Vermont’s Dabble With Socialized Medicine Comes to a Merciful End

Democrats and progressive ideologues have always loved the idea of “single payer” healthcare, which is nothing more than a nicer-sounding term for socialized medicine, in which the government, rather than private insurers, pays for all health care costs.

Prior to Obamacare becoming law they wondered why single payer wasn’t on the table. “Wouldn’t [single payer] be simpler, easier to administer and more efficient?” asked Paul Krugman. “The great virtue of a single-payer system is that all the evidence suggests it would be cheaper,” wrote Matthew Yglesias for Slate.

After Obamacare’s troubles the same cast of characters gathered round to say “see, we told ya so.”

“Had Democrats stuck to the original vision and built comprehensive health insurance on Social Security and Medicare, it would have been cheaper, simpler and more widely accepted by the public,” wrote Robert Reich.

And Democratic leadership fended off the criticism by suggesting that Obamacare was merely a first step towards achieving the single payer dream.

When a reporter asked Rep. Nancy Pelosi how she would like to see Obamacare improved her response was, “Well of course I wanted single-payer, and I wanted a public option.” Sen. Harry Reid was less oblique in his state desire. When asked whether his goal was to move to a single payer system his answer was, “Yes, yes. Absolutely, yes.”

Although Democrats were unsuccessful at introducing a national reform bill that fulfilled their single payer dreams, the nation’s most liberal state—Vermont—decided to push on. In 2011, Governor Peter Shumlin, with help from Democratic supermajorities in both the House and Senate, passed a single payer bill with the explicit goal of eliminating employer-provided insurance and creating a single, state-managed system. The system (which, incidentally, was built by Jonathan Gruber) would have increased payroll taxes and premiums to offset employer contributions.

The program ran into trouble almost immediately as the projected savings proved overly optimistic and the anticipated costs exploded. In December, to almost no hoopla, Gov. Shumlin’s single payer plan fell apart before ever getting off the ground. POLITICO reported:

Vermont Gov. Peter Shumlin on Wednesday dropped his plan to enact a single-payer health care system in his state — a plan that had won praise from liberals but never really got much past the framework stage.

Shumlin had missed two earlier financing deadlines but finally released his proposal. But he immediately cast it as “detrimental to Vermonters.” The model called for businesses to take on a double-digit payroll tax, while individuals would face up to a 9.5 percent premium assessment. Big businesses, in particular, didn’t want to pay for Shumlin’s plan while maintaining their own employee health plans.

“These are simply not tax rates that I can responsibly support or urge the Legislature to pass,” the governor said. “In my judgment, the potential economic disruption and risks would be too great to small businesses, working families and the state’s economy.”

Gov. Shumlin had little choice but to throw up his hands and admit defeat. Indeed, defeat was pretty much baked into the bill. The single-payer system would have cost more than $2.5 billion, which would have effectively doubled the amount of tax revenue the state needed to collect, and yet the bill included a provision that prevented the system from going live until a determination was made that it “will not have a negative aggregate impact on Vermont’s economy.” Only the most deluded left winger could simultaneously believe that doubling taxes wouldn’t harm the Vermont economy, especially one that is already struggling under the weight of some of the nation’s highest tax rates.

Hopefully Democrats will learn a lesson that Vermont’s governor learned the hard way: In order to achieve socialized medicine you have to also kill the economy. In other words, the purported cure for high health care costs is worse than the disease.