1-9-15 – Administration Guilty of Unnecessarily Dragging Out Single Payer Fantasy, Not Cooking the Books

by Rob Roper

VTDigger posted an interesting article titled, “Shumlin Built ‘Lead Airplane’ for Single Payer.” The piece accuses the Administration of essentially cooking the books to make Green Mountain Care appear prohibitively expensive, thus justifying pulling the plug. The article elicited an equally interesting response from Shumlin’s healthcare team of Robin Lunge, Matt Cota and Lawrence Miller.

What we learn from the exchange is that the real tragedy of the single payer Kabuki theater we’ve had to endure for the past four years is that the whole agonizing process should have been over before it even began. Single payer was never going to work. It was never going to be politically viable or fiscally responsible, and everybody knew (or should have known) it from the start.

The Shumlin Administration defended its decision to propose a plan with a 94% actuarial value, a plan equal to the most generous offered in the state today, rather than a less expensive option.

If you look at what most large, private employers offer today, 65% of Vermonters would have worse insurance if we had recommended a less generous plan…. To argue for a less generous plan would be to ask Vermonters to support taxes that would require some to pay more than they do now – while asking the majority of Vermonters to also swallow a benefit cut. Doing that would be unfair, impractical and divisive.

Well, yeah. But we knew this back in 2011 after we paid the famous Dr. William Hsiao nearly $300,000 to analyze possible paths to a single payer system. Hsiao warned that the state could not afford this kind of comprehensive plan, directing the state to fund only an “essential” benefits package. To do more would bust the state budget, and would therefore be impossible.

To quote Hsiao’s 2011 report to the legislature:

The comprehensive benefit package under option 1 covers all health services with minimum cost sharing. As a result, it costs more and requires more funds to finance it. Under a payroll contribution scheme of financing, employers and workers will have to pay more than what they would pay if no reform takes place. This comprehensive benefit option would also increase the total health spending in Vermont which would make this option less feasible. (January 19, 2011)

The Administration went on to say, “…we can only imagine the opprobrium that would have been aimed at us had we chosen to recommend the lower AV [actuarial value] plan.”

This observation is also not a great revelation for anyone watching the comments of single payer activists, unions, etc. from the beginning of the debate. If the Shumlin Administration had made a decision that anything but 94% actuarial plan or something very close to that was politically unviable and/or fiscally unjust, then they knew very well that single payer for Vermont, from a cost standpoint, was a non-starter.

The other defense the Shumlin Administration mounts has to do with the impact of single payer on small businesses. They write:

One curious omission [by critics in the Digger article] is any discussion of the challenge of transitioning thousands of small Vermont businesses into Green Mountain Care. Small businesses fewer than 10 employees who do not offer health care today would pay hundreds million more in taxes. If only such a problem could be ignored. Sending these employers from scant contribution for health care to a large payroll tax with no transition would be reckless to our economy, yet would cost upward of $500 million to solve.

Yeah. But some of the earliest testimony from chambers of commerce and other business groups lit up this obvious problem like a Christmas tree.

A year ago, Senate Finance Committee chairman, Tim Ashe (D/P Burlington) noted:

The majority of small businesses in Vermont currently pay nothing for healthcare, because they don’t offer it…. Well, if you tell the majority of small businesses in Vermont that they’re going to go from zero percent of payroll to thirteen percent overnight, I think there might be dramatic implications throughout the economy. (Mark Johnson Show, 1/24/14)

Again, this was nothing new.

Single payer healthcare did not fail in Vermont because Peter Shumlin cooked the books to make it look even worse than it is. It failed because it’s too expensive and too complicated to work. What’s truly infuriating is the fact that Vermonters were dragged through four years of painful economic uncertainty and threw away millions of taxpayer dollars for absolutely no reason at all.

Shumlin and those legislators who aided and abetted in this process are to blame. But so is the Vermont press corps, which should have could have shined a light on the obvious right from the beginning.

– Rob Roper is president of the Ethan Allen Institute. www.ethanallen.org.

 

{ 1 comment… read it below or add one }

Lyle M. Miller, Sr. January 9, 2015 at 5:07 pm

I surely hope the Ethan Allen Institute will continue to expose Mr. Shumlin’s lack of credibility along with those who voted to put him back in the governor’s chair yesterday in opposition to the votes of the majority of Vermonters in a majority of counties i.e. districts that went for Scott Milne. Let’s not forget this like we did when Howard Dean sold the state down the tubes to the liberal lobby on matters that we all know have been pushed and expanded every since that fateful year in Vermont when the moral standards of the state took a huge hit.

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