Monday, January 5, 2015

The Single-Payer Health Insurance Failure in Vermont

For 25 years I've been saying that I wished a little state like Vermont would implement a single-payer Canadian-style health insurance system––"Medicare For All." My argument has always been that such a small and limited experiment would give us the opportunity to see the ideological arguments for such a system play out in the face of fiscal reality and the stakeholders fighting it out in the political arena over who would get the money. The rest of the country would be able to learn a lot from it.

I have always thought that this debate will never be settled until a state gives it a shot and everybody witnesses the result.

So, I was excited to see that Vermont, of all places, was indeed going to give it a shot when they passed Act 48 back in 2011. It was no longer a theory, a state was really going to do it––"Medicare For All."

Until last month.

Turns out reality crashed head-on with ideology a lot quicker than even I expected it to.

Vermont's governor pulled the plug on his plan because the state couldn't afford it:
  • It would have cost Vermont $2.6 billion in the first year to implement the plan––the state now raises only a total of $2.9 billion a year in taxes.
  • To raise the money it would have required the state to impose a new 11.5% payroll tax on businesses AND a new personal income tax ranging up to 9.5%. The state already has the seventh highest state income tax, maxing at 8.5%, and a 6% sales tax.
Vermont's governor was quoted as saying the effort is dead, "At least for now. Our time will come."


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