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vermont

Posted on behalf of Ed Fensholt, J.D. – Senior Vice President and Director – Lockton Compliance Services

Something worth noticing played out in the Green Mountain State last week. Vermont, no stranger to progressive politics, abandoned its single-payer healthcare initiative, almost four years after becoming the first state to enact such legislation.

The state’s action is noteworthy because it illuminates the fiscal challenges sometimes inherent in worthy social welfare legislation. Vermont passed with great fanfare a universal coverage law shortly after enactment of the federal Affordable Care Act (ACA). But the failure of the state legislature to include a plan for raising revenue to pay for universal coverage suggested the law, from the beginning, was more aspirational than realistic. As it turns out, that’s precisely the case.

The law gave Vermont until 2013 to come up with a plan to finance universal coverage, a deadline the state missed by more than a year. Only recently did a plan surface, and it called for an 11.5 percent payroll tax on employers and an additional income tax of up to 9.5 percent. Vermont’s governor, Peter Shumlin, concluded the tax hit was too steep a hill for the state’s employers and other taxpayers to climb, and pulled the plug.

During the debate on the Affordable Care Act in 2009, several of the more progressive political players on Capitol Hill publicly applauded the Act as the best way to take America to a universal coverage platform like those in Canada and other western industrialized nations. But if Vermont’s lesson is indicative of the cost to the nation of a federal universal coverage initiative, one might legitimately question just how a nation barreling toward a $20 trillion national debt could afford such an initiative without crushing tax increases or doubling down on our aggressive borrowing.

A closer look at the budgeting process behind the Affordable Care Act might suggest the ACA was never intended to move the nation to single payer, but to shift to private parties—employers mostly—the cost of insuring the bulk of the nation’s employees. Congressional Budget Office cost estimates, for example, cap projections for public health insurance exchange enrollment at 19 million Americans, acknowledging the Act’s estimated $1 trillion price tag over 10 years cannot accommodate subsidized coverage for more than about six percent of us.

Perhaps what Vermont’s action tells us above all else is that we must remember we cannot have it all. There are only so many dollars in the public treasury. While it’s absolutely worthwhile to think about all the things we’d like to do with that money, we must remember that there is a very finite list of things we’re able to do with it.