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Health Reform Officials Review Single-Payer Financing Documents

Juhan Sonin/flickr

Officials from Vermont’s Office of Health Care Reform reviewed the documents that led to Governor Peter Shumlin’s decision to stop the state’s move to a single-payer system, a decision  Shumlin called the biggest disappointment of his political career.

The Office of Health Care Reform on Tuesday released the 61-page financing report for Green Mountain Care, Vermont’s single-payer system,  and the supporting documents related to the development of that proposal. The plan called for an 11.5 percent payroll tax and an income tax separate from the one the state already has of up to 9.5 percent.

On Wednesday health care reform officials reviewed with reporters the financing report, modeling data and documents that led to the governor’s decision.
Chief of Health Care Reform Lawrence Miller said they were working toward recommending the plan until December.   “We didn’t get new data at the end, we got new analysis. It aggregated a number of data issues that we knew were difficult and made it really visible and starkly clear. You know, if we were able to come in on a system basis at a better spot with higher federal participation I think this is something that we would’ve recommended. I really feel that the transition risks though at this point in time are just overwhelming and a substantial amount of more work needs to be done.”

Miller adds that the federal government is the primary stumbling block in the state’s effort to implement universal health care.  “Will the federal government ever get to the point where you’ve got all the chess pieces? I think I was very clear since coming into this role that I view the federal relationship as the biggest risk. Not just what they would contribute financially, but the rules and regulations and laws within which we have to work.”

Numerous simulations were run and Deputy Director of Health Care Reform - Finance Michael Costa explained some of the technical details.   “There’s really two things at play here. One is your projected general fund revenue available for the state is down. That puts pressure on your general fund transfer to Medicaid. The other issue is the Green Mountain Care model. You’re at a different place with your tax base for the Medicaid. Green Mountain Care is a program that only applies to people under 65 years old. And so you have a different tax base. And so for the first time we’re projecting what income looks like for people under 65 and then we’re getting economic downgrades that are saying income tax collections are growing even slower. So you have both a problem in your state Medicaid revenue and a problem in public income. And so those two are working together to create some real headwinds  for your economic modeling.”

While the state is backing off the effort to move to single-payer, Director of Health Care Reform Robin Lunge says much can be salvaged and learned from the report and modeling that has been completed if the state decides to move forward again.  “Between 2012 and now we have figured out a lot of answers to a lot of really, really hard problems. Those would include is there a way to have federal tax deductiblity for a publically financed state based system? The answer is yes. We did not know that in 2012. Nobody else has figured that out. We can reuse all of the benefits development work that we had done. This is hard to do as a state because you need to work within about four to six different federal laws. We’ve figured out a path through those federal laws. What you would need to do is update the data and rerun both the cost estimates and the micro-simulation analysis because that’s the kind of thing that changes over time.”

Governor Peter Shumlin announced on December 17th that he was dropping the proposal due to the tax increases he said are too big for the state to absorb.

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