A Healthy Blog

Massachusetts health care — wonky, with a healthy dose of reality

Things Are Hot, Hot, Hot in Vermont -- from Burlington Free Press

Things Are Hot, Hot, Hot in Vermont -- from Burlington Free Press

June 3, 2005

Douglas rejects 3 tax option for health care
By Nancy Remsen, Free Press Staff Writer

MONTPELIER -- The Democratic leadership of the Legislature gave Republican Gov. Jim Douglas an ultimatum at noon Thursday in a dramatic flare-up of a long-expected political battle over health care reform legislation. In a letter delivered to the governor's Statehouse office, Democrats offered Douglas three options to pay for health care for uninsured Vermonters and two hours to make his choice. Douglas made his decision in minutes.

"The tax measures being offered," he declared without hesitation at his weekly news conference, "are simply unacceptable to me." Each of the three options included a payroll tax, which Douglas vehemently opposes. One option also relied on a tax on insurance premiums, Douglas' preference, but that wasn't enough to win his support.

Rebuffed, the House and Senate teams negotiating the health reform bill met and quickly announced they had agreed on a financing plan that would raise $43.8 million to provide primary and preventive health coverage to 35,000 Vermonters who have no health insurance. Their agreement calls for businesses that don't offer health insurance to their workers to pay a 1 percent payroll tax if their payroll totals less than $50,000 or a 3 percent payroll tax. Also, Vermonters without health insurance would pay a 1 percent income tax.

The House and Senate negotiators also have agreed on all the other provisions in a compromise health reform package -- including measures to:
Curb the growth of medical spending in hospitals.
Save on prescription medicines,
Change insurance to reward healthy lifestyles.
Revise medical malpractice law.
Conduct studies that would scope out the feasibility and potential benefits of moving from a private market health insurance system to a totally government-financed system.

The Senate is expected to vote on the compromise bill this morning, then send the package to the House for an up-or-down vote. House and Senate negotiators also struck deals on the budget and numerous other bills Thursday, increasing the likelihood the Legislature would adjourn this weekend.

Douglas has promised to reject the health care bill because of its payroll tax. Legislative leaders are ready with a back-up plan to salvage provisions that they and Douglas support along with the studies the Legislature needs to support future health care initiatives. They have added these sections to the budget bill -- just in case.

"A governor's veto isn't going to stop us from doing what we need to do to keep this discussion going," said Rep. John Tracy, D-Burlington, chief negotiator for the House.
"Vermont is on the threshold of becoming the first state where every Vermonter will have a doctor and every Vermonter will share responsibility for paying for health care," Senate President Pro Tempore Peter Welch, D-Windsor, proclaimed to a crowd of politicians, lobbyists and reporters. Welch laid responsibility for achieving this goal on the governor's shoulders. "Are we going to make the move toward universal health care or not?" Welch asked. "Jim Douglas has to decide whether he is going to do the right thing or do nothing."

Frustrated they couldn't reach agreement in recent closed-door meetings with Douglas and his staff, legislative leaders made their final offer in public. "We need a response to the challenge," said Sen. Jim Leddy, D-Chittenden. "We need to move beyond the rhetoric."
Half an hour later, Douglas answered in kind. "This is a theater at the end of the session as many of you veterans understand," Douglas told reporters. "To be perfectly blunt, I think what we are seeing is amateur hour."

"As we inch toward adjournment, it becomes increasingly clear that the conferees are less interested in achieving meaningful, bipartisan reform," Douglas said. "If a bill comes to my desk that is a Trojan horse for government run health care, if a bill comes to my desk that is paid for with hundreds of millions of new dollars in taxes, I will protect the people of Vermont and reject that tax proposal."

Health care tax

House and Senate negotiators have agreed on a way to pay for basic health insurance for 35,000 Vermonters currently without coverage.
WHO PAYS? Only employers who don't offer health insurance to their workers or spend less than 3 percent of their total payroll on insurance, and Vermonters without health insurance who aren't eligible for Medicaid.
EMPLOYER TAX: Employers with payrolls of less than $50,000 would pay a 1 percent payroll tax. Larger employers would pay a 3 percent payroll tax. If they offer health insurance but spend less than 3 percent of payroll on it, they would pay the difference between what they spend and 3 percent of their payroll.
INDIVIDUAL TAX: Uninsured Vermonters would pay 1 percent of their income for health insurance.
BENEFIT PACKAGE: A no-frills package of preventive and primary health services would be covered. Hospital coverage wouldn't be included. A commission would report to the Legislature next January what health services should be covered.
STARTING DATE: Coverage would begin July 1, 2006.