe companies must have at least 400 employees. That means that IBM and many, if not all, of Vermont’s hospitals are self-insured. Unless the state finds a way to extract some sort of insurance revenue from the self-insured population, single payer will not be financially sustainable.
One of the most important issues relating to self-insured plans is the 1974 ERISA law. A part of that law allows self-insured entities to not have to be subject to state insurance laws. That means that when single payer is enacted, self-insured businesses cannot not be forced to buy into the new Green Mountain Care product. But, ERISA does not protect self-insured businesses from state taxes. What this means is that a business that now offers insurance to its employees, who may already pay a percentage of the premium, can decide to keep things the same and not buy into Green Mountain Care. However, the employer and its employees will still be subject to a new health care tax.
That means the business will have to pay the projected 8 percent payroll tax whether or not they buy into Green Mountain Care and their employees will also have to pay some level of health care tax based on their income, no matter what plan their employer offers. Most experts project that individual tax at about 5 percent of income.
The question that employees will need answered from their employers is, "What do you plan to do when Vermont adopts a single-payer plan?" A lot of people will be impacted and they need information to be able to figure out how to maintain a reasonable level of affordable health insurance.
Richard Davis is a registered nurse. He writes from Guilford and welcomes comments at rbdav@comcast.net.