Over in Maryland, Ben Jealous is running for the Democratic nomination for governor, and it appears he wants to make his signature issue a plan to create single-payer health care in the state, a plan that would “make government pay for residents’ medical care and get rid of the out-of-pocket expenses that residents pay.”
One would think Vermont’s experience with trying to implement a single-payer system would have had some impact on Democrats, but apparently it has not.
In spring of 2011, Vermont’s state legislature passed legislation to create a government-financed single-payer health system called Green Mountain Care. Almost all of the Democrats in the state house and senate voted for it. Vermont governor Peter Shumlin had campaigned on the idea and enthusiastically signed it into law.
There was no Republican sabotage, no foot-dragging from those allegedly nefarious conservatives, no sinister lobbyists blocking some oh-so-easy win-win idea. This is Vermont, where there’s no shortage of well-meaning progressives around. Democrats had the votes, and the governor made it his signature proposal. When it passed, the idea was to pay for it with gradual annual increases in Medicaid spending. The state would increase its share, the federal government would match it and increase their contribution as well. Within a few years, the state would throw in a modest bump in tax rates and create state-run health coverage for every resident.
Bit by 2014, Shumlin’s team ran the numbers over and over again and kept coming up with the same result: Paying for the system they wanted to build meant they needed about $2.5 billion in additional revenue in the first year. The state’s total tax revenue at that time was . . . $2.7 billion.
Much to the surprise of Shumlin, the plan was going to cost a lot more than expected, and the savings were pretty mild: “A 2014 study by Shumlin’s staff and consultants predicted 1.6 percent savings over 5 years and foresaw required new taxes of 11.5 percent for employers and up to 9.5 percent for individuals.” In December, the governor shocked his supporters by announcing the plan was unworkable and he was abandoning it.
You see arguments from single-payer fans that the plan could have worked if Shumlin and other Democrats had merely prepared the public for the tax hikes:
While the Shumlin administration was heavily invested in trying to make the policy side of the reform effort work, it ignored or put off an equally vital component of implementing such a large and complex public policy initiative: ensuring that the public was educated on what the reform did and what its costs would be, as well as making the case that the end result would be worth the cost of those costs.
But “they just didn’t try hard enough” explanation doesn’t wash, and it’s worth noting that Shumlin barely won reelection in 2014 against a Republican who opposed the single-payer plan. Enacting the plan would have required tax hikes that Shumlin knew would have created an “economic shock,” as he said in his announcement press conference. He admitted that the previous estimates of tax revenue were too optimistic.
A liberal progressive Democratic governor who had made single-payer his preeminent issue and top priority, who had every incentive in the world to make it a reality, looked at the math and concluded he couldn’t institute single-payer without doing serious damage to his state’s economy. Abandoning the plan was the ultimate argument against interest. But he probably sensed, correctly, that the tax hikes needed to finance it would be wildly unpopular and he and his party would be thrown out by the voters at the earliest opportunity.
In light of all this, it’s not so surprising that state senator Paul G. Pinsky, the legislator proposing a “Medicare for All” system, says he’ll lay out how to pay for his proposed system sometime later.
Interviewer: What’s the fiscal note? I assume it’s eye-popping.
Pinsky: Well, we don’t put it in there. We say you have to set up a universal budget, and then you have to raise revenue to take care of it. In previous years I’ve said it should be this tax and this much money, but modeling all this is way beyond the Department of Legislative Services’ abilities. So we leave that aside. We just said there will be a system.
What are the odds that when push comes to shove, and Maryland has to actually implement a single-payer system, that the costs of providing “Medicare for All” turn out to be way higher than anyone was willing to admit on the campaign trail?