Vt. Governor Vetoes Single-Payer Plan

Published August 1, 2005

Citing the danger of bureaucratic rationing of care, economically damaging taxes, and loss of health care choices for patients, on June 22 Vermont Gov. Jim Douglas (R) vetoed a bill that would have paved the way for his state to adopt a single-payer health care system.

“H.524 would create a new, government-run, taxpayer-financed health care program that would lead Vermont toward a system of fewer choices, fewer benefits, and fewer health care providers,” Douglas said in a 17-page memo to the state legislature accompanying his veto.

As passed by the State House and State Senate, the bill would have imposed payroll taxes on many small businesses and an income tax surcharge on the uninsured. In exchange for those higher taxes, Vermont would begin paying for primary and preventive care for uninsured residents by July 2006.

Hospital and catastrophic expenses would not have been covered initially, although H.524 did allow for such coverage to be extended to all Vermont residents by 2009 if cost containment measures made it affordable to do so.

Veto Praised, Criticized

Reaction to Douglas’s veto was swift. “Now, with the governor’s courageous veto, we can wipe the slate clean and begin to discuss health care reform from an inclusive point of view, instead of the myopic view as embraced by H. 524,” said Duane Marsh, president of the Vermont Chamber of Commerce.

“This legislation … would have prematurely set Vermont on a course to establish a government-run, taxpayer-financed, single-payer health care system,” which Marsh noted would be similar to those in other countries that are experiencing significant problems and are attempting their own reforms.

Paul Burns, executive director of Vermont Public Interest Research Group (VPIRG), expressed disappointment over Douglas’s veto. Calling it a “strong health care reform bill,” Burns said, “H.524 was the product of compromise between the House and Senate, and was a good step towards solving the problem of the uninsured. With this veto, Governor Douglas has unfortunately chosen to be part of the problem, rather than part of the solution.”

Burns’ assessment was not shared by John McClaughry, president of the Ethan Allen Institute, a think tank located in Vermont. “Gov. Douglas’s veto has at least temporarily spared Vermonters from the calamities of a government-controlled, Canadian-style single-payer system,” McClaughry said. He went on to list the likely outcomes of government-run health care as including “rationing, waiting lines, maddening bureaucracies, demoralized doctors and nurses, shabby facilities, obsolete technology, declining quality of care, and of course much higher taxation.”

More Reform Proposals Imminent

The issue of health care reform in Vermont has not been resolved by Douglas’s veto. His administration is working on a new proposal, and the state legislature has created a 10-member panel to explore reform options.

“We think we have a solid foundation for moving forward,” Senate President Peter Welch (D-Windsor) said in remarks reported by the Rutland Herald on June 23. “We are looking forward to making progress over the summer and working with everybody, including the governor.”

McClaughry had several recommendations for what Vermont should do to address the issue. In a May 2005 commentary on the Ethan Allen Institute’s Web site, he recommends the state maintain its commitment to providing health care to the poor, while moving towards a more free-market health care system.

“Shift the focus from creating a Canadian-style mega-system to building strong incentives for personal responsibility,” McClaughry urges. “[Educate] consumers about wellness, and about their choices for necessary treatment. Recreate a competitive and innovative health insurance market.

“Back off expensive coverage mandates,” McClaughry continues, “and stop shifting insurance costs from the older and richer to the younger and poorer. Encourage families to own their own policies and tax-free health savings accounts. … Make provider pricing transparent, and reward efficient and innovative providers.”

Paul Burns at VPIRG believes progress is likely on the issue. “There is a commitment among Vermont’s elected officials to deliver universal health care. Right now, there is a great deal of debate and concern between people of goodwill on how to get there.”

Sean Parnell ([email protected]) is vice president – external affairs for The Heartland Institute.

For more information …

More information on health care reform in Vermont is available online. See especially:

“Health Insurance Meltdown in Vermont,” by Conrad F. Meier, Health Care News, March 2004, http://www.heartland.org/Article.cfm?artId=14530.

“Governor Issues Veto Message for H. 524,” http://www.vermont.gov/tools/whatsnew2/index.php?topic=GovPressReleases&id=1360&v=Article.

“The Health Care End Game,” http://www.ethanallen.org/commentary.php?commentary_id=255.

“Health Care in Vermont: A New Prescription,” by John McClaughry, http://www.ethanallen.org/pdf/HealthCare2004final.pdf.