Health reaction mixed

But some questioned the timing. It came after an election so close that the Legislature will have to settle it next month, and it came before the Legislature actually convenes.

“The timing of the announcement is different, a little strange in my view, but trying to figure out the calculus of Gov. Shumlin is not something I’m good at,” Scheuermann said.

House Speaker Shap Smith, D-Morristown, said the decision to scrap single-payer wasn’t entirely unexpected, given the tax implications that had risen in recent weeks.

“I was surprised that he decided not to move forward, but after he went through all of the numbers, it was an understandable decision on his part,” Smith said.

State Sen. Rich Westman, R-Lamoille, agrees with Scheuermann that private-sector pressure helped squash Shumlin’s single-payer ambitions, with opposition from a lot of small businesses and from one huge one.

Westman, a former state tax commissioner, said the total payroll in the state is $11.7 billion, and IBM accounts for $1 billion of that just by itself.

With Big Blue selling its chip manufacturing sector to semiconductor company GlobalFoundries, there was already plenty of angst over the future of the IBM chip plant in Essex Junction Westman said.

He’s not sure Shumlin’s announcement was meant as an incentive to keep IBM/GlobalFoundries in Vermont, but an 11 percent payroll tax and up to a 9.5 percent personal income tax to fund single-payer “would almost be like pushing them out the door.”

“IBM is the single largest employer and we’re going to be in a fight to keep them here,” Westman said.

Reps. Rebecca Ellis and Tom Stevens, Democrats from Waterbury, said they were surprised and disappointed — but are reserving judgment until more is known about the numbers behind the decision.

“The governor was clear that it can’t work right now because they feel it’s too expensive,” Ellis said. “I’m looking forward to reading the work that was done, to see what the administration came up with.”

Stevens dismissed critics who say Shumlin’s reckoning proves single-payer cannot work in Vermont. “It’s easy for people to say, but unless they’ve done the work, they couldn’t really,” he said.

However, Washington County Sen. Anthony Pollina, a Democrat, said Shumlin failed supporters by presenting only a plan he knew would not work.

“He was not willing to look at it creatively,” he said.

The senator said Shumlin should have presented legislators with a couple of options, including a plan that offered less comprehensive coverage than the state’s employee health care plan. He looks forward to pushing a new single-payer health care plan in the future.

Shumlin said it would take an 11 percent payroll tax to finance single-payer, and that’s too much for businesses to bear. However, “I’m not sure heavy reliance on the payroll tax is a mistake,” given the variance of taxes paid by businesses, Pollina said.

Some businesses pay payroll taxes as high as 25 percent; others pay nothing at all, he said.

What happens now?

Smith said he’s heard mixed reactions about Shumlin’s decision: “I have heard voices of disappointment from people outside of the district and disappointment from representatives, and then others are breathing a sigh of relief.”

While he understands Vermonters’ reservations about the cost of single-payer, the current health insurance system isn’t financially sustainable or equitable, he said.

Without reforms, “people will pay pretty dramatically different prices for the same health care,” Smith said, and that’s not fair.

Already, he said many families and businesses pay more for health insurance than they pay in education property taxes.

At his press conference, the governor said Vermont must focus on other health care goals, such as reducing the number of uninsured Vermonters, improving access to primary care, reducing cost-shifts to private insurers, and strengthening the Green Mountain Care Board to give the state a better shot at long-term cost containment.

Smith is cautiously optimistic that these ideas will gain bipartisan support in the Legislature.

“The devil is always in the details,” Smith said. “We’ll see.”

In a related development, Smith expects school-tax reform to be a key focus of the next legislative session, and pointed to the connection between education costs and health care reform.

“When you look at cost of education, a significant portion — at least $100 million — is directly related to health care,” Smith said. “Getting a handle on the cost of health care is critical in getting a handle on the increasing cost of education.”

Systems in place

Both Scheuermann and Westman said health care will be a part of the coming legislative session, because the infrastructure is still in place.

There’s Vermont Health Connect, the state’s health care marketplace, which Westman said the state has already sunk $100 million into, and which he said will probably end up costing $120 million.

And there’s the Green Mountain Care Board, established by the Legislature in 2011 to overhaul the state’s health care system.

“They aren’t just going to trash the exchange, because they’ve gone this far in collecting premiums, and Green Mountain Care isn’t going anywhere,” Westman said. “All that goes away right now is the idea that we’re going to run headlong into a big tax to fund it.”

Scheuermann said she was disappointed to watch the Shumlin administration invest huge amounts of time and effort in Green Mountain Care and Vermont Health Connect during the past three years, despite growing unease even from Democrats who felt in the dark about the system’s inner workings and its finances.

Worse, she said, was the sense of unease it instilled in current and would-be business owners.

“I think people were holding their wallets, waiting to see what would happen,” Scheuermann said.

Going forward, “I think this is an opportunity for us to create a health care exchange that works for all Vermonters,” Scheuermann said.