Gov. Peter Shumlin says a health care package being developed by the House fails to take any meaningful action to address the rising cost of health care. The governor is urging lawmakers to reconsider the House approach.
In his inaugural address, Shumlin said it was critical for lawmakers to deal with the so-called Medicaid cost-shift.
He proposed a 0.7 percent payroll tax to pay for his health care initiative. He said the plan would raise $90 million in new state revenue, and that this money would be matched with $100 million in federal funds.
Shumlin said a good chunk of the money would be used to increase Medicaid reimbursement rates for health care providers – rates that currently represent roughly 60 percent of the cost of medical services. He said the net effect would be a 5 percent drop in private health insurance premiums.
The plan being developed in the House raises a lot less money: roughly $20 million in state revenue that's matched with about $17 million in federal funds.
Shumlin says the House plan doesn't go nearly far enough to deal with the cost-shift issue.
“My concern is that it doesn't solve the problem that we're trying to solve,” Shumlin says. “So my point is simple: Let's either have the courage to solve a real problem or let's ask ourselves, ‘What are we trying to accomplish here?’"
The House plan is financed by imposing a half-cent-per-ounce tax on sugar-sweetened beverages, raising the tobacco tax and applying the sales tax to dietary supplements.
Shumlin says he doesn't want to use these revenue sources for health care because he thinks they'll be needed later in the session to help balance the state budget.
"All I'm saying is, we shouldn't be spending that money twice. To get consensus on a revenue package, we're going to need the traditional things that we've used in the past. And that includes the money they're using currently for health care,” Shumlin says.
House Speaker Shap Smith says the House didn't put a lot of money into the governor's cost-shift plan because there was a lot of doubt if the money would actually help lower private health insurance premiums.
Instead, Smith says the House decided to use the money for two purposes: boost reimbursement rates for primary care physicians, and increase state subsidies on Vermont's health care exchange.
"We've decided to focus on strengthening the primary care system and helping those who are having a difficult time paying for the cost of health care for their policies under the exchange [Vermont Health Connect],” Smith says.
And Smith says it doesn't make sense to use the sugar-sweetened beverage tax to balance the state budget.
"It seems appropriate for me to use that money to help people who need health care,"
he says. “And I'm not sure whether we need to use it for balancing the budget in other areas."
The House Appropriations committee is currently reviewing this legislation. It could be on the House floor for debate by the end of the week.