Site menu:

 

October 2017 Brief: Volume 24, Number 28

  Click Here for a pdf version.
 

Single-Payer Healthcare:
If It Won’t Work in Vermont, Will It Work Anywhere?

 

by Amy K. Frantz

 

 

Former presidential candidate and current U.S. Senator Bernie Sanders has long promoted a government-run healthcare plan for America. He recently introduced legislation for his “Medicare for All” plan that would move the U.S. to a single-payer system, in which the government delivers and finances all healthcare. Senator Sanders often points to European countries such as Sweden and the United Kingdom as models for the United States to follow on healthcare. However, he rarely points out the failure of his own state, Vermont, to implement a single-payer health system.

 

In May 2011, the Vermont Legislature adopted and then-Governor Peter Shumlin (D) signed into law Act 48, putting the state “on a path to a single-payer system.”[1] The Act created a Board to “oversee additional pilot projects and test new models of payment and . . . work to design a healthcare budgeting system for the state that assures adequate healthcare resources and fair pay for providers.” Additionally, the Board was to recommend a benefits package, after which the Secretary of Administration would “develop a financing plan for universal coverage.” The Legislature would then vote on the financing plan, which was due to be presented to the Legislature in 2013.

 

But 2013 came and went, and Governor Shumlin’s administration still had not presented a financing plan. Finally, in December 2014, shortly after winning his third term as Vermont Governor, Shumlin presented the plan — and it was not good news for single-payer supporters.

 

The original plan was to have the single-payer system, Green Mountain Care, up and running in Vermont in 2017. However, Governor Shumlin’s presentation in December 2014 revealed that the cost of implementing the plan was higher than expected. Much higher. According to Avik Roy of Forbes magazine:

 

In 2017, under pre-existing law, the state of Vermont expects to collect $1.7 billion in tax revenue. Green Mountain Care would have required an additional $2.6 billion in tax revenue: a 151 percent increase in state taxes.[2]

 

Where the additional $2.6 billion would come from was problematic for Governor Shumlin and the single-payer healthcare plan:

 

Shumlin’s office estimated the state would need to impose new personal income taxes of up to 9.5 percent, on top of current rates that range from 3.55 to 8.95 percent. Businesses would be hit with an 11.5 percent payroll tax, on top of 7.65 percent payroll taxes employers pay for Social Security and Medicare.

 

And even those tax increases might not have been enough. The Governor’s office estimated the Green Mountain Care program would run deficits of $82 million by 2020 and $146 million in 2021. Shumlin said he feared the tax increases would harm businesses and the economy.[3]

 

Thus ended Governor Shumlin’s dream of a single-payer health plan for Vermont. The Governor did not run for re-election in 2016.

 

To put the cost of Vermont’s plan into perspective, let’s take a look at Vermont’s population. According to the U.S. Census Bureau’s most recent census (2010), Vermont’s population is 625,741; Iowa’s population is 3,046,355, nearly five times larger than Vermont. The United States’ population, at 308,745,538, is 493 times larger than Vermont.

 

Vermont’s Governor Shumlin decided the tax increases required to implement a single-payer healthcare plan in his state would “harm businesses and the economy.” During his 2016 presidential campaign, Senator Bernie Sanders claimed his single-payer plan for the United States would cost nearly $1.4 trillion per year.[4] However, “The Urban Institute, known as a left-of-center think tank, estimated that the plan would cost $2.5 trillion in the first year and $32 trillion over a decade.”[5] What will that mean for American businesses and the economy?

 

Endnotes:

[1] “Brief Summary of Act 48 Vermont Health Reform Law of 2011,” State of Vermont Agency of Human Services, <http://hcr.vermont.gov/sites/hcr/files/pdfs/legislation/ACT-48-one-page.pdf> accessed on August 28, 2017.
[2] Avik Roy, “Six Reasons Why Vermont’s Single-Payer Health Plan Was Doomed From the Start,” Forbes, December 21, 2014, <https://www.forbes.com/sites/theapothecary/2014/12/21/6-reasons-why-vermonts-single-payer-health-plan-was-doomed-from-the-start/#4b687c9d4850> accessed on August 29, 2017.
[3] Jay Fitzgerald, “Costs derail Vermont’s dream of a single-payer health plan,” The Boston Globe, January 25, 2017, <https://www.bostonglobe.com/business/2015/01/25/costs-derail-vermont-single-payer-health-plan/VTAEZFGpWvTen0QFahW0pO/story.html> accessed on August 28, 2017.
[4] Tami Luhby, “Sanders’ last ‘Medicare for all’ plan cost nearly $1.4 trillion,” CNN: Your Money Your America, September 12, 2017, <http://money.cnn.com/2017/09/12/news/economy/sanders-medicare-for-all/index.html> accessed on September 21, 2017.
[5] Demian Brady, “Single-Payer Health Plan Would Add Trillions to the Budget, Burden Millions of Taxpayers,” National Taxpayers Union, August 25, 2017, <https://www.ntu.org/foundation/detail/single-payer-health-plan-would-add-trillions-to-the-budget-burden-millions-of-taxpayers> accessed on September 7, 2017.

 

Amy K. Frantz is Vice President of Public Interest Institute, Muscatine, Iowa.
Contact her at Public.Interest.Institute@LimitedGovernment.org.

 

Permission to reprint or copy in whole or part is granted, provided a version of this credit line is used:"Reprinted by permission from INSTITUTE BRIEF, a publication of Public Interest Institute." The views expressed in this publication are those of the author and not necessarily those of Public Interest Institute. They are brought to you in the interest of a better-informed citizenry.

   

 

 

All of our publications are available for sponsorship.  Sponsoring a publication is an excellent way for you to show your support of our efforts to defend liberty and define the proper role of government.  For more information, please contact Public Interest Institute at Public.Interest.Institute@LimitedGovernment.org