Socialist Vermont Shoots Down Super-Expensive Single-Payer Health Care

Gov. Shumlin of the highly socialist state of Vermont shutdown the necessary request to the legislature for the taxes needed to fund the Green Mountain Care state health plan.  This Vermont single-payer health plan was going to require an 11.5% payroll tax on businesses and a 9.5% income tax in addition to the income tax the state already has on those making four times the poverty level income or more.  Vermont already has a top income tax rate of 8.95%, a 6% sales tax, and a 8.5% corporate income tax.  Shumlin reluctantly admitted that the state could not levy such heavy taxes without putting many businesses out-of-business and without many businesses leaving the state.  He said that given that Vermont was still feeling the effects of the Great Recession, this was a particularly bad time to implement a state-run single-payer health system.

Vermont had initially estimated an annual cost of $2.2 billion for the plan for its 627,000 citizens.  The state had received $45 million to study the implementation of a single-payer system from the Obama's Department of Health and Human Services, which hoped Vermont would pave the path to a national single-payer or totally socialized medical system.  William Hsiao of Harvard and Jonathan Gruber of MIT served as consultants.  A more careful look by Vermont accountants put the increased tax revenue needed at $2.6 billion.  Vermont's total tax revenues now are $2.85 billion, so total state tax revenues would have to almost be doubled.  Projected revenues had to be scaled back by $75 million a year due to the lingering effects of the recession.  The state realized it would get $150 million less in federal cost coverage than they expected to set up the system and that they would get another $150 million less in Medicaid assistance from the federal government than they had earlier thought they would.  Setting up the plan was estimated to cost an additional $500 million.

As I have pointed out many times, it is a fiction that the business paid payroll tax is not paid by employees.  All payroll costs are a cost of employment for employees.  They are all compensation for the labor of all employees.  The greater the payroll tax, whether it is Workman's Compensation, unemployment tax, Medicare, Social Security, a withholding tax, an ObamaCare tax, or a Green Mountain Care tax, the lower the compensation that can be offered an employee.  If an employee's addition to the company revenue is not enough to cover all of these tax costs, all of his take-home pay, and other operational costs incurred to provide him with a job, then the employee is not hired or is let go by any rational employer.  This Green Mountain Care plan in Vermont was going to require a 21% increased cost of employment for a company's most value employees minus whatever the employer might be currently paying into health care plans minus whatever wage decreases ensued.  Employees closer to the poverty level would cost somewhere between 11.5% to 21% more depending upon the progressive explicit tax on their income.

As Gov. Shumlin noted, it was particularly difficult to impose these costs given the failure to recover from the effects of the Great Recession.  What is more, any knowledgeable observer has learned that the cost estimates for new government programs are almost always too low.  They are usually much too low.

Of course, while acknowledging that there was no way to practically implement a single-payer health system in Vermont at this time, Shumlin, as a good Progressive Elitist, continued to maintain that it was the Ideal.  Progressive Elitists never actually consider the costs of their programs to be too high and they never ask what the costs displace in other options individuals might have for their time, effort, property, and money.  Their choices and dreams always take precedent over those of others and they are willing to use force to make sure that every individual accedes to that precedence.

All this for a health care system that is sure to deteriorate into another shabby equivalent of the Veteran's Administration System of an unavailable, highly rationed, low-quality, wait-forever, bureaucratic, vindictive, and dishonest morass that treats its patients like peons.  Of course, individuals who do not retain their individual rights are just that -- peons, serfs, begging servants and dependents of the state.

There must be a few individuals in Vermont who are much relieved by the failure of this Great Socialist Dream.  Indeed, Gov. Shumlin nearly lost his re-election bid to Republican Scott Milne, who ran against the Shumlin-backed Green Mountain Care.  Would Milne have won the election if the newer costs and tax estimates had been made available before the election?  Only 2,095 votes separated the two candidates for Governor.