It’s been 18 months since Gov. Peter Shumlin signed a bill calling for the creation of a publicly financed, universal health care system.
Now, one of the leading advocates of that bill is pushing for the administration to begin taking action.
The Vermont Workers’ Center recently wrapped up a 17-page proposal for financing the state’s universal health care system, called Green Mountain Care. The crux of the proposal, which is light on specific numbers, calls for leveraging higher taxes on personal income, personal wealth and corporate income.
The center also proposes a “graduated payroll tax” aimed solely at employers.
A financing study for such a system, conducted by the University of Massachusetts, is due on legislators’ desks by Jan. 15. The state, however, doesn’t have the federal go-ahead to implement such a plan, and the Shumlin administration doesn’t expect Congress to provide the state a waiver until 2017.
Given the timeline, the administration is urging legislators to hold off on addressing the system’s financing until 2014 or later, so they can focus on implementing a federally mandated health insurance exchange. But many advocates on both sides of the health care reform fence say it’s time to get the ball rolling — one way or another.
“One can assume there are political reasons to avoid making a proposal now,” said David Kreindler, a member of the Workers’ Center policy committee. “What we want to do is say to the administration and everyone else is Act 48 has spoken. It is laid down in law what the principles of financing Green Mountain Care need to be, and we want to bring that discussion a little bit closer to reality.”
Reality, in this case, means how the state is going to pay for universal health care.
One of the center’s most contentious proposals is likely to be the employer payroll tax. In 2011, many businesses across the state were up in arms when Harvard economist William Hsiao proposed an 11 percent payroll tax.
Secretary of Administration Jeb Spaulding points out that many employers are already paying these fees and that such a tax is “certainly worth considering.”
“Employers are right now paying a payroll tax,” he said. “It’s called a premium.”
The proposal also calls for broad shifts in the state’s income tax policy, drawing some ideas from the Blue Ribbon Tax Structure Commission’s final report. One overarching change calls for the state to tax a person’s adjusted gross income rather than a person’s federal taxable income after itemized deductions for payments like home mortgage interest, property taxes and charitable donations.
The report also calls for measures proposed by incoming state Auditor Doug Hoffer in a 2011 blog post. The center suggests raising taxes on income from capital gains, dividends and interest investments. Hoffer estimated that a higher tax on these items for funding a publicly financed health care system would leverage an additional $3 billion in statewide income that would not otherwise be taxed if such taxes were limited only to payroll.
Not everyone, however, is as eager to implement such taxes.
Last week, the anti single-payer group Vermonters for Health Care Freedom blasted Spaulding for his alleged “endorsement” of these taxes. The group’s executive director Jeff Wennberg said the proposal runs counter to the administration’s goal to grow jobs.
“Placing the tax burden on employers and individuals will result in accelerating job losses and Vermonters fleeing the state to avoid paying these skyrocketing taxes,” said Wennberg in a public statement.
But Spaulding denies endorsing the Workers’ Center plan wholesale.
“It’s a good report, but there’s no way that anyone can construe (my) diplomatic statements as an endorsement,” he said. “It’s a well-written report, and well-written reports will be helpful in dialog and debate on how to finance Green Mountain Care in coming months and years. Hopefully there will be other well-written reports and people weighing in.”
Robin Lunge, head of health care reform for the Shumlin administration, said that she appreciates the center’s efforts but it would be premature to make any particular policy recommendations without further debate and analysis.
“You need to look at sources of funding as a package and really drill into a discussion about what sources would have an impact on what populations,” she said. “I’m not prepared at this point to comment on a particular source. I think we need to have a discussion about all of the potential avenues and work through that as a group.”
VTDigger’s Nat Rudarakanchana contributed to this report.
Correction: Doug Hoffer’s blog post argued for an additional health care tax on capital gains, interest, and dividends because he estimated such a tax would leverage $3 billion in income that would not be included if a tax only addressed payroll. He did not suggest that it would raise an additional $3 billion in revenue as the article initially stated.
