Democrats reject Douglas’ financing plan for health care

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(Host) Senate Democrats are rejecting Governor, Jim Douglas’s proposal to finance a health care reform plan by taxing health insurance premiums.

The Democrats are insisting that companies that don’t offer health insurance coverage to their employees be required to help finance a new state health care program.

VPR’s Bob Kinzel reports:

(Kinzel) Senate Democratic leader, Peter Welch, readily admits that the content of the governor’s new health care reform plan is pretty good. It’s the financing mechanism that has Welch upset.

Both the Democratic proposal and the governor’s plan seek to provide basic coverage to the roughly sixty-two thousand Vermonters who don’t have any insurance. And both sides are eager to make investments in a chronic care initiative that’s designed to reduce future health care costs. But the two plans use very different financing methods to achieve this goal.

Welch says he has two basic problems with the governor’s plan. First, it assumes that the state’s application for a significant Medicaid waiver is going to be approved in a timely manner by the federal government.

Second, he argues that by imposing a tax on health insurance premiums, the governor is taxing the wrong people. Welch is backing a plan to levy a three-percent payroll tax on companies that don’t offer coverage to their employees:

(Welch ) “The financing plan is about dealing with this population of Vermonters sixty-two- thousand who have no coverage. And it’s also about introducing the element of universal obligation as well as universal benefit. So it’s a very very serious breakthrough if we’re successful in that approach to financing.”

The governor opposes the payroll tax approach because he’s concerned about its impact on the state’s business community.

(Douglas) “I am concerned about new taxes. We have a very high tax burden in our state. And we want to maintain our competitive posture as best we can, so that employers will stay here, come here, create more jobs for Vermonters.”

While Senate Republicans prefer the governor’s approach, they don’t have a major problem with payroll tax. Senate minority leader Bill Doyle says the approach makes sense.

(Doyle) “I think in all fairness, the Senate Health and Welfare committee has worked very hard. And I give them a lot of credit for it. There’s a lot of good in the senate committee plan. And I think there’s a lot of good in the governor’s plan. Let’s be straight up.”

Democratic leaders are hoping to have their plan on the floor for debate by the end of next week.

For Vermont Public Radio, I’m Bob Kinzel in Montpelier.

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