Payroll Tax, Sugar-Sweetened Beverage Tax At A Critical Juncture

Mar 30, 2015

This is going to be a critical week for the future of a major health care initiative in the House. It's unlikely that the House Ways and Means committee is going raise as much money as the Shumlin administration originally proposed, which means some elements of the governor's plan may have to be scaled back.

Gov. Peter Shumlin originally proposed a 0.7 percent payroll tax to pay for his health care package. The new tax was projected to raise roughly $90 million on an annual basis. This new revenue would then be matched with $100 million in federal funds.

The plan included money to boost Medicaid reimbursement rates to help reduce the Medicaid “cost-shift.” It also provided additional funds for the Blue Print for Health and the Green Mountain Care Board and it increased state subsidies for policies sold on Vermont's health care exchange.

Calais Rep. Janet Ancel, the chairwoman of the House Ways and Means committee, doesn’t support using the payroll tax. She says it's likely that her panel will back a proposal that raises considerably less money than the governor's plan.

The House Ways and Means committee is expected to decide this week if a tax on sugar-sweetened beverages should be included in their health care package.

But Lawrence Miller, the chief of health care reform for the Shumlin administration, says he's still hoping that lawmakers will support the governor's entire package. If they don't, he says raising reimbursement rates for Medicaid will take a back seat to other priorities.

"I think the clear priority is on the various elements of primary care, cost sharing reductions, Blue Print for Health, quality improvements that have meaningful long term impact,” Miller says. “Those are really transformational." 

The Ways and Means committee is expected to decide this week if a tax on sugar-sweetened beverages should be included in their health care package. Miller is urging the committee not to use this tax because the governor is strongly opposed to it.

The committee is also looking at other options including imposing the sales tax on soda and candy and raising the tax on tobacco products.