High Taxes, Lack of Federal Bailout Make Vermont Cancel Single-Payer Plan

Vermont Governor Peter Shumlin has cancelled his longstanding plan to impose government-monopoly health care in the Canadian border state:

Tax hikes required to pay for the system would include a 11.5 percent payroll tax as well as an additional income tax ranging all the way up to 9.5 percent. Shumlin admitted that in the current climate, such a precipitous hike would be disastrous for Vermont’s economy.

“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,” Shumlin said. “It could set back for years all of our hard work toward the important goal of universal, publicly-financed health care for all.”

The state had been anticipating $267 million in federal funding to revamp its system, courtesy of a 2013 Obamacare waiver—but the current estimate has fallen to $106 million. Vermont also overestimated by $150 million in federal Medicaid funding. (Daily Caller)

While Vermonters are blessed to be relieved of the risk of government-monopoly health care, I have to regret that the rest of us won’t be able to observe the consequences. I had a secret list of predictions that I was planning to roll out when the plan passed. One was that Vermonters would suffer long queues for treatment. They would have to travel out of state to find it.

Boston hospitals would have to send claims to Vermont’s single-payer health plan. How would that work out? Hospitals in Montreal, however, might find it profitable to treat Vermonters, as long as they had their own money to spend on procedures. (Cash-paying foreigners can jump the queue for access to Canadian hospitals, while Canadians cannot.)

With respect to taxation, I think the governor’s plan underestimated what the plan would need. Canadian provincial taxes are higher than 9.5 percent. Quebec has a progressive income tax that ranges from 16 percent to 25.75 percent. Ontario’s starts at 5.05 percent, hits 9.15 percent at about $35,000 (U.S.), and tops out at 13.16 percent.

And those taxes result in long waits for treatment. To maintain the access to care that Americans expect, they are not nearly enough.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

 

John R. Graham is a Senior Fellow at the Independent Institute.
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