Vermont Abandons Single-Payer Healthcare Plan

Vermont Governor Peter Shumlin announced on Wednesday that his state will not pursue a single-payer healthcare plan that the state's legislature had been considering.

As The Daily Caller reports, the primary cause for the change in plans was the burden it would place on Vermont's taxpayers: "Pushing for single payer health care when the time isn't right and it might hurt our economy would not be good for Vermont and it would not be good for true health care reform", the governor said in a statement. The plan as originally proposed would have called for significant tax increases to finance the reforms, including an 11.5 percent payroll tax and personal income taxes reaching as high as 9.5 percent.

Also complicating matters was the fact that the plan's advocates had overestimated the amount of federal funding that would be available to offset some of the upfront costs. Vermont had anticipated waivers from the Affordable Care Act and additional money from Medicaid, but the actual amounts they received were $311 million less than expected (obviously, that funding would have had to be made up for in taxes). And on top of the additional costs, the governor's office admitted that the savings it expected to realize by implementing a single-payer system ("hundreds of millions of dollars") were "not practical to achieve."

Through our BillTally research program, NTUF has analyzed the cost of single-payer systems introduced in Congress before; the proposal is usually one of the most expensive pieces of legislation that Congress considers. In the 113th Congress, three such proposals were introduced and if enacted would have been by far the largest spending increases:

  • H.R. 676, introduced by Rep. John Conyers (D-MI), would increase federal outlays by $1.2 trillion per year.
  • H.R. 1200/S. 1782, introduced by Rep. Jim McDermott (D-WA) and Senator Bernie Sanders (I-VT), would increase federal spending by $824 billion per year.

For perspective, the next largest spending increase proposal introduced in the 113th Congress would amount to $108 billion per year.

Vermont's Lieutenant Governor Phil Scott said of the decision to abandon the idea: "Our State cannot afford [this] bill, and Vermont cannot afford to continue down this path of uncertainty. We've already spent far too much money exploring this idea, and the discussion has paralyzed our business community."

When it comes to financing single-payer healthcare plans, the devil is often in the details.