Vermont Gov. Peter Shumlin announced on Wednesday that he is abandoning attempts to implement a single-payer health care plan that would have made Vermont the first state in the country to establish a publicly-financed health care system.
In his prepared statement, he acknowledged that “as we completed the financing modeling in the last several days, it became clear that the risk of economic shock is too high at this time to offer a plan I can responsibly support for passage in the legislature.”
“I know this is a huge disappointment to many Vermonters,” Shumlin wrote in a blog post about his abrupt reversal on an issue that was the cornerstone of his campaign and re-election. “I know because I am one of those Vermonters who has fought for this to succeed.”
According to Shumlin, projections of federal money that would aid in establishing the system were vastly overestimated and wrote that “In the last several months, we have also learned that the amount of federal funds available to Vermont for this transition is over $150 million less than we had anticipated. Additionally, the slow recovery from the Great Recession has tightened our state budget and caused us to not meet the goals we had set forth for increases in Medicaid provider payments, adding more than $150 million to the amount we would need to raise through public financing.”
Single-payer health care, a campaign promise made by Shumlin in his 2010 gubernatorial bid, was signed into law in May 2011 and called Green Mountain Care. Attempts to create the system became increasingly difficult, most notably due to the lack of a concrete financing plan behind it. A financing plan for Green Mountain Care was due in January 2013, yet there was none proposed after the deadline passed. A pledge to create one earlier this year was also unfulfilled. In August, Rep. Cynthia Browning (D-Arlington) filed a lawsuit against the state to challenge Shumlin’s use of executive privilege that was obstructing public access to information discussing financing plans for the system.
Shortly after his re-election in November, Shumlin was continuing to reassure residents that his administration would introduce “a smart plan to spend less money for better outcomes with a more fair way of paying for health care where everybody has health care as a right, not a privilege.”
However, Shumlin said it wasn’t until last Friday that that he realized the costs involved in implementing the plan could be disastrous:
The cost of that plan turned out to be enormous, requiring an 11.5% payroll tax on all Vermont businesses and a public premium assessment of up to 9.5% of individual Vermonters’ income. Further, the phase-in for smaller businesses and those that do not currently offer insurance would add an additional $500 million to the system. These are tax rates that I cannot responsibly support or urge the Legislature to pass. In my judgment, the potential economic disruption and risks would be too great to small businesses, working families and the state’s economy.
Supporters of Shumlin’s single-payer plan were predictably disgruntled. “Clearly, a political decision was made not to raise adequate revenue from big businesses and from wealthy folks to fund this thing. The money is going in right now primarily from large employers and the money is there, and it’s just the political will of being able to raise the taxes,” said Vermont Workers Center director James Haslam.
Dr. Deb Richter, a Montpelier doctor and proponent of single-payer health care, said that “we’re going to need a slower phase-in of this” and the plan’s failure was due to “trying for the whole thing all at once.”
Rep. Browning, the legislator who filed the suit against the state, said “Welcome to reality, Governor. From what I can see at first take, all of the problems to which he refers were apparent and valid concerns back in 2011.”
House minority leader Don Turner (R-Milton) said in a statement that “This ideological experiment was an egregious waste of taxpayer dollars. The governor has spent millions of your taxpayer dollars with nothing to show for it. It is unlikely that a single Vermonter will see an improvement in their health care services or reduction in health care expenses as a result of these wasted dollars. Just imagine what could have been done for every Vermonter with that amount of money.”
Shumlin wrote that this announcement does not mean the end of a possible single-payer plan in the future and wrote that “while the time is not right today, we must not give up on health care reform.”
“Those reforms can and must continue, and our success will lay the groundwork for future efforts to implement a publicly-financed health care system. While now is not the right time for Vermont to take such a step, the time will come.”