Shumlin: Single-payer ‘greatest disappointment of my political life’

Editor’s note: This article originally appeared on Vermont Watchdog.

MONTPELIER, Vt. — Gov. Peter Shumlin announced Wednesday he has called off his plans for single-payer health care in Vermont for 2015, saying “now is not the right time.”

At a mysteriously unannounced news conference at the Statehouse, Shumlin said he received the final modeling for financing single-payer health care on Tuesday and concluded the taxes required to fund a publicly financed system were simply unaffordable.

“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,” Shumlin said.

“It was clear to me that the taxes required to replace health-care premiums with a publicly financed plan that would best serve Vermont are, in a word, enormous.”

The surprise announcement, which came nearly two weeks ahead of schedule, included shocking details that Green Mountain Care’s new-revenues requirement had ballooned to $2.6 billion — up from prior high estimates of $2.2 billion. The overall cost for Green Mountain Care’s operations and coverage is estimated at $4.3 billion.

According to Shumlin’s financing plan, paying for Green Mountain Care would require a new 11.5 percent payroll tax on all Vermont businesses plus a new sliding-scale income tax of up to 9.5 percent, based income level and family size. Under Shumlin’s plan, a family of four with $100,000 of income or more would pay the full 9.5 percent tax. The maximum single-payer income tax for any single household would be capped at $27,500.

At the news conference, Shumlin called single-payer “the greatest disappointment of my political life so far,” and he explained why he abandoned his signature policy initiative of the past four years.

In a rundown of Green Mountain Care’s financing woes, Michael Costa, deputy director of health care reform, said $267 million in funds expected from opting out of the Affordable Care Act had shrunk to just $106 million. Moreover, the expected availability of $637 million in Medicaid funding declined by $150 million. As for the hundreds of millions of dollars of administrative savings anticipated in the Hsiao report, officials said they would not likely materialize.

The administration also discovered Green Mountain Care would begin running deficits by 2020. While new payroll and income taxes could supply $2.6 billion to the program for the year 2017, they could not supply the $3 billion required for 2020, or the almost $3.2 billion required for 2021.

Other barriers to implementing single-payer included Vermont’s stagnant economy, a $75 million reduction in General Fund revenue in fiscal year 2016-2017 and the inability of small businesses to afford a new 11.5 percent payroll tax. Many small businesses do not offer health care coverage to employees.

As for the benefits Vermonters would receive, Shumlin’s plan had a 94-percent actuarial value, meaning out-of-pocket costs for patients receiving care would be just 6 percent. While a 94-percent plan would be costlier to the state than the alternative 80-percent actuarial value plan under consideration, Shumlin concluded a plan with 80 percent actuarial value would be a significant step down for most Vermonters. Vermont’s teachers and state employees currently have robust plans with a 94 percent actuarial value.

Wednesday’s announcement set off many sighs of relief, “I-told-you-so’s,” and even some “we’re not licked yet” comments from prominent Vermonters.

“It’s a culmination of four bad years of leadership for Vermonters. … We’ve wasted four years,” Scott Milne, the Republican gubernatorial runner-up, told Vermont Watchdog.

“Four years ago, Peter Shumlin promised us not only that he’d do all kinds of great things for health care, but that this is his recipe for fixing what four years ago was a struggling economy. And now it’s being abandoned, and we’re facing a $100 million deficit and an economy that’s not growing, and all kinds of problems exacerbated by a lack of leadership on some issues.”

Milne, who’s still in the running when lawmakers vote to appoint the next governor in January, said he was “naïve enough” to believe legislators would not vote based on party allegiance.

“They’re going to do what the Constitution requires, which is to vote for who they think is going to be the best governor for the people of Vermont for the next two years. I’m quite confident I’m a better choice than Peter Shumlin,” Milne said.

State Sen. Peter Galbraith, D-Windham, the only lawmaker to have proposed a health care financing bill this year, told Vermont Watchdog that Shumlin’s political gamesmanship cost taxpayers more money.

“Since it was known what it would cost all along — and this was completely known — the question is, why did the taxpayers of Vermont have to foot the bill of paying (consulting MIT economist Jonathan) Gruber and all the other costs that went with a plan that, in fact, the governor knew full well what the costs would be and (knew) he wouldn’t go ahead with it?”

Galbraith compared Shumlin’s four-year single-payer campaign to “the boy who rides the tiger and can’t figure out how to get off without ending up inside the tiger’s mouth.” He also noted Shumlin’s cleverly-timed announcement.

“He made the only retreat he could. He did it at the least damaging time politically — just after the election, and two years from the next election,” Galbraith said.

Dan Feliciano, the Libertarian challenger to Shumlin in the election, called the governor’s decision a “resounding defeat,” and said the governor dug in his heels on a failed idea.

“A lot of people told him this would not work and he continued to go against the grain and tried doubling down. He’s going to have to be more flexible and transparent going forward,” Feliciano said.

“Now that this distraction is off his desk, he needs to focus on reducing spending, reducing property taxes and restoring businesses’ faith in Vermont government. … I hope he takes the opportunity to stop meddling in health care and brings the payers, providers and insurers together to find robust solutions.”

Deborah Richter, one of the most influential single-payer advocates in Vermont, said she knew it was going to be a heavy lift and wasn’t shocked by Wednesday’s news.

“I’m not giving up. I’ve been at this for 26 years. I don’t think it means we’ve failed. I don’t think it means we aren’t ultimately going to prevail. We may have to do it more slowly in more manageable chunks,” she said.

Darcie Johnston, a leading opponent of Shumlin’s single-payer agenda, called Shumlin’s announcement “half a victory.”

“We must stay vigilant to make sure Vermonters have freedom and choice in health care,” she said.

Johnston said Shumlin remains committed to implementing payment and rate changes, moving Vermont’s electronic medical-record system under the control of the Green Mountain Care Board and seeking a federal waiver from the Affordable Care Act.

Image courtesy of Bruce Parker/TNR