New Health Care Policy Consensus?

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Along with funding Act 60, the most immediate and pressing problem facing the Vermont legislature this year is how to pay for the generous state health care benefits approved during the Dean years. Over the next five years the Joint Fiscal Office projects a state funding shortfall of $300 million for the Medicaid program. This rate of spending is simply not sustainable with any imaginable increase in state revenues.

But there may be some good news from Washington.

In the past few months a new health care policy consensus has begun to emerge. The idea began as a proposal by a bipartisan group of senators to help workers who became uninsured as a result of the 9/11 terrorist attacks by giving them tax credits to buy health insurance coverage. It then evolved into a generalized proposal to extend tax credits to all Americans not covered in an employer-based plan, Medicaid, or Medicare. Vermont Sen. James Jeffords is a key member of this centrist coalition, led by Louisiana Democrat John Breaux.

The House passed the plan in December as part of its “economic stimulus” package. President Bush came out strongly in support of the plan in his State of the Union message. The problem lies in the Senate. Even though a clear majority of Senators supports the tax credit plan, the Democratic majority leader has in effect given a veto to the advocates of government health care, notably Sen.Ted Kennedy and Sen. Hillary Clinton.

The Kennedy-Clinton goal is full government control of health care. They want a Giant Health Care System to make all the choices for all families, and ration the amount of care to be provided. They abhor the thought of millions of American individuals and families shopping in a health insurance marketplace for a policy that best suits their needs, with their buying power augmented by a refundable tax credit.

The Vermont legislature needs to understand this political clash between advocates for Individual Choice and Government Control. Legislators need to recognize that enactment of the bipartisan tax credit plan by Congress will get Vermont taxpayers out of the fiscal black hole that Medicaid expansion has become. Whatever their differing views on other policy issues, they should give their strong support on this issue to the President and to Senator Jeffords.

Then the legislature has one more task: to restore a competitive insurance market in the state. That will require scrapping Vermont’s ill-advised community rating system and creating a high-risk pool for genuinely uninsurable Vermonters. It will require encouraging Medical Savings Accounts, to redress the tax penalty faced by individual insurance buyers. It will require forcing Blue Cross/Blue Shield of Vermont to compete in an insurance marketplace.

This is a challenging political task. But the momentum in Washington and the budgetary pressure in Montpelier makes tackling those tasks worthwhile and indeed essential.

This is John McClaughry ¿ thanks for listening.

–John McClaughry is President of the Ethan Allen Institute, a Vermont policy research and education organization.

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