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The outrageous tax increases that would have been required to make Vermont's proposed single-payer healthcare program a reality forced Gov. Peter Shumlin to pull the plug after years of planning.
In May 2011, Shumlin, a Democrat, signed legislation into law that established a government-run, taxpayer-financed healthcare system that would provide coverage to all residents of Vermont. "In Vermont we are pursuing a plan that we think will control healthcare costs, not just by cutting fees to doctors and hospitals, but by fundamentally changing the state's healthcare system. I have launched an ambitious effort, with support from the Vermont legislature, to implement a single payer system in Vermont," Shumlin wrote in an August 2011 editorial at the Huffington Post. "Under the plan, single payer coverage will be a right and not a privilege, and will not be connected to employment."
The proposed program was hailed by the political left, including Sen. Bernie Sanders (D-VT), a self-identified socialist. "If Vermont can pass a strong single-payer system and show it works well, it will not only be enormously important to this state, it will be a model," Sanders said in February 2013. "If we do it and do it well, other states will get in line and follow us, and over years, it will take years, we will have a national system."
As Margaret Thatcher once said, "The problem with socialism is that you eventually run out of other people's money."
Shumlin, a Democrat, quickly learned that building the program -- the first of its kind at the state level -- is easier said than done. Advisers struggled to come up with a reasonable financing plan to cover the estimated $2 billion price tag, which, by the way, is roughly the size of the state's $2.3 billion budget (excluding federal funds) for FY 2015. The Vermont Democrat would have had to sign off on an 11.5 percent payroll tax on all businesses in the state and a 9.5 percent public premium tax to finance the program. These new taxes would have been in addition to the state's already heavy tax burden.
On Wednesday, Shumlin pulled his support for the proposed single-payer system, known as Green Mountain Care. "These are tax rates that I cannot responsibly support or urge the Legislature to pass. In my judgment, the potential economic disruption and risks would be too great to small businesses, working families and the state’s economy," said Shumlin. "Although our economy is still growing, that growth is slower than expected and we have faced two revenue downgrades. Given this new reality, every percent of tax raises fewer dollars than we had anticipated, requiring higher tax rates than we had hoped to fund this system." Shumlin also noted that federal funds to help cover the cost "is over $150 million less" than his administration had expected.
It's also worth pointing out that Vermont hired Jonathan Gruber, the now-infamous MIT economist who worked on ObamaCare, to help craft its single-payer system. The state ended the $400,000 consulting agreement after videos surfaced in which Gruber insulted Americans and bragged about the designed lack of transparency in ObamaCare.