Single-Payer Healthcare: If It Won’t Work in Vermont, Will It Work Anywhere?

Former presidential candidate and current U.S. Senator Bernie Sanders has long promoted a government-run healthcare plan for America.  He recently introduced legislation for his “Medicare for All” plan that would move the U.S. to a single-payer system, in which the government delivers and finances all healthcare.  Senator Sanders often points to European countries such as Sweden and the United Kingdom as models for the United States to follow on healthcare.  However, he rarely points out the failure of his own state, Vermont, to implement a single-payer health system.

In May 2011, the Vermont Legislature adopted and then-Governor Peter Shumlin (D) signed into law Act 48, putting the state on a path to a single-payer system.  The Act created a Board to oversee creation of the system and recommend a benefits package, after which the Secretary of Administration would propose a financing plan for Vermont’s single-payer system.  The Legislature would then vote on the financing plan, which was due to be presented to the Legislature in 2013.

But 2013 came and went, and Governor Shumlin’s administration still had not presented a financing plan.  Finally, in December 2014, shortly after winning his third term as Vermont Governor, Shumlin presented the plan — and it was not good news for single-payer supporters.

The original plan was to have the single-payer system, Green Mountain Care, up and running in Vermont in 2017.  However, Governor Shumlin’s presentation in December 2014 revealed that the cost of implementing the plan was higher than expected.  Much higher.  According to Avik Roy of Forbes magazine, “In 2017, under pre-existing law, the state of Vermont expects to collect $1.7 billion in tax revenue.  Green Mountain Care would have required an additional $2.6 billion in tax revenue:  a 151 percent increase in state taxes.”

Where the additional $2.6 billion would come from was problematic for Governor Shumlin and the single-payer healthcare plan.  According to Jay Fitzgerald of The Boston Globe, “Shumlin’s office estimated the state would need to impose new personal income taxes of up to 9.5 percent, on top of current rates that range from 3.55 to 8.95 percent.  Businesses would be hit with an 11.5 percent payroll tax, on top of 7.65 percent payroll taxes employers pay for Social Security and Medicare…. Shumlin said he feared the tax increases would harm businesses and the economy.”

Thus ended Governor Shumlin’s dream of a single-payer health plan for Vermont.  The Governor did not run for re-election in 2016.

To put the cost of Vermont’s plan into perspective, let’s take a look at Vermont’s population.  According to the U.S. Census Bureau’s most recent census (2010), Vermont’s population is 625,741; Iowa’s population is 3,046,355, nearly five times larger than Vermont.  The United States’ population, at 308,745,538, is 493 times larger than Vermont.

Vermont’s Governor Shumlin decided the tax increases required to implement a single-payer healthcare plan in his state would “harm businesses and the economy.”  During his 2016 presidential campaign, Senator Bernie Sanders claimed his single-payer plan for the United States would cost nearly $1.4 trillion per year.  However, the Urban Institute estimated that the plan would cost $2.5 trillion in the first year and $32 trillion over a decade.  What will that mean for American businesses and the economy?