Vermont’s Giving Up On Single-Payer Health Care Over Ballooning Costs

Vermont Gov. Peter Shumlin is canceling his dream plan to create a single-payer health system in the state, he announced Wednesday.

“I am not going to undermine the hope of achieving critically important health care reforms for this state by pushing prematurely for single payer when it is not the right time for Vermont,” Shumlin said in a statement Wednesday. “In my judgment, now is not the right time to ask our legislature to take the step of passing a financing plan for Green Mountain Care.”

The problem is, of course, how to pay for it. Even while plans were moving forward for a 2017 launch of the single-payer system, to be called Green Mountain Care, Shumlin had held off on releasing a plan for how to pay for the system, waiting until his announcement Wednesday.

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.”

Shumlin’s office released a slideshow with more details about financing for the plan which fell through. 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.

But beyond federal funding, the report also admits that the single-payer system won’t save money as Vermont officials had planned. While both previous reports on Green Mountain Care had assumed “hundreds of millions of dollars” in savings in the very first year of operation, Shumlin’s office is now admitting that’s “not practical to achieve.”

“State government and providers need to partner to bend cost curve over time,” the report concluded. And the state admitted that while it would need to “ease the transition” for Vermont’s businesses, it would be “extremely expensive” to do so.

Shumlin also cited slow economic recovery in Vermont as reason to delay, and hopes to try again in the future. But its failure, especially on economic grounds, is a resounding defeat for single-payer advocates.

Many opponents of Obamacare continue to maintain that national health reform didn’t go far enough. Retiring Sen. Tom Harkin, who helped author Obamacare, recently expressed his regret that the health care law passed at all because it didn’t create single-payer. (RELATED: Harkin: We Shouldn’t Have Passed Obamacare The Way We Did)

Shumlin’s admission that the shift to single-payer won’t alleviate rising health care costs — and that it’ll add a bundle of tax hikes — buttresses single-payer’s political opposition.

Vermont Lt. Gov. Phil Scott, a Republican, applauded the decision to back off the plans.

“As I’ve said continually over the last two years, if the Governor’s single-payer plan places another burden on already overtaxed Vermonters, we simply cannot afford it,” Scott said in a statement Wednesday. “Our State cannot afford a $2.6 billion bill, and Vermont cannot afford to continue down this path of uncertainty. We’ve already spent far too much money exploring this idea, and the discussion has paralyzed our business community.”

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