Tag Archives: Vermont

VTDIGGER.ORG: Peter Galbraith: Toward a Health Care Solution

Editor’s note: This commentary is by Peter W. Galbraith, a former Democratic senator from Windham County. He did not seek re-election in November.

Gov. Shumlin’s decision not to proceed with a financing plan is disappointing to the many single payer advocates but should not have been a surprise. And, much more importantly, it should not end the effort to achieve universal coverage in Vermont.

In reality, Vermont could never have a single payer health care system. There were always going to be other payers: Medicare, federal employees, the military, participants in self-insured multistate (ERISA) employer plans, out-of-staters, and people who simply preferred to keep their existing health coverage even as they paid the single payer taxes. Under these circumstances, the per capita savings from a Vermont single payer plan would be less than a national plan, were such a thing ever politically feasible.

Most Vermonters have health care that they like and can afford, in part because someone else — an employer or government — pays most of the cost. Shumlin’s now defunct plan would have taxed the contented majority to address the problem of the uninsured and inadequately insured. By placing so much emphasis on the income tax (or mandatory premiums), the plan would have transferred some of the burden of health care from Vermont’s largest and wealthiest corporations (who provide health care to their employees) to their workers and to small business.

Even if Vermont won’t create single payer health care for everyone, we can still provide quality health care for those who are uninsured or underinsured. Last May, I proposed legislation to create a public option as part of the exchange created by the Affordable Care Act. The public option would establish a benchmark silver plan on the exchange (perhaps using the existing Blue Cross Blue Shield silver plan). Silver plans are the only ones eligible for federal subsidies that help pay premiums, but they only have a 70 percent actuarial value, meaning the plan only picks up 70 percent of the participant’s health care costs. Under my proposal the state would enhance the benchmark plan so that it paid 87 percent of the participant’s costs and would subsidize each participant’s monthly premiums. I proposed a monthly subsidy of $40 a month for an individual and $120 a month for a family.

Under my proposal the state would enhance the benchmark plan so that it paid 87 percent of the participant’s costs and would subsidize each participant’s monthly premiums. I proposed a monthly subsidy of $40 a month for an individual and $120 a month for a family.

Presumably every participant in the exchange would choose the public option since he/she would be getting 87 percent of her/his health care expenses covered for the price of a 70 percent plan and, in addition, would have a subsidy. Since almost everyone would choose the enhanced and subsidized plan, Vermont would end up with many of the same administrative savings that would have occurred under the single payer plan.

Legislative counsel estimated the cost of my proposal at $350 million. I proposed paying for it with a 2.2 percent payroll tax and by eliminating certain income tax deductions that primarily benefit high income Vermonters and which otherwise have no real policy purpose. Since every Vermonter would pay the tax, every Vermonter would receive the subsidy and enhancements, regardless of income. But, no one who is happy with his current health care would be forced into the new system. And, as a practical matter, most well off Vermonters have good insurance paid by their employers and would not be entering the subsidized pool.

Under this proposal, Vermont would not be taking over the state’s health care system but instead building on the existing Affordable Care Act. If the projections on needed revenue are wrong, the state is not locked into tax increases (as it would be under single payer) but can simply adjust the subsidies or benefits. And the public option can be created right now. It does not depend on an uncertain federal waiver.

The cost figures the governor released last week are not substantially different from those contained in a report he submitted to the Legislature in January 2013. In short, the handwriting about the likely fate of the single payer plan has been on the wall for quite some time. Instead of recriminations over what didn’t happen, let’s look to what can still be accomplished.

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Vermont Watchdog.org ~ Galbraith: Shumlin could have given Vermonters gold for the price of silver

January 2, 2015 @ 4:00 am
Posted By Bruce Parker

MONTPELIER, Vt. — An outgoing Vermont senator says the health care plan he formulated is the only one left standing after Gov. Peter Shumlin ditched his single-payer agenda in December.

Peter Galbraith, a two-term state senator and former U.S. ambassador, spent the past legislative session working to provide Vermonters with universal health care.

Click on this link to read the article in its entirety.

 

 

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Spoiler alert: VT state senator details cost of single-payer health care

By Bruce Parker | Vermont Watchdog / December 5, 2014

For two years, Gov. Peter Shumlin has concealed his plans for financing single-payer health care. His lead consultant, Jonathan Gruber, has admitted to deceptive policymaking and called lack of transparency “a huge political advantage.”

But at least one man knows what Vermonters can expect to pay for Green Mountain Care and isn’t afraid to tell.

Peter Galbraith, a former U.S. ambassador and two-term Democratic state senator from Windham County, holds the distinction of being the only lawmaker to have put forward a plan for financing Act 48, Vermont’s publicly financed health care program.

Read the article in full

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Vermont Watchdog: Medicare issue hurting Shumlin administration

Vermont senator: Medicare issue hurting Shumlin administration

Posted By Bruce Parker On November 12, 2014 @ 9:52 am

MEDICARE MESS: Outgoing Democratic state Sen. Peter Galbraith (right) says Gov. Peter Shumlin’s handling of Medicare is causing anxiety among seniors.

MEDICARE MESS: Outgoing Democratic state Sen. Peter Galbraith (right) says Gov. Peter Shumlin’s handling of Medicare is causing anxiety among seniors.

 

 “Senior citizens worry about changes to their standard of living. The easiest thing in the world would have been to say don’t worry. But instead we didn’t, and frankly I think that’s the reason the governor nearly lost,” state Sen. Peter Galbraith, D-Windham, told Vermont Watchdog.

Read the article in its entirety by clicking this link.

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Remarks to the Vermont Senate: Health Care Financing and the Public Option

Senator Peter W. Galbraith

Remarks to the Vermont Senate

Health Care Financing and the Public Option

May 2, 2014

 

Mr. President:

The Senator from Caledonia spoke yesterday about how little time we have spent talking about the two most important issues on our constituents minds: how to pay for education and how to pay for health care. Indeed, this legislature has spent far more time this biennium discussing how just a few people—literally 3 or 4 a year—might die rather than how we to pay for the life-sustaining health care for 600,000 Vermonters.

Many of us were disappointed that our Governor ignored the mandate in Act 48 to present a financing plan for Vermont’s universal publicly financed health care system by January 15 of last year. But, Mr. President, I do not fault the Governor. This is a big step.

If we want the health care system laid out in Act 48, the financing is not complicated. It requires a big tax increase, but not a complicated one. Financing Green Mountain Care will cost $2 billion. If we want a taxpayer to pay for it, the only practical way to do this is through a payroll tax that falls primarily on employers.

Earlier this year, I introduced S. 252 which would have imposed a 11% payroll tax on employers and 2% payroll tax on employees. The Governor explicitly rejected such the 11% payroll tax as far too large. I wondered how it was possible to finance Green Mountain Care without such a tax.

The Governor, however, is not moving to implement the taxpayer financed universal health care system envisioned in Act 48. The Governor has publicly said he would not force the ERISA companies into the new system and, as his own Act 48 report states, it is not practical to include federal employees.  The administration has a plan under discussion, what I will call a notional financing plan. This plan will make it very attractive for the ERISA companies to substitute Green Mountain Care for their own plans.

Under the Administration’s notional plan, most Vermonters would get their health care through Green Mountain Care. But the system will be primarily financed by premiums, not by taxes. The notional plan would raise about $1 billion in premiums. While the premiums will be graduated according to income, they will need to reach 9% of income at around $50,000 a year to raise the necessary money. (Any system would also cap on the total premium payable by any individual.) The other billion would come from a 2% gross receipts tax and a 5% employer payroll tax.

For companies that already provide health care, the administration’s notional plan is very good deal. Since most such companies generally pay far more than 5% for their employees’ health care, they would have a strong incentive to drop that health care and pay the payroll tax. This will make Vermont an attractive place for large—and generally well paying—businesses to locate. I understand why the Governor thinks the ERISA companies will like his plan and why he can say—with good reason—that Vermont’s new health care system is an economic development tool.

Of course, businesses that do not now offer health care will see a 5% increase in labor costs. The plan therefore represents a shift in health care expenditures from larger businesses and from socially responsible businesses to smaller businesses and businesses with lower paid employees. It also represents a cost shift from business to employees. While low wage employees may end up better off—and certainly no worse off—many middle and upper middle-income workers will end up worse off, perhaps much worse off. For example, a professional couple who now have ¾ of their health care costs paid by one spouses’ employer might both end up paying premiums amounting to 9% of their combined income. Depending on the premium structure, this could—for a family making a combined $200,000 a year—take their health care costs from $5000 to $18,000.

While I think there is much to admire in what the Administration is now considering, I have several concerns. I do not think going from our current premium-based system for financing health care to a mandatory premium based system represents the kind of radical change that I had hoped to see through Act 48. While I am confident that the Administration will work to minimize inequities, there are certain to be many. And, if I learned one thing in my four years in the Senate, the voices of those who are unhappy about a piece of legislation always outweigh the silent majority who stand to benefit.

If we aren’t going to have a compulsory financing system for all, we can get as close to a single payer system with incentives as we can with a compulsory system that applies only to some. And we can do so for a fraction of the cost. That is the purpose of this amendment.

The amendment proposes to create a public option, called Vermont Health, to be offered on the Vermont exchange. The public option would offer a gold and silver plan on the exchange.

Only Silver plans are eligible for federal subsidies. However, silver plans only provide a 70% actuarial value while Act 48 says Green Mountain Care should have an 87% actuarial value. This amendment provides every Vermonter enrolled in the Vermont Health Silver Plan with wrap coverage bringing up the actuarial value to 87%. In addition, every Vermonter enrolled in the Vermont Health Silver Plan also receives a premium monthly subsidy. Under current circumstances the subsidy would amount to $40 a month per person and $120 per month for a family of three or more. The wrap coverage and the subsidy will be available to every Vermonter enrolled in the Vermont Health Silver Plan regardless of income.

The subsidies and wrap coverage are paid for by a 2.2% payroll tax and by eliminating the pass through of itemized federal deductions on the Vermont income tax. The amendment raises $350 million dollars through these two taxes.

While no one will be obliged to sign up for Vermont Health, it would be a very attractive option for individuals and companies. By joining Vermont Health, companies and individuals will get the actuarial equivalent of a gold plan for less than the price of a silver.

However, there would be no element of coercion. No one would be obliged to give up health coverage that they like. And, the taxes are relatively low.

The price tag for the public option in this amendment is $350 million, 83% less than the cost of Green Mountain Care—whether financed by taxes or by premiums. Yet, precisely because the public option will be so attractive to companies and individuals, it should get as close to a single payer system as the Administration’s notional plan.

Mr. President, there are no secrets in democracies no matter how hard leaders try to keep them. The information that I have discussed comes to me from someone knowledgeable about the administration’s deliberations. It does not come from anyone in the administration but I have reason to think that this indeed what is now being considered.

Some have suggested that discussions of health care financing are best put off until after the elections. I could not disagree more strongly. Elections are an occasion to have a conversation with the voters and there is no issue more deserving of a conversation this fall than the future of health care in Vermont.

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Senator Galbraith explained his bill to fund Vermont’s single payer health care system

In a floor speech in the Vermont Senate on March 27, 2014, Senator Galbraith explained his bill to fund Vermont’s single payer health care system and why the delay in coming up with a financing plan is unjustified and damaging to Vermont’s economy.

 

Remarks on S.252

Senator Peter Galbraith

March 27, 2014

Mr. President:

S. 252, as introduced, is a financing plan for Green Mountain Care. I have distributed a handout describing the provisions of the bill. I will briefly explain the bill and then explain why I introduced this bill.

In its January 2013 Act 48 report, the Administration estimated that Green Mountain Care would cost $1.6 billion and so S.252 seeks to raise that amount. Since then the estimate has risen to $2 or 2.2 billion and I will discuss later how that might be raised.

Both the underlying bill and the committee amendment establish a number of principles for a Green Mountain Care financing plan. These include the principle that everyone contributes according to her or his ability to pay and that payments should be related to service received. In short, that no one should see a $100,000 tax bill to pay for health care.

The underlying bill has three taxes:

  • A payroll tax of 11% on the employer and 2% on the employee. This raises about $1.45 billion.
  • A 10 % tax on the amount of non-wage income that exceeds wage income. This intended to capture income from individuals who live on unearned or out of state income but who will be included in GMC. This raises about $100 million.
  • The elimination of the pass through of federal itemized deductions to Vermont taxes. The pass through primarily benefits high-income taxpayers and most states with an income tax do not allow the pass through. This raises about $65 million.

Most of the revenue in the underlying bill is raised by the payroll tax. There are two reasons for this. First, a payroll tax divided between employers and employees mimics the current system of financing health care where both employers and employees pay premiums. Thus, a payroll tax causes less disruption than any other revenue source.

But, the second reason for choosing a payroll tax is more important. A payroll tax paid by the employer is a deductible business expense to the employer. Depending on the tax status of the employer, the value of this deduction could range from nothing (if the business were never profitable) to 39%. Overall, it is a fair estimate that, if we go with a payroll tax, the federal government will pick up at least 25% of cost to Vermont employers of Green Mountain Care. Thus an 11% payroll tax would have an effective rate to employers on average of 8.25%. No other revenue source has this implicit federal subsidy.

 

Now, let me turn to the question of why I introduced the bill.

Green Mountain Care is biggest and most expensive project ever undertaken by the state of Vermont. It is an undertaking on the order of magnitude of creating from scratch a public education system or the social security system. To pay for Green Mountain care, Vermont will have to enact the largest tax increase in Vermont history but it is a tax increase that will save Vermonters money. Overall Vermonters will save more in premiums and expensive services (such as emergency room care for the uninsured) than they will pay in taxes.

Raising the approximately $2 billion needed for Green Mountain Care is a big decision, but not necessarily a complicated one. In fact, the very size of the amount that needs to be raised greatly reduces our options and therefore simplifies our choices.

There are four taxes — and only four taxes — that can raise $2 billion. These are (1) a payroll tax, (2) the income tax, (3) the sales tax, and (4) a capitation tax, or mandatory premium. I asked the Joint Fiscal Office (JFO) to prepare a chart showing how much each tax would have to go up to raise $2 billion:

  • Using just the payroll tax, we would need a rate of 17%.
  • If we used just the income tax, we would have to start the tax with a 33% bracket and a top rate of 39%.
  • If we used just the sales tax, we would have to expand the tax to cover food and clothing and we would need to set the overall rate at 29%.
  • If we use just premiums, every Vermonter not excluded from Green Mountain Care will have to pay an annual premium of $5200.
  • If $500 million were raised from each source, it would require a payroll tax of 4.25%, a public premium of $1,325, a 7.5% increase in the marginal rates in the income tax, and a 5.75% hike in the sales tax to 11.75%

Because there are so few choices, it is not hard to come up with a workable plan to finance Green Mountain care. The hard part is having the political will to do it.

If the experience of every other industrialized country is a guide, universal publicly financed health care will be significantly less expensive than our current system of paying for health care. But, it will be substantially more expensive for some people and that is the dilemma.

If we use just the payroll tax, we will add 17% to the bottom line of the many Vermont businesses that do not now offer health care. We will alienate our largest employers, who are self-insured and who would see their costs rise as their employees get the superior Green Mountain Care benefits. If we hike the income tax by adding 30% to each tax bracket, we will alienate almost everyone. We will certainly alienate the state’s highest earners who could face a combined state and federal tax rate of 78%. European countries have a sales tax (called the VAT) that ranges from 20 to 25%, so a 29% sales tax is not impossible — except that we are not our own country. Vermont retailers will fiercely oppose a hike in the sales tax. Everyone who has good health care will oppose the mandatory premiums.

I see no sign that Administration or the legislature is prepared to support tax hikes of the kind I have outlined. The Administration declined to present the plan required by Act 48 in January 2013 and more recently the Governor declined to share his administration’s ideas with the legislature, although he had said he would do so.

I have sympathy for our executive. There is no financing plan that will not alienate large parts of our business community and many other Vermonters. Around Montpelier, the raised voices of a disaffected minority always seem to count for more than those of a silent majority who might benefit. In the case of any plan to pay for Green Mountain Care, the disaffected minority is sure to be numerous and loud. So, it is easy to understand why no plan has been put forward.

But, Mr. President, not having a financing plan also has economic consequences.

I have spoken with several of our largest employers. They say that uncertainty about what they will have to pay for health care affects their investment decisions for Vermont. Imagine a company with a $200 million payroll. That company doesn’t know whether or not it will have to pay $34 million in taxes on a $200 million in payroll is not likely to make new investments in Vermont. That is a lot of uncertainty. And, the company might be reluctant to invest in a state if it doesn’t know the income tax rate on its highest paid employees — the very ones who make investment decisions.

Many of my constituents strongly support universal publicly financed health care. But, they are anxious about how it might affect them and this is especially true of older Vermonters who live on fixed incomes. We have an obligation as public servants to alleviate that anxiety, and we can alleviate it.

We should end the uncertainty that is undermining our economy. Green Mountain Care might make Vermont attractive to certain kinds of companies, indeed to the socially responsible companies that we would love to have here. But, it is hard to make investment decisions if you don’t know whether if there will be Green Mountain Care and how it will be paid for.

Let us be honest with our constituents. If we are not willing to raise $2 billion — if we are not ready for a payroll tax, for a doubling of the income tax, for a doubling of the sales tax and for a premium tax — let’s say so.

Pretending we don’t know how to raise $2 billion is a poor excuse for ducking a tough decision and disservice to the people of Vermont.

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Manchester Journal: Wind Forum explores concerns

Wind Forum explores concerns

TOWNSHEND – Tears welled up in Larry Lorusso’s eyes and his voice began to crack as he spoke about the environmental impacts the Hoosac wind project has had since it first went online last year.

Peter Galbraith (D-Windham District) moderated a meeting held by Vermonters for a Clean Environment. This is the first of three meetings to explore wind turbines and their impact. The specific topic for Friday, November 22, 2014s meeting was noise and health, with acoustical engineer Stephen Ambrose as the main speaker, and citizens from the wind projects in Hoosac, MA and Groton, NH joining him in a panel conversation. Over 60 were in attendance. Please click on the links to the Manchester Journal’s report of this meeting.

“My mountain was out back,” he said taking a moment to try to collect himself. “It was the enchanted forest. I loved going up there and [it was] a very beautiful place and I watched them wreck it little bit by little bit. So, I understand something was taken from us. Part of it is the noise, our peace and quiet.”

Lorusso was part of four person panel that met at the United Church of Christ (Townshend, VT) on Friday (November 22, 2014) for a forum that attracted about 60 people for a discussion that focused largely on the noise and health impacts of industrial wind power.

“They would be basically parallel to the Windham Hill Road and therefore parallel to much of the settlement in Windham and certainly two of the villages close to that,” said state senator Peter Galbraith (D-Windham District). “It would then veer to the east to Townshend Road in Grafton and it would come into Townshend with sort of a direct impact on the Acton Hill area. Now this project, if it is built, would be the wind project that is in the most densely populated area of any wind project so far built in Vermont.”

Galbraith continued to say that within two miles there were 500 residences in the towns of Windham, Grafton, Townshend, Andover, Chester and Londonderry. Within three miles there would be 1,000 residences effected in the aforementioned towns as well as in Jamaica, he said.

Galbraith also touched on the potential of the projects to impact the value of not only various towns grand lists, but the value of individual homes – something that will be the subject of the next meeting of Vermonters for a Clean Environment, which is scheduled for January 17, 2014.

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