Dec 26 2014 -
Vermont is a model for America on health care, the Wall Street Journal sensibly pointed out earlier this week. That’s because Vermont is “where the purest progressive version of ObamaCare has imploded.”
Vermont’s Democrat Governor Peter Shumlin (at right) ran for election in 2010 promising a “single-payer” health system – one in which the government paid for all health care by taxing people, like the “public option” that liberals (including President Obama) wanted in Obamacare. Shumlin hired experts such as Jonathan Gruber to come up with a government-only plan, got the legislature to pass it, and ran for re-election on it.
He knew it mattered nationally: “If Vermont gets single-payer health care right, which I believe we will, other states will follow,” said Shumlin at the time. “If we screw it up, it will set back this effort for a long time. So I know we have a tremendous amount of responsibility, not only to Vermonters.”
Then last week, he canceled it. There will be no single-payer plan – socialized medicine -- in Vermont.
As the Journal explains, “Mr. Shumlin’s budget gremlins concluded the plan was too expensive and would damage the state economy.
“As crises of faith go, this is Mikhail Gorbachev circa 1991 territory. Mr. Shumlin ran in 2010 on an explicit single-payer platform in the most liberal state east of California, and the plan was conceived as a model for other states. He called his retreat ‘the greatest disappointment of my political life so far.’ May there be others.”
Shumlin realized the plan was simply too expensive. The Journal explains:
“Under the Vermont plan, all 625,000 state residents were to be automatically enrolled in the government plan, with the same benefits for all. As with Medicare, employers would be subject to a payroll tax that would reduce wages, and workers would pay a premium based on a sliding income scale. . . .
“If Mr. Shumlin would give to each according to his need, he would take from each far more than his ability to pay. The state accountants estimated that his plan required an 11.5% tax on worker payroll, with no exceptions.
“Individuals, meanwhile, would have paid as much as 9.5% of earnings, which would have applied to everyone making more than four times the poverty level, or $102,220 for a family of four—hardly the 1%. The full $2.59 billion in necessary funding would roughly double current state revenues (about $2.85 billion today).”
This wouldn’t save Vermonters money. For one thing, the plan mandated not gold-plated insurance but platinum-plated – it mandated an “actuarial value” of 94%, meaning that patients would cover only 6% of the cost of their care. This is a certain formula for patients and providers paying no attention of cost and value. It instead would have tried to control costs by imposing punitively low payment rates on providers. The federal government tries this now with its single-payer system for the poor, Medicaid, leading to shortages of doctors who will accept Medicaid patients.
Worse, it shifted the costs in ways taxpayers would see as unjust. Even liberal media observers admit this. “The proposed taxes would ask higher earners to spend more on health care than they do now — in some cases, far more,” noted the website Vox, which also pointed out that an 11.5% payroll tax hits high-wage payrolls much harder than low-wage ones. And remember where the burden of payroll taxes falls: On workers’ wages. Don’t believe me? Ask Jonathan Gruber.
It was all too much for Vermont to afford. The Journal lauds Shumlin for waking up:
“His ideological comrades are rarely dissuaded by the prospect of economic damage, as ObamaCare proves. But Mr. Shumlin has succeeded in making Vermont a national model: By admitting that single payer will make health care both more expensive and less efficient, he has shown other states what not to do.”
Perhaps he had little choice: If Vermont really did add 21% more in tax to incomes, the people it hoped would pay for everyone’s health care could have fled to another less hostile state. If single-payer is imposed nationally, where can the targeted taxpayers run? Simple: They can work and earn that much less, to the detriment of the people they would have employed or served.
Let this be a warning, then, as the nation thinks about what will replace the mess of Obamacare. Putting more power and money into the hands of government isn’t just morally wrong, it’s unaffordable.