Shumlin Rejects New Tax As Way To Pay For Health Care Reform

01/20/11 5:50PM By John Dillon

(Host) Governor Peter Shumlin will not call for a tax this year to pay for a sweeping overhaul of Vermont's health care system.

Shumlin says his focus instead is on cutting costs, not on figuring out how to pay for the single payer health plan.

VPR's John Dillon has more:

(Dillon) Shumlin's comments at his weekly news conference came a day after a legislative consultant recommended an 11 percent payroll tax to raise the money for a new health care system.

William Hsiao, a Harvard economist, says the payroll tax would replace the way health care coverage is financed now - primarily through premiums on employers and workers.

But Shumlin did not endorse the payroll tax idea.

(Shumlin) "You know, I'm going to resist the temptation to talk about how we pay for it. Because I think if we make that mistake we lose sight of the prize. The prize for Vermont is designing a health care containment system that works."

(Dillon) Hsiao said on VPR's Vermont Edition that no one - government or businesses - can afford to pay more to expand coverage.

(Hsiao) "So as a result our strategy was we have to produce the savings. And ... we'll use the savings to cover everyone in Vermont."

(Dillon) But Hsaio says there's a place for a tax. The 11 percent tax on an employer's payroll would effectively replace the health insurance premiums that businesses now pay. Employees would pay roughly 5 percent of their salaries to fund the plan.

(Hsiao) "In our design we make sure that most employers and most workers will not pay more than what they pay now for their health insurance premiums."

(Dillon) The Shumlin administration is working with legislative leaders on a single payer bill. The governor said the bill will probably not include a funding plan.

(Shumlin) "I don't think it needs to. I think we first need to pass the cost containment mechanism that will work. We all know that it's going to get paid  for. The question is are we going to design that's going to cost less and be more affordable for Vermonters. And that's the hard work."

(Dillon) One idea under consideration to cut costs is paying doctors and other providers based on performance and outcomes as opposed to the current fee for service system.

Shumlin said he was aware of the political pitfalls ahead in reforming health care.

(Shumlin) "I don't think we should underestimate the casualties that have come along the way to some of the best politicians in America. President Clinton, Hillary Clinton, Barack Obama, Howard Dean. So the mistake in every single health care reform effort, whether it's federal or state, including Vermont to date, is that none of them have succeeded in containing costs."

(Dillon) Shumlin said he hopes to have a single payer plan in place by 2014, after Congress passes a bill that would allow Vermont to seek an early waiver of federal rules to implement the system.

For VPR News, I'm John Dillon in Montpelier.

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health_reform vermont_legislature politics
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