As we head into the final lap of the biennial Vermont campaign season there is one topic that is begging for more debate. How should we finance a new single payer health care system?
Political forums and debates have raised the simplistic question of whether or not a candidate is in favor of a single payer health care system. That is a moot question because the state has already decided that we are moving in that direction.
On Jan. 1 it is expected that the governor will finally unveil his plan for financing Vermont's new health care system. It's a safe bet that there will be a lot of disagreement about his plan. A new and fiery debate will begin the day the plan is revealed.
That means that we should use the current campaign season to best advantage and begin that debate now. The media and the public, as well as candidates, should use these few months leading up to the start of a new biennium to lay all of the options on the table.
Let us begin. We first need to remind people that, although we will need to raise more than $2 billion dollars in new taxes, most Vermonters will end up paying less for health care because the new tax will be less than their current premiums and out of pocket costs. That is a critical piece of factual information.
The meat of the issue is the funding source. Where will this new tax money come from? In the world of taxes there are only a limited number of options. Some people favor using a formula based on income taxes to fund the new system.
Using an income tax means that the amount of money people would pay for health care would be based on their ability to pay. If a 5 percent individual health care income tax was levied it would mean that a person earning $40,000 a year would pay $2,000 a year for health care.
That would mean that almost all of a person's health care needs would cost $167 a month. In today's health care world that would be a major bargain. Then the question is raised if that would be enough to finance a new system.
Most studies indicate that such an income tax alone would not be enough. That is why I favor a combination of taxes because I don't think people should have to pay more than five percent of their income for health care. Others feel that all of the burden should be on income tax, which means the individual percentage could rise to close to 10 percent.
I would rather see part of the cost of a new system paid for with payroll taxes. Estimates are that it would have to be between 5 and 8 percent of payroll. It would be paid by the employer.
The problem with this kind of tax is that it would be a hard hit for very small businesses and those businesses that do not now pay for insurance. One way to ease that burden would be to allow these businesses to phase in their contribution over a number of years or perhaps find a way to subsidize businesses of a certain size.
There may be other smaller taxes that could contribute to the cost of a new system. One of those could be a sweetened beverage tax. It is estimated such a tax could bring in revenue of about $10 million dollars. The governor has been opposed to such a tax but, now that he is unbeatable, and now that our new healthcare system will need all the help it can get, perhaps this tax will now have a better chance of passage.
All ideas need to be on the table now. We should use the remaining months before January to have as broad and deep a public discussion as possible about how to finance a single payer system so that when the Legislature convenes they will have a good sense of what the public is thinking.
Richard Davis is a registered nurse and long-time health care advocate. He writes from Guilford and welcomes comments at firstname.lastname@example.org.
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