Vermont Workers’ Center Proposal Outlines Health Care Financing Plan

It’s been 18 months since Gov. Peter Shumlin signed a bill calling for the creation of a publicly financed, universal health care system.

Now, one of the leading advocates of that bill is pushing for the administration to begin taking action.

The Vermont Workers’ Center recently wrapped up a 17-page proposal for financing the state’s universal health care system, called Green Mountain Care. The crux of the proposal, which is light on specific numbers, calls for leveraging higher taxes on personal income, personal wealth and corporate income.

The center also proposes a “graduated payroll tax” aimed solely at employers.

A financing study for such a system, conducted by the University of Massachusetts, is due on legislators’ desks by Jan. 15. The state, however, doesn’t have the federal go-ahead to implement such a plan, and the Shumlin administration doesn’t expect Congress to provide the state a waiver until 2017.

Given the timeline, the administration is urging legislators to hold off on addressing the system’s financing until 2014 or later, so they can focus on implementing a federally mandated health insurance exchange. But many advocates on both sides of the health care reform fence say it’s time to get the ball rolling — one way or another.

“One can assume there are political reasons to avoid making a proposal now,” said David Kreindler, a member of the Workers’ Center policy committee. “What we want to do is say to the administration and everyone else is Act 48 has spoken. It is laid down in law what the principles of financing Green Mountain Care need to be, and we want to bring that discussion a little bit closer to reality.”

Reality, in this case, means how the state is going to pay for universal health care.

One of the center’s most contentious proposals is likely to be the employer payroll tax. In 2011, many businesses across the state were up in arms when Harvard economist William Hsiao proposed an 11 percent payroll tax.

“Employers are right now paying a payroll tax,” he said. “It’s called a premium.”

The proposal also calls for broad shifts in the state’s income tax policy, drawing some ideas from the Blue Ribbon Tax Structure Commission’s final report. One overarching change calls for the state to tax a person’s adjusted gross income rather than a person’s federal taxable income after itemized deductions for payments like home mortgage interest, property taxes and charitable donations.

The report also calls for measures proposed by incoming state Auditor Doug Hoffer in a 2011 blog post. The center suggests raising taxes on income from capital gains, dividends and interest investments. Hoffer estimated that a higher tax on these items for funding a publicly financed health care system would leverage an additional $3 billion in statewide income that would not otherwise be taxed if such taxes were limited only to payroll.



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