The Shumlin administration official who is designing a tax structure for Green Mountain Care – Vermont’s proposed universal health care system – said Friday there are multiple ways Vermont can generate the needed revenues, but it’s too early to discuss any of the options.
Michael Costa, deputy commissioner for Health Care Reform, rejected the premise that Vermont’s only way to finance universal health care is a payroll tax.
“The payroll tax is a reasonable place to start,” Costa told the Senate Finance Committee during testimony Friday, “but it’s not the only way.”
Sen. Peter Galbraith, D-Windham, who introduced a financing plan this week, said the state has no other recourse, and lawmakers shouldn’t waste time arguing about other revenue models or waiting on the administration to present one to them. Under the law passed in 2011, Vermont will implement universal health care in three years, in 2017.
Costa said it would be premature to enumerate any of the other possible options, adding that the administration will present several to the Legislature sometime in the spring.
“This is a conversation the governor really wants to have,” he said, adding, “It’s a little ahead of where we are.”
Just how Gov. Peter Shumlin plans to pay for single-payer universal health care has become a political tug of war, with Republicans pressing the administration to reveal its plans for funding. The governor has steadfastly resisted, saying it is too early to provide firm figures for covering a price tag estimated at $1.6 billion or more.
The administration will come to the Legislature with a finalized bill to pay for Green Mountain Care in January 2015. That complex piece of legislation and an accompanying report will seek to answer several simple questions, Costa said: What would it really cost Vermont’s health care providers to care for every Vermonter; how does the state raise that money; and what’s the economic impact on individuals and businesses, as well as on state finances?
Robin Lunge, the state’s director of Health Care Reform, also testified in the Senate Finance Committee on Friday. She thanked Galbraith for getting the conversation started. But she insisted that making any decisions now would be “putting the cart before the horse.”
Lawmakers must clearly understand who pays for health care now and how they pay for it, as well as where there are gaps and inequity in the current system, she said.
The administration has collected information over the last two years that will elucidate those issues, which it has yet to present to the Legislature, said Lunge. She asked for the opportunity to return and share that information in the coming weeks.
“That’s an important step for us, because it puts a context around throwing out financing numbers and different tax amounts,” Lunge said.
One reason the new information hasn’t made its way to lawmakers is the time and energy spent on Vermont Health Connect.
In a previous interview, Sen. Kevin Mullin, R-Rutland, called the state’s struggling health care exchange a “side show.”
“The federal Affordable Care Act did more to cause damage to our efforts here than it did to help us,” Mullin said.
Another important step before minting a financing plan for universal health care, said Lunge, is to arrive at a “consensus estimate” of the proposed system’s costs.
Conflicting studies commissioned by the administration and a group of health care providers and trade organizations have variously pegged the total cost to Vermont at $1.6 billion and as much as $2.1 billion. Vermonters already pay much of that total in health insurance premiums.
Vermont needs to get a full picture of how new taxes would impact residents, especially those who work for multiple companies, who have derive most of their income from non-wage sources or who live and work on either side of the state’s borders, Costa said.
Non-wage income is defined as interest, dividends, alimony, unemployment compensation and self-employment.
One limiting factor in those efforts is that the state doesn’t currently have the capacity to match payroll data from the Department of Labor with income data from the Department of Taxes, said Sara Teachout, a senior analyst for the Joint Fiscal Office.
She said her office is close to integrating the two data sets, and she expects they’ll have the ability to match them during this legislative session.
Secretary of Administration Jeb Spaulding is working with legislative leadership to hammer out the timeline for developing and presenting an authoritative cost estimate to the full Legislature, Lunge said, but she did not know when that would be.
Galbraith asked Lunge if the state would need to have a finance plan pinned down before the state could apply to the federal government for a state innovation waiver to the Affordable Care Act. Lunge said she did not believe that was the case.
“[The federal government] couldn’t approve the waiver, I would say, but they can certainly start considering [it],” she said.
The state is briefing the federal government on its progress, and federal officials will consider many other aspects of the state’s plans for a universal health care system, Lunge added.
Galbraith wanted to know if Lunge and Costa supported his proposal for a transitional fund, S.254, which would build a reserve for state payment of claims on day one of the universal health care system.
They explained that there is a “health care claims tail,” describing the lag time between when the service is received and the claim is paid. That lag typically results in providers and insurers paying claims from the last quarter of the previous year in the first quarter of the current year, Lunge said.
“I don’t think you’d have to have all the money in hand day one, because you wouldn’t accrue all the costs day one,” she said. “I think what we need to do is have a more in depth thinking about how long is that claims tail, and when do you actually start paying the claims that accrue beginning in the first quarter of 2017.”
