Who’s Paying For Green Mountain Care?

By Alice Dubenetsky

Much has been in the news lately about Green Mountain Care, it’s implementation and the potential cost to Vermont taxpayers and employers. While the nation as a whole is waiting to discover what full implementation of the federal Affordable Care Act will mean to them, Vermonters also have this more immediate sword hanging over their heads. Who, in a state of a mere 626,000 souls, will wind up paying for universal single payer health care? The entire state doesn’t even have the population of a moderately large city. How will we keep chronically ill, low income, out-of-staters from flooding over the border hoping to cash in on “free” health care? What will happen if the Federal Government further reduces its contribution to the state in future years? How will this undertaking affect businesses, both large and small? Unfortunately, the legislature either doesn’t know the answers to the thorny questions associated with Green Mountain Care, or worse, they do know and are rightly afraid to tell Vermonters what could be in store for them under this liberal version of utopia.

When Governor Shumlin and the legislature passed Act 48 in 2011, they included a requirement that the funding mechanisms to finance Green Mountain Care would be made available by January 15, 2012. That in itself caused a bit of a furor because many people wanted the information released prior to the November election. In July of 2012 the administration signed a $300,000 contract with the University of Massachusetts to perform analysis and to prepare a report and present it to the appropriate legislative committees by January 15, 2012. Unfortunately, the report that was released to the public was late (January 25) but more importantly, it was absent the funding sources.

The UMass report projects that the program will need a total of $1.6 billion by 2017 – in addition to current revenue – to support the staggering $6 billion dollar adventure into Green Mountain Care. The public advocacy group Vermonters for Health Care Freedom (VHCF) found this lack of detail peculiar and concerning, given the level of public interest in the information, so they published a list of deficiencies their own analysis has discovered in the report.

In addition to the fact that the report did not comply with the law because it didn’t include specific funding mechanisms and sources, they identified numerous other areas not in compliance. These including the fact that no recommendations were made regarding non-resident eligibility; no analysis or recommendations regarding tax impact; no analysis relative to federal law; no analysis of the impacts on individuals, households, public and non-profit entities regarding tax issues; and no consideration of changing revenue needs. Also not included were funds to recruit and retain high quality health care professionals in a state that supports reducing payments to those professionals, or funds to encourage healthy lifestyles.

The question that drops into the mix is: what did the taxpayers pay for if important questions like these, and the impact on their personal taxes and income, were not considered important enough to include in a report for which they ponied up the not inconsequential sum of $300,000? Is our legislature really willing to drag Vermonters into such an ill-considered scheme without thought to the potential for massive down-stream damage?

Rutland City Treasurer Wendy Wilton has been examining the Green Mountain Care proposals for several years, and in a recent opinion article she expressed her concerns about Green Mountain Care and the relentless march to a single payer system. Wilton projects the cost of Green Mountain Care to be $1.8 billion. She points out that “Realistically, only a couple of taxes will raise revenue of this magnitude: the payroll tax, income tax, or some combination of the two. Other taxes, such as sales tax, could not generate the needed revenue even if increased to extreme levels.” She further asserts that through a payroll tax, gross wages would be taxed at about 15 percent. If the revenue were garnered from personal income tax, rates would have to quadruple to raise $1.8 billion. Since UMass suggested the taxes would be progressive, higher wage earners will pay even more. For what? To lose the health insurance they already have and are happy with in order to pay to insure the 4% of Vermonters who are (for a number of reasons) not insured?

It seems counter to any modicum of common sense that Vermont’s legislature would continue down a path that will dismantle our current health insurance system, flawed as it may be, with very little idea of what the impacts will be: Who exactly will pay for it, how, and how much? How will this impact the state’s already stagnant business climate? How will we protect against the chronically ill targeting Vermont for residency in order to reap the benefits of our system? Does anyone seriously think a government bureaucracy can operate anything efficiently? And most importantly, how do they justify partnering with a Federal Government that, by many accounts, is about to face it’s own insolvency problems, and that has proven to be a notoriously unreliable partner in the past. Remember all those un-funded mandates?

Given the ham-handed manner in which Green Mountain Care is being introduced, the residents of Vermont would be well-advised to think long and hard before handing over anything as important has health care to a group of people who can’t even come up with a plan that they aren’t terrified to share with those who will be responsible for shouldering the burden. Vermont taxpayers beware.