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Shumlin says state can't afford single-payer — for now

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Posted on December 17, 2014 |
By John Flowers



MONTPELIER — Gov. Peter Shumlin on Wednesday put the brakes on the state’s multi-year quest to convert to a universal, single-payer health care system, saying the cost and financing scheme of such a plan would be “detrimental to Vermonters, employers and the state’s economy overall.”

Shumlin made his comments at a news conference on Wednesday while unveiling his administration’s health care financing report that is set to be delivered to the Legislature in January. That report describes the need for both a double-digit payroll tax on Vermont businesses and an up-to-9.5-percent public premium assessment on individual Vermonters’ income in order to pay for Green Mountain Care, the statewide public health care system proposed in Act 48.

“I have always made clear that I would ask the state to move forward with public financing only when we are ready and when we can be sure that it will promote prosperity for hard-working Vermonters and businesses, and create job growth,” the governor said through a press release.

“Pushing for single-payer health care when the time isn’t right and it might hurt our economy would not be good for Vermont and it would not be good for true health care reform. It could set back for years all of our hard work toward the important goal of universal, publicly-financed health care for all. I am not going undermine the hope of achieving critically important health care reforms for this state by pushing prematurely for single-payer when it is not the right time for Vermont. In my judgment, now is not the right time to ask our Legislature to take the step of passing a financing plan for Green Mountain Care.”

In a conversation with the Independent on Wednesday afternoon, Shumlin said he’s committed to now work on controlling the cost of health care for Vermonters.

“No system will work until we get the cost under control,” he said.

Although the administration explored several different benefits and financing proposals, the preferred proposal outlined by the Governor’s Deputy Director of Health Care Reform Michael Costa would cover all Vermonters at a 94 actuarial value (AV), meaning it would cover 94 percent of total health care costs and leave the individual to pay on average the other 6 percent out of pocket. Lower AV proposals create significant administrative complexity and reduce disposable income for many Vermonters, Costa argued.  Costa explained that paying for that benefit plan would require:

•  An 11.5 percent payroll tax on all Vermont businesses

•  A sliding scale income-based public premium on individuals of zero to 9.5 percent. The public premium would top out at 9.5 percent for those making 400 percent of the federal poverty level ($102,000 for a family of four in 2017) and would be capped so no Vermonter would pay more than $27,500 per year.

“These are simply not tax rates that I can responsibly support or urge the Legislature to pass,” Shumlin said. “In my judgment, the potential economic disruption and risks would be too great to small businesses, working families and the state’s economy.”

But the governor added that state government should not abandon the effort to reduce health care costs for Vermonters.

“We can and must make progress in 2015 to put in place a better, fairer and less-costly health care system, one that in the future supports a transition to Green Mountain Care so that all Vermonters receive affordable, publicly-financed health care,” he said. “In order for us to get there, we need to accelerate the hard work we’ve begun on cost containment and a more rational payment and delivery system.”

To do that, Shumlin said he will ask the Legislature to take several steps this coming session, including enhancing the Green Mountain Care Board’s role as a central regulator of health care with the goal of lowering annual health care spending increases to between 3-4 percent in the long term, continuing to pursue a path for Vermont to move from a fee-for-service health care system to one that “reimburses providers for quality and outcomes,” and improving the state’s health information technology plan.

Two Addison County lawmakers have been at the forefront of the state’s single-payer health care debate: Sen. Claire Ayer, D-Addison, who chairs the Senate Committee on Health and Welfare, and Rep. Mike Fisher, D-Lincoln, chairman of the House Health Care Committee.

Ayer on Wednesday said she was disappointed that the state will be at least temporarily abandoning its pursuit of single-payer, but added she understands Shumlin’s decision.

“I’m not stunned, and I’m glad the governor did it this way instead of handing (the Legislature) a plan and saying ‘See if you can make it work,’” Ayer said.

She noted lawmakers who supported single-payer had a list of around a dozen criteria that they felt a single-payer health plan should meet. One was that the plan had to be sustainable, and another was that it couldn’t have a net negative impact on the state’s economy.

“I think we would have failed to meet both of those tests for Act 48,” Ayer said.

The county’s senior senator added she was initially not sold on pursuing single-payer, but came to that position after some months of study. With single-payer now off the table, Ayer stressed that lawmakers cannot abandon health care reforms and must now, in concert with the Green Mountain Care Board, look at ways to make the system less costly and more accessible, without affecting the quality of services.

“We still have to do that work,” she said. “We still have to find ways to control health care costs.”

Ayer said she looked forward to receiving more input from John Franco, a Burlington attorney and someone who has been active in the health care debate for the past 25 years. Franco, among other things, had voiced some ideas about working within the Medicaid and private insurance models to develop a less costly system, she said.

Efforts to reach Fisher were unsuccessful as the Addison Independent went to press.

Shumlin was clearly moved by the setback to health care reform in Vermont.

“It’s heartbreaking for me, it’s probably the biggest disappointment in my political life,” he told the Independent.

Reporter John Flowers is at [email protected]

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