But Michael Costa, Shumlin’s deputy director of health care reform, concluded the plan would have required an 11.5 percent payroll tax on all Vermont businesses and an income tax hike of up to 9.5 percent. Those taxes wouldn’t have covered transition costs to the new system, which would have amounted to at least $500 million.
“These are simply not tax rates that I can responsibly support or urge the legislature to pass,” Shumlin said in a speech Wednesday. “In my judgment, the potential economic disruption and risks would be too great to small businesses, working families and the state’s economy.”
Shumlin blamed slower-than-expected economic growth after the recession that forced the state to make steep budget cuts. Federal funding for the transition would have been $150 million less than initially projected, costs the state would have had to absorb.
“Pushing for single payer health care financing when the time isn’t right and it would likely hurt our economy is not good for Vermont and it would not be good for true health care reform,” Shumlin said. “Now is not the right time to ask our legislature to take the step of passing a financing plan for Green Mountain Care.”
The administration’s budget officials tried to find ways to pay for the program without the tax hikes, though no one could come up with a solution that prevented the tax hikes.
In an op-ed released by Shumlin’s office, he called the move to scrap universal care “one of the most difficult decisions of my public life.”
Instead of universal health care, Shumlin said he would pursue other avenues to reduce health-care costs, such as paying for quality of outcomes rather than quantity of services, and improving information technology systems.
Republicans cheered the decision to abandon the push for a single-payer system. Lt. Gov. Phil Scott (R) called the move “a definitive step in the right direction for Vermonters, Vermont businesses and Vermont’s economy.”
“Businesses cannot afford an 11.5 percent payroll tax, individuals cannot afford a 9.5 percent income tax, our State cannot afford a $2.6 billion bill, and Vermont cannot afford to continue down this path of uncertainty,” Scott said in a statement. “We’ve already spent far too much money exploring this idea, and the discussion has paralyzed our business community.”
More than 41,000 Vermonters were made eligible for Medicaid or Children’s Health Insurance Programs under the Affordable Care Act and another 38,000 had signed up for coverage as of April, according to statistics maintained by the pro-ACA Kaiser Family Foundation. Just 9.3 percent of Vermonters were uninsured before the Affordable Care Act was passed, one of the lower rates in the nation.