State hires MIT economist to vet single-payer proposals

Vermont has hired a policy architect of the Affordable Care Act as an economic consultant to help the Shumlin administration vet different single-payer financing scenarios.

Jonathan Gruber, a professor of economics at the Massachusetts Institute of Technology, will help Shumlin’s health care reform team understand how different tax structures will impact subsets of the population as they design a proposal to pay for a planned universal health care program.

Gruber is a veteran of health care economics and national health policy having served as technical adviser to the Obama administration and Congress as they designed the Affordable Care Act.

The contract is worth $400,000 and is expected to solidify the administration’s pitch to lawmakers when it presents its proposal to lawmakers in January.

The Legislature’s Joint Fiscal Office recently signed its own more limited contract for economic simulations with Rand Corp.

The upcoming legislative session is expected show whether Gov. Peter Shumlin’s signature policy priority will come to fruition.

Morgan True

Comments

  1. Cynthia Browning :

    The Administration clearly has alternative financing plans for GMC that will be given to Prof. Gruber for his analysis. Why can’t they be given to the Vermonters who will pay for GMC and whose health insurance will depend on GMC? I am sure that Prof. Gruber’s study will be useful, but Vermonters deserve to have a chance to evaluate the plans sooner rather than later.

    It is a violation of the principles of transparency and accountability that this Administration refuses to allow Vermonters to see these plans. Given the incompetence and poor judgement shown by the Administration and the legislative leadership in developing and implementing Vermont Health Connect, it is imperative that future health reform initiatives can be fully vetted by all Vermonters in a timely way, not just by those who work for the Governor.

    Rep. Cynthia Browning, Arlington

    • J. Scott Cameron :

      Amen.

    • Jonathan Willson :

      Please just run for Governor

  2. Thomas Powell :

    Another outlay of taxpayer funds to support another person to help Shumlin force through his single payer agenda. How many people have jobs in Montpelier fanning the flames of this financing scheme, and (as noted above) why are none of them willing to tell us the tax impacts prior to November elections? And, considering the wreckage that is Vermont Health Connect, how in the world are we supposed to have confidence that this government can run the financing of an entire health care system?

  3. J. Scott Cameron :

    Currently, hundreds of millions of dollars are spent by school districts, municipalities, county governments and the State of Vermont to provide top of the line health insurance benefits to public employees. Public employers fund these costs from the local property tax (schools, cities and towns) and general fund tax revenues (State employees).

    If and when single payer is implemented all public employees should transition to that program, hopefully as part and parcel of the enabling legislation (if government believes single payer is good for us, should it not mandate participation by its own employees?). When that occurs public employers and employees will no doubt contribute to the cost of single payer to the same extent private employers/employees contribute, based on whatever funding mechanism(s) is put into place by statute. Public employers (and possibly public employees, although this is not as clear) should realize tremendous cost savings under almost any imaginable financing scenario which might stand a chance of garnering the necessary political support for passage. Some of these savings will likely go back to unionized public employees as a result of impact negotiations when the switch to single payer occurs, if only to address the new costs which they, as employees and taxpayers, will likely bear under the new public financing scheme. But a majority of the funds should stay with the public employer entity, assuming that it knows what it doing and doesn’t give away the store (we can hope).

    Prof. Gruber’s analysis should therefore include a determination of the costs currently being borne by taxpayers to fund health insurance costs for public employees, and how those costs will shift from the property tax etc. to whatever alternative revenue generating taxes may be imposed by legislation (most likely a combination of payroll taxes on employers and/or employees, a universal sales or VAT tax on goods and services, income taxes and required per capita payments). Whatever taxes are imposed on employers to fund this system, it should be kept in mind that public employers can only raise the funds to pay their shares through available means, such as the property tax. Accordingly, public employers will have to be astute in their negotiations with public employee unions when the switch to single payer is negotiated in order to protect the interests of taxpayers who have been paying a lot of money for a long time to fund health benefits for public employees. In my opinion, the lion’s share of the savings rightfully belong to the taxpayers.

    Based on discussions at the statehouse last session there are some legislators, doubtless influenced by Vermont’s strong, influential and astute public sector unions, who think it would be good policy to simply give those savings to public employees, perhaps as a reward for embracing the politics of single payer and even providing financial support for the P.R. effort. This would be a real blow to Vermont taxpayers. In the alternative, to the extent school districts, towns and the State of Vermont retain savings realized from the implementation of single payer that money will be available to reduce property taxes, improve education and/or fund much needed improvements/enhancements to our crumbling infrastructure.

    This is an important issue. We need to know and understand the numbers. Tens of millions of dollars are at stake. It is especially important that members of the Vermont legislature understand the numbers, and how costs and tax shifting will impact school districts, towns and cities who are currently struggling pass budgets based on ever increasing property taxes. Hopefully, Prof. Gruber’s analysis will consider the financial impact of single payer funding and implementation in light of the costs already borne by taxpayers to pay for public employee health benefits, and help us to understand the potential savings that could be realized. Such an analysis would surely be important to any consider of the public financing scheme for a single payer system.

  4. Matt Taylor :

    One reason the health insurance for the state employees works is that EVERYONE pays in a similar amount per month….no one gets “free” insurance therefore it works…

    If you start handing out “free” insurance them premiums will go up and the coverage will go down…it’s simple math.

    • Chris Lewis :

      Matt,

      You are correct.

      Now, if you can sell the upside of free insurance, and ignore the cost part, you will be suited to be the next governor of Vermont.

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