House Committee Eyes Soda Tax For Health Care Reforms

Feb 27, 2015

Gov. Peter Shumlin wants to raise $90 million in state revenues to pay for a wide ranging health care reform agenda. And while a key House committee is backing his push for new taxes, the House Committee on Health Care looks to be leaning toward a tax on sugar-sweetened beverages to raise the money, not the payroll tax preferred by Shumlin.

The proposal from the House Committee on Health Care doesn’t go quite as far as Shumlin would like. And the plan would fall short of the $90 million annually in state revenue that the Democratic governor wants to generate.

But members of the health care committee still want to pay for significant increases in Medicaid reimbursement rates, as well as major investments in other health care reform initiatives. And they say they’re ready to raise taxes to do it.

“And so what the committee is trying to do is thread the needle of how much can we afford? What’s a reasonable investment? And how much can we return in premiums and lower hospital budgets to Vermonters? That’s the goal,” says Burlington Rep. Chris Pearson, the vice-chairman of the health care committee.

The plan from Pearson’s committee spends less than Shumlin on boosting Medicaid rates. And it would spend more than the governor on increased state aid to Vermonters who now get their health insurance through Vermont Health Connect.

"I think the committee is very interested in looking at the sugar sweetened beverage tax. There's clear health implications from drinking so many drinks with added sugar." - Rep. Chris Pearson, House Health Care Committee vice chairman

Pearson, a Progressive, says many lower-income Vermonters are spending more on insurance in the exchange than they had under Catamount Health.

“We have more and more Vermonters with insurance – too many of them can’t afford to use it, so helping them out with those out-of-pocket costs,” Pearson says.

Lawrence Miller, chief of health care reform for the Shumlin administration, says he’s pleased with the general outline of the committee’s proposal.

“They’ve come to a set of conclusions that look pretty consistent with our priorities as well,” Miller says.

While lawmakers and the administration may have found common ground on the need for additional health care revenue, however, they remain at odds over where the new money ought to come from.  

"They [the health care committee] have come to a set of conclusions that look pretty consistent with our priorities as well." - chief of health care reform Lawrence Miller

Shumlin has proposed a 0.7 percent tax on Vermont businesses, which would raise $90 million a year. The health care committee instead looks poised to endorse a 2-cent per-ounce tax on soda and other sugar-sweetened beverages.

The tax would raise an estimated $35 million annually. That doesn’t get lawmakers all the money they’d need to pay for the additional health care expenditures, and the House would still have to look to other sources to fund the remainder of their plan.

“I think the committee is very interested in looking at the sugar sweetened beverage tax,” Pearson says. “There’s clear health implications from drinking so many drinks with added sugar. I mean these are loaded with sugar.”

Lawmakers and the administration say the new expenditures would have the effect of lowering private health insurance premiums.

The health care committee will hold a formal vote on its plan when lawmakers return from their week-long Town Meeting break.