As House Lawmakers Rethink Soda Tax, Health Reform Money At Risk

Apr 13, 2015

Gov. Peter Shumlin is urging lawmakers to make huge new investments in health care reform. But the Vermont House has slashed his proposal dramatically. And even the pared down health reform initiative may now be in jeopardy.

It’s been almost two weeks since the House Committee on Ways and Means approved an approximately $20 million health care reform bill. The legislation, however, continues to languish in the House Committee on Appropriations. And House Speaker Shap Smith now says it’s possible the bill might never make it to the floor.

“At some point in time we may just say, ‘We’re not going to do this bill,” and make the decision to look at it maybe next year,” Smith said Monday.

Smith’s iffy prognosis is the latest setback for the centerpiece of Peter Shumlin’s 2015 legislative agenda. The Democratic governor sought to raise $90 million annually with a new payroll tax, use it to draw down another $100 million in federal funds, and then use the bulk of the combined sum to increase the amount doctors and hospitals are paid to treat patients with Medicaid.

Shumlin says boosting reimbursement rates will improve access to health care for lower-income Vermonters, while bringing down the cost of private insurance being sold by Blue Cross Blue Shield and MVP.

"I’ve been around the building for a long time. I know that sometimes the things you believe are important and necessary don’t get across the finish line." - House Speaker Shap Smith

The House rejected the payroll tax, saying Vermont can ill afford what critics say amounts to a tax on employment. The House Committee on Ways and Means offered up a plan that would raise $18 million by way of a half-cent per-ounce tax on sugar sweetened beverages.

But that proposal is now mired in an appropriations committee that has serious reservations about a tax on soda.

Smith says he thinks it’s critically important that lawmakers address Medicaid reimbursement rates, especially for primary care doctors.

“I’m also a realist, and I’ve been around the building for a long time. I know that sometimes the things you believe are important and necessary don’t get across the finish line,” Smith says.

The House Committee on Ways and Means offered up a plan that would raise $18 million by way of a half-cent per-ounce tax on sugar sweetened beverages. But that proposal is now mired in an appropriations committee that has serious reservations about a tax on soda.

The House bill would direct the $20 million mainly to increased Medicaid payments for primary care doctors, and also to financial assistance for lower-income Vermonters buying insurance from the exchange.

Smith says a majority of House lawmakers support the aims.

“I think the consensus is pretty clear around how we would spend the money. “It’s less clear around how you might raise it,” Smith says.

Many lawmakers fear the economic impact of a tax on soda and other sugar-sweetened beverages, especially on retail outlets in border towns. And with no obvious revenue plan to replace that soda tax, Smith says the entire health reform bill is at risk.

Shumlin, meanwhile, is still urging lawmakers to think big, and find the "courage" to move forward with the $90 million payroll tax.

Shumlin, meanwhile, is still urging lawmakers to think big, and find the “courage” to move forward with the $90 million payroll tax. Even if lawmakers can find the votes for the $18 million package, Shumlin says it won’t address the Medicaid cost shift in any meaningful way. 

“Well, my concern is that it doesn’t solve the problem that we were trying to solve,” Shumlin said last week.

The House Committee on Appropriations resumes debate on the health care bill Tuesday.

This story was edited at 10:24 a.m. on 4/14/15