In 2010 socialist Peter Shumlin bamboozled his way into Vermont’s governorship by lying about the benefits of the new single-payer government insurance program that he would launch with a waiver from Obamacare. Readers will remember that way back then, the dynamic trio of Obama, Pelosi, and Reid all made sure we knew that the new and unread national healthcare program would be just a stepping stone to European styled socialized medicine. Well, it now turns out that this “purest progressive version of Obamacare has imploded.”
Vermont with 625,000 residents was the perfect place to field America’s first attempt at total government healthcare that replaces premiums with high taxes to pay for doctors and hospitals. The state received $45M from Health and Human Services to plan a proper single payer system, calling in such experts from Harvard as William Hsiao of Medicare fame, and from MIT Jonathan Gruber (yes, that Gruber) of Obamacare fame to make sure that the protocols, processes, and numbers all would work out. Vermont, “the most liberal state east of California”, was destined to become the template for other states to follow on their merry road to socialism.
But as more of Vermont’s own government accountants began running the numbers developed by Hsiao and Gruber, things just didn’t add up. For Shumlin to “give each according to his need”, he would have to take more from the wealth-creating Vermonters than they would or could pay. To the state’s already high top income tax of 8.95%, there would have to be added another 11.5% bringing a family of four earning more than $102K paying over 20% to Vermont alone while still excluding all the federal taxes and the 6% state sales tax.
Under leftwing legislative supermajorities Vermont already had a record of slower than average growth. Moreover it was experiencing lower than projected tax revenues as it continued to raise taxes (pay no attention to the good Dr Laffer laughing behind the curtain). It turned out that all those millions and billions of savings promised by Hsiao and Gruber were nothing but a bunch of hooey, which, of course, was exactly what in 2010 Shumlin’s opponents were telling the already gruberized Vermonters all along. In the end Shumlin’s accountants told him these “savings”are “not practical to achieve”, apparently because it would cause a further exodus of wealth creators and would result in collections far short of the added annual $2.59B required that would double the existing $2.85B state budget.
So looking at the whole single-payer deal, Governor Shumlin concludes that the tax hit would be, “in a word, enormous”, and “the risk of economic shock is too high at this time to offer a plan I can responsibly support.” And as we stifle our chortles and step back to look at the bigger picture, this has been a good exercise for the country. This is what federalism is all about, and what our Founders intended about the several states being laboratories of various approaches to governance.
We can also hope that Vermont’s experience will open our progressives’ eyes to the socialist time bombs ticking in Europe that they have been celebrating for years, and holding up as examples for America to follow. European single-payer healthcare systems have been unsustainable in that they continue to swallow a larger share of each nation’s GDP, a share that can only be diminished by offering lower levels of health services that cause more of those who can to seek critical and elective care elsewhere. Europe is now in its second round of slow/negative growth and high unemployment – i.e. Great Recession 2. And everyone there is trembling at the thought of interest rates resuming their normal levels while having to start spending realistic amounts for their own defense as the US has been pulling in its horns. Sooner or later we, of course, will face the same twin fiscal dragons, and Obamacare has already demonstrated that in its half-assed implementation it is already an albatross around the country’s neck (more here).