Rare News Desk
Chalk up one more failure for the never-ending liberal hope that sometime, somewhere, someone will devise a single-payer health care system that actually works. The latest casualty: Vermont.
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Shortly after entering office in 2011, Vermont Governor Peter Shumlin, a Democrat, signed legislation intended to make the Green Mountain State the first to implement a state-based, single-payer health care system, where state citizens pay higher taxes and the government pays most of their medical bills.
The effort was introduced with the usual moral smugness and arrogance that consumes liberals when they try to impose a new government program they think will reduce inequality.
The effort was doomed from the start, but it took the governor and his liberal enablers several years to realize something that most health policy people already understand: It is virtually impossible for a state to create anything approaching universal health care. That’s because the federal government controls so much of the health care system.
First, there’s Medicare. Virtually all seniors participate in the federal Medicare program. Because it’s a federal program, the state has no control over it. But Shumlin wanted everyone in his system—presumably because misery loves company. So he tried to get the feds to give the state a waiver from Medicare.
There was never any chance of that happening—Congress would have to pass legislation allowing the change—but if the state had been successful, Vermont seniors would have revolted. Tricare, the Defense Department’s coverage for military personnel, retirees and their dependents, is also federal and outside of the state control.
Second, there’s Medicaid and the state Children’s Health Insurance Program (CHIP). Both are federal-state programs for the poor, even though the states have some flexibility. But if the state were to somehow move those poor out of Medicaid into its single-payer program, the state would likely lose federal Medicaid funding—about $150 million by Shumlin’s estimates.
And then there’s a third problem: ERISA. The Employee Retirement and Income Security Act (1974) allows companies to opt out of traditional, state-governed health insurance by self-insuring under federal law. Most large and even many medium-sized companies provide their employees heath coverage under ERISA—in large part to avoid state laws.
States have repeatedly tried to force employer ERISA plans to adhere to state law, and the courts virtually always rule that the federal law preempts state involvement.
Shumlin may have been able to impose a corporate income tax on companies to pay for his Green Mountain Care program, but he couldn’t force those companies into his socialist experiment. So the companies would have been paying twice: once for their employees’ health coverage and again for the health insurance tax that company employees wouldn’t use.
All of the above was true before Obamacare, but its creation complicates matters even more, because the federal government is providing hundreds of billions of dollars in subsidies to make coverage more affordable. And Vermonters would likely loose those subsidies.
But what Shumlin focused on when he pulled the plug on his single-payer promise was the cost of implementing such a system. Like so many others advocating a government takeover of health care, Shumlin and his apologists promised that doing so would lower health care costs. But once the numbers were crunched, so was his affordability promise.
The state would have to impose an 11.5 percent income tax on businesses and a personal income tax, in addition to the current income tax, of 9.5 percent. The governor decided it might not be a good time to do that to his voters.
But even high taxes can’t do the impossible: replace the federal government’s overwhelming role in health care and health insurance—and that was true even before Obamacare dramatically increased the federal government’s role. And so one more single-payer dream bites the dust.
But give Shumlin this much: He saved Vermonters from years of high taxes and failed health care promises—which is more than President Obama can claim.
