• Financing the VT single-payment system

    This post is part of a series on Vermont’s single payment system law.

    H.202 builds the framework for a single-payment system in VT, but doesn’t pull the trigger yet. Two financing plans will be presented to the Legislature by January 15, 2013 (see sec.9). For background, skip the legislation and look at the official report by Hsiao, Kappel and Gruber.

    The current model is a payroll tax, on both employers and employees, with exemptions for low-income workers.  In fundamental design, this is similar to Social Security or Medicare. The tax rate numbers are not set in stone, but one estimate is 11% for employers and 3% for employees. If Vermont can pay for health care with just 14% of wages, that will be a remarkable bargain.

    The tax applies whether or not the employee accepts GMC.  This is a “pay whether or not you play” tax – quite different from the “pay or play” laws in Maryland or SF.  As a prominent Vermont employer said, no one wants to pay for health care twice, so this structure encourages the self-insured ERISA plans to voluntarily join GMC.

    My interview with Ezra Klein is here.

     

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