Leaders differ on new taxes to solve Medicaid deficit

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(Host) With Vermont facing a multi-million dollar deficit in its Medicaid program, some advocates want the Legislature to consider new taxes to fill the budget gap. But “tax” is not a popular word in the Statehouse these days. Governor Jim Douglas says taxes are not an option. And the Senate Democratic leader is also leery of the idea.

VPR’s John Dillon reports.

(Dillon) When Tim Searles listened to Governor Jim Douglas’ plan to erase the Medicaid deficit, he thought back to the early 1990s. Searles is executive director of the Champlain Valley Office of Economic Opportunity, which serves low-income people. It’s Searles’ clients who would have to pay more for Medicaid premiums under the governor’s proposal. Searles thinks there’s a better way.

(Searles) “I would love to see this Republican governor do what another Republican did a mere 14 years ago, and that is slightly raise taxes on the most affluent Vermonters in order to assure there’s basic health care for the very poorest. It didn’t seem like such a radical idea when Dick Snelling proposed it in 1991, and was sunset after two years once the crisis had passed. It would buy us some time it would be just the humane way to deal with this.”

(Dillon) Governor Douglas has emphatically ruled out taxes as a way to resolve the Medicaid budget crisis. Administration officials warned that income or sales taxes would need to be raised every year just to keep pace with the growth in Medicaid spending.

Chittenden County Democratic Senator Jim Leddy chairs the Senate Health Committee. He thinks that new taxes – such as raising the tax on beer – have to be part of the discussion.

(Leddy) “I have felt for some time that it’s almost impossible for us to address the magnitude of the Medicaid problem without creating major damage to the most vulnerable people in this state without raising additional revenues.”

(Dillon) Leddy points out that Governor wants to extend a tax on insurance premiums to non-profit companies such as Blue Cross and Blue Shield of Vermont.

But Senate President Peter Welch says that taxes are not the solution to the Medicaid deficit. He says that the Medicaid problems now are substantially different than the fiscal crisis the state face in 1991. Back then, revenues slumped and the deficit grew because of a recession.

(Welch) “This year’s different. We’ve got a strong economy, the revenues are strong we’ve got a surplus for this year and a projected surplus for next year. So that’s not the scenario where you usually look to have to get more revenues. We’ve got a significant problem in how we deliver health care. So the concerns of the advocates I absolutely agree with, and that is maintaining access to health care. But I believe if we continue to duck overall health care reform, then we’re going to all fail.”

(Dillon) Both Leddy and Welch say the health care debate needs to be broadened beyond the Medicaid crisis. They say the governor and the Legislature need to look at how the entire system is financed and structured.

For Vermont Public Radio, I’m John Dillon in Montpelier.

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