Fact checker: Would Single-Payer Health Care Result in the Largest Tax Increase in Vermont History?

With the 2012 campaign season in full swing, Seven Days has teamed up with VTDigger.org to create a fact-checker feature to test the “truthiness” of claims made by the candidates who want your vote this November. This week’s Fact Checker was written by Anne Galloway.

CLAIM: “Montpelier is keeping a $5 billion secret. Why? Because the truth will result in the largest single tax increase in state history.”
— Television commercial from conservative super PAC Vermonters First

FACTS: So what’s the secret? The super PAC Vermonters First is referring to the state’s current annual health care expenditures, including private insurance and federally funded programs, which total $5 billion. If Vermont moves ahead with a publicly financed universal health care system, residents would pay taxes instead of insurance premiums to cover the cost.

No one knows, however, just what state taxes will be raised or on whom. That’s because the Shumlin administration is keeping the financing plan under wraps until after the election.
William Hsiao, the Harvard professor who created the blueprint for Vermont’s single-payer system, proposed funding it by raising state payroll taxes by 10.9 percent on employers and by 3.6 percent on workers. The business community reeled at Hsiao’s suggestion, and the Shumlin administration went mum, leaving the financing mechanism unresolved.

Act 48, the single-payer law passed in 2011, does spell out that funding will come from a combination of federal and state taxes. The Shumlin administration is counting on several hundred million in subsidies through the federal Affordable Care Act — aka Obamacare. It’s also seeking waivers to roll Medicaid and Medicare funding into the new system, which together in 2010 amounted to more than $2 billion. The Shumlin administration hopes to save $400 million to $700 million a year by eliminating administrative costs, fraud and abuse, and by improving chronic care and tackling malpractice reform.

Vermonters paid $1.86 billion in 2010 for private insurance. Under single payer, those expenditures would be covered by state tax revenues — specifically “adjustments to the income tax, a payroll tax, consumption taxes, provider assessments, employer assessments” or other revenue sources, according to Act 48 language.

SCORE: As currently envisioned, single-payer health care would in fact result in the largest tax hike in state history. Not even the creation of a statewide property tax under Act 60 was as much. What’s missing from the television ad is context. Vermonters may begin paying for health care through taxes rather than insurance premiums, but that doesn’t mean they’ll pay more overall. The exact amount won’t be known until Shumlin releases his rate plan next year. Still, it would represent the largest new tax and, for that reason, we rate the claim “True.”

Anne Galloway

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26 Comments on "Fact checker: Would Single-Payer Health Care Result in the Largest Tax Increase in Vermont History?"

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Jason Farrell
3 years 8 months ago
When I purchased my home ten years ago, that purchase and resulting mortgage immediately became the single largest investment I’d made in my lifetime, bar none. If I had worried only about that side of the ledger, I never could have fathomed a way to have made such an investment. How could I possibly add such a huge expense to all of my existing expenses? However, I was savvy enough to reconcile that by investing in homeownership, the single largest investment I had made would not only be an expense, it would also replace my previous largest investment I had… Read more »
3 years 8 months ago
Omitting the context constitutes a misrepresentation of the facts. Higher taxes, yes. Probable lower costs to “taxpayers” — aka Vermonters — also yes. The ad intends to generate hysteria by obfuscating the context, and it succeeds. VTD is helping that along. This piece also suggests that the administration is trying to hide something. First of all, as it says later, there’s a lot up in the air — esp. whether Obamacare will survive. Anyhow, how revenue is raised is not up to the Shumlin administration. The gov puts forth his budget and the Legislature comes up with its. Then they… Read more »
Al Salzman
3 years 8 months ago
As my dad wisely used to say: “Figures don’t lie, but liars figure!” You can disprove just about any proposition by manipulating the facts in the short term without any regard for future, long term results. It is the difference between productive deficit spending i.e. infrastructure, health care, education, all of which pay back ten-fold to the well-being of our society at some time in the future- and pouring money down a rat-hole i.e. Afghanistan, Iraq, military spending, subsidies for big oil etc. The most dramatic examples are the G.I. Bill after WWII and the interstate highway system initiated by… Read more »
Eric Bradford
3 years 8 months ago

The issue is that Shumlin et. al. clearly have no idea how this will be funded, or if it can be funded without disastrous follow-on consequences. It’s hard to force that conversation, because admitting it is painful, but this simple, factual statement is a good start.

Paula Schramm
3 years 8 months ago
What irked me the most about the Vermonters First ads ( in both the written mailing & the TV ad ) was that “Montpelier” was hiding a $5billion SECRET. This was the fake context they were offering to scare the pants off Vermonters. The mailing actually declares :” the program will cost a staggering $5 billion”, as if this was a whole new expense, rather than what we already are paying for our health care now. This creates confusion and constitutes mis-information to the extent that it is worthy of a “fact-checking” judgement on its own. There has been no… Read more »
Gary Stahl
3 years 8 months ago
Rating this claim “true” — with nothing more — simply enables Vermonter First, and similar organizations, to be misleading. It also gives Vermonters First a measure of credibility that it plainly does not deserve. The television commercial was clearly not intended to inform; if that were the case, Vermonters First would’ve also advised its viewers that the tax increase would take the place of the insurance premiums paid to unaccountable insurance companies. Instead, the Vermonters First commercial was intended to scare. And calling the spot “true” amounts to an abdication of responsibility that results in a less-informed public — which… Read more »
Carl LaShomb
3 years 8 months ago

I have two big concerns with this scheme:
1) in general, there is a large reliance on savings from “anticipated” efficiencies. In my experience with a LOT of “cost savings” programs, the actualized savings are never as big as the projected savings were to sell the project initially.
2) What is the impact to those VT’ers who already have good (or decent) healthcare insurance through their non-vermont employers (those of us who work in a different state, or have employers providing insurance to all of their employees on a national basis).

Eric Bradford
3 years 8 months ago

Both good points.

There are a lot of people who will pay the tax but will not see the benefits of any potential reduced/eliminated premiums. The implication by those decrying a true statement being called true that all employers will pass along any savings in premiums is utterly laughable.

Bill Gardyne
3 years 8 months ago
There are a LOT of Vermonters who presently have employer-provided health insurance that either is fully paid for by that employer or the employee may contribute a percentage towards the premium. In THIS process, if that employee earns a decent income which causes them to exceed the maximum for getting a premium-reducing Tax Credit funded by the Feds(maybe), there will be BIG negative change in their family budget. What about the small businesses that don’t provide health insurance to their employees now?? They will be getting a BIG increase by having to subtract a potential 10%+ payroll tax to their… Read more »
walter carpenter
3 years 8 months ago

“Vermonters paid $1.86 billion in 2010 for private insurance.”

Were the deductibles part of this figure or just the premiums? This would make a huge difference since, in addition to the premiums, Vermonters are generally also slammed with thousands of dollars in deductibles that, if not included, would make this figure much higher.

Kirby Dunn
3 years 8 months ago
I have to say that while I don’t support this ad, the concept must be discussed…what will this cost and how will this cost be shared? I have three concerns. First, it will be income adjusted. Although I work for a non-profit and don’t earn a huge salary, i am an older worker and have been there for many years so i will pay more for more health insurance that other workers. Older workers paying more than younger workers-we have lost the inherent fairness of the current system where all pay the same regardless of health issues. Second, the assumption… Read more »
Paula Schramm
3 years 8 months ago

Kirby Dunn, I hope I don’t add to the confusion, but it seems to me the questions you raise have to do with buying insurance in the exchanges that are being set up for 2014. This is an unavoidable extra step that is a mandate of the national Affordable Care Act, and is different from where Vermont is ultimately heading with Green Mountain Care.

Some of the problems you wonder about will no longer be issues after GMC is fully implemented in 2017. The exchanges in this context are almost a complicating factor, but must be accomodated.

Jane Stein
3 years 8 months ago

Wow, Anne, major fail. This ad was intended to be deceptive and it is deceptive. To call an intentionally deceptive ad “true” is journalistic malpractice.

Suggestion: Instead of narrowly evaluating claims, how about evaluating the ads as a whole?

I’m really surprised to see VTDigger falling down the same rabbit hole as the big-time media “fact-checkers.”

Bill Gardyne
3 years 8 months ago

Just today, Team Shumlin announced that cost and funding mechanism proposals for GMC WILL NOT be appearing this coming session as promised and won’t be put out for public discussion until 2015!!! Is is so bad that he’s afraid of massive negative public reactions, even after the election??

Charles Merriman
3 years 8 months ago

My family and I will be hit hard by the tax increase. My thoughts on Shumlin’s plan? Great! Tax the bejesus out of me for this laudable goal. Much better than buying drones.

rosemarie jackowski
3 years 8 months ago
Eliminate the cost of insurance, eliminate Insurance company CEO salaries, eliminate Wall Street profiteering, cap hospital adminstrative pay, eliminate unnecessary ‘paper churning’ and inefficiency, control the price of pharmaceuticals and other medical aids – this will be more than enough to provide universal comprehensive Single Payer – including dental, vision, and long term care for every Vermonter. This is NOT an economic problem. It is a political problem. Are there any democrat/republican leaders currently speaking in support of Single Payer? We do not need a complicated 2000 page plan. We need a simple commitment that all medically necessary care will… Read more »
Lance Hagen
3 years 8 months ago
Ms. Jackowski, please show us, or point to the study that determines or claims that the “Eliminate the cost of insurance, eliminate Insurance company CEO salaries, eliminate Wall Street profiteering, cap hospital administrative pay, eliminate unnecessary ‘paper churning’ and inefficiency, control the price of pharmaceuticals and other medical aids – this will be more than enough to provide universal comprehensive Single Payer – including dental, vision, and long term care for every Vermonter”. As far as I know, no such study exists making these claims for universal healthcare in the state of Vermont. Even Dr. Hsiao’s plan required a payroll… Read more »
rosemarie jackowski
3 years 8 months ago

Lance…Thanks for the comment. I assumed that US citizens are as smart at designing a health care system as the citizens in Cuba, CostaRica, and most other industrialized nations. Maybe I have too much confidence in the critical thinking ability of USers.

Yes, taxes would increase, but that would be offset by the total elimination of premiums, co-pays, and other out of pocket expences. Single Payer would save money and lives.

Lance Hagen
3 years 8 months ago
Ms. Jackowski, you are kidding yourself if you believe that the eliminated insurance premiums will offset the funds needed for the program. Remember we will need to add the uninsured and Medicaid recipients (and Medicaid recipients represent 23% of the Vermont population) and these are people that are not presently paying premiums. So the state is going to need additional $ to cover these added people. At one point in the plan the state was counting on $500 million in ‘administrative’ save to cover this added cost, but that appears to be waning. And it was never clear to me,… Read more »
John Franco
3 years 8 months ago
Seven Days and VTD should get an “F” for this rating. Alf Landon ran against Franklin Roosevelt in 1936 on precisely the same argument (correctly) that Social Security was the largest tax increase in US history. How’d that turn out? The very first question which should be answered in this “how much will it cost” debate is how much we are currently spending in private health insurance premiums. In 2010 Vermont employers spent about $1.3 billion on private health insurance for their employees. That does not include workers compensation insurance. That is more than the the total amount of state… Read more »
Eric Bradford
3 years 8 months ago

Fixing this problem sounds so simple! Odd that it’s going to take until 2015 to generate a first draft of the specifics.

rosemarie jackowski
3 years 8 months ago

This is what happens to those without access to health care.
Please pass it on to those who say: “No one goes without care. They just go to the ER.”

http://warisacrime.org/node/46563

NICOLE LEBLANC
3 years 8 months ago

No It would Not !!! Single Payer will lower Healthcare Cost for all People and eliminate pr-existing conditoons so that those with can have access to affordable healthcare without being denied!! Its time for Society to Make Healthcare a public good! Healthcare Should Not be attached to Employment!!!

Dont BELIEVE THE REPUBLICAN SCARE Tactics!!! They are Wrong!!! Liberals Know Best!!!

Hilton Dier
3 years 8 months ago

Somehow the Europeans and Canadians manage to provide better health care outcomes than we do for about half the money per person.

The savings come from eliminating insurance company profits and their legalized fraud, along with the administrative costs of dealing with them and the cost of delayed care, as well as drug company profiteering.

However they do it, they do it. We can too.

Gina Johnson
3 years 4 months ago

If I can’t get Canadian citizenship, I’m going to move to Vermont to avoid being robbed every month by health insurance companies. I am sick of paying middlemen thousand of dollars a year just so my life isn’t ruined if my appendix acts up, or I break a leg. It’s paying off a gangster not to shoot you, that’s what it comes down to, and the fact that so many people still tolerate this state of affairs says volumes about the terminal passivity of the American people.

Denise lambert
3 years 4 months ago
It doesn’t matter whether we have healthcare through Obamacare or single payer the fact remains that you will languish key wait to see an oncoligist ,cardiologist or any other kind of doctor. 136,000 people in Great Britain are prematurely euthanized to save the government 20 billion dollars. You are all so worried about costs, rightfully so, but at the expense or a shorter and poorer quality of life! he United States was number one in response time— that is quickest access to needed medical care but that will be over in 2014. Many Americans will either die waiting in line… Read more »
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