Oliver Parini, photo
How do we move to a system that spends less money for better outcomes?
ST. ALBANS — Gov. Peter Shumlin was in St. Albans on Monday morning to discuss his record, his plan to raise the minimum wage, and health care and education. He faced a mostly conservative crowd at the monthly legislative breakfast held at the American Legion hall.
“My focus has been on jobs,” said Shumlin. He pointed to the 11,000 jobs created during his tenure as a sign of success. He also noted that those jobs have been in a number of industries – including 1,100 jobs in manufacturing, 2,200 in food-related businesses, and 500 in agriculture.
The biggest challenge for Vermont and the nation, he said, is that middle and working class residents “haven’t felt any benefits of the recovery, full stop.”
Shumlin and other governors in the Northeast propose to increase the minimum wage to $10.10 by 2017.
The goal is to “get folks who are struggling a reasonable livable wage,” said Shumlin.
Audience member Linda Kirker, a former GOP chair locally, challenged that goal, suggesting wage determination should be left to negotiations between employees and employers.
Shumlin responded by pointing out that people who work a full week should not have to go on public assistance in order to feed their families.
Shumlin faced questions and challenges over health care. Carl Rosenquist, a former Georgia Republican representative, asked how a single-payer health care system would be funded.
“Our biggest problem is not how to pay for it,” Shumlin answered. “Our biggest problem is how to pay for the current system.”
Health care currently takes up 20 cents of every dollar Americans earn. If costs continue to escalate at current rates, that number will reach 40 cents, according to the governor.
“We have the notion in America that if we just spend more on health care our loved ones will live longer,” said Shumlin.
The central question, he added, is “How do we move to a system that spends less money for better outcomes?”
The Green Mountain Care Board is working with providers to find a way to pay health care providers not on the basis of procedures performed, but for providing overall care intended to keep people healthy.
In addition, health care premiums are regressive. That is, they are a larger burden for those with lower incomes, which is why Shumlin wants to move to a system where health care is paid for with a progressive tax.
Combining the funding change with a change in how health care is paid for is “very hard to develop,” said Shumlin. “We will share that with you when we think we’ve got it right.”
Asked about comparisons between his proposed system and the Canadian system, Shumlin said that comparison is made by “the folks that want so badly for us not succeed.”
Canada has a publicly financed system, but uses the same payment model the U.S. current uses with the result that health care costs in Canada are also exceeding the ability to pay for it, said Shumlin.
The model for payment doesn’t matter if costs aren’t reduced, he added.
As for a critique from former candidate for state treasurer Wendy Wilton that a single payer system would require a 15 percent payroll tax, Shumlin dismissed it out of hand, stating that if the solution were that simple, his administration would have done it already.
“We want our health care system to enhance economic opportunities not hurt economic development,” said Shumlin.
St. Albans resident Ann Levy asked about the lack of psychiatrists in the region. Doctors without psychiatric training are reluctant to prescribe the types of medications some mental health patients need, she said. In response, Shumlin pointed to the scheduled opening of a new 25-bed facility in Berlin and other mental health beds around the state.
He also spoke of the need to develop community-based care, adding that his administration is working to build the community-based system.
Pixley Hill, co-owner of the Tyler Place Resort in Highgate Springs and a longtime advocate for a cleaner Lake Champlain, spoke of the need for support for tourism. “Small business is under a great deal of duress,” she said.
The tourism industry competes against other destinations around the U.S., she said.
She also expressed concern about differing setbacks between farmers and other owners of lakeshore property. Farmers can have as little as 25 feet between their field and the lake, while a shorelands protection bill currently in a conference committee would create much larger setbacks for homeowners and businesses along the lake.
“I think lake owners were picked on,” said Hill.
Shumlin chose to address the issue of water quality. “We’ve spent a ton of loot with very little gain,” he said.
By the end of April, Shumlin will need to send a letter to the Environmental Protection Agency (EPA) outlining how the state will meet new pollution limits on phosphorous entering Lake Champlain, known as the total maximum daily load (TMDL).
If the EPA is not satisfied with Vermont’s plan, it can use its regulatory authority to force reductions in phosphorous from landowners with pollution discharge permits, primarily wastewater treatment plants.
The state could spend hundreds of millions upgrading sewage treatment plants and reduce the amount of phosphorous entering the lake by only one percent, said Shumlin.
The first step in improving water quality in the lake is determining what will work, said Shumlin.
This has largely been done. EPA and the state have done extensive modeling to determine the benefits of different phosphorous reduction efforts. Should the current plan proposed by the Dept. of Environmental Conservation and the Agency of Agriculture be implemented in its entirety, the state would achieve clean water in all but two of the lake’s 13 segments.
The second step, Shumlin said, is securing federal funds to help pay for the cleanup efforts.
Jay Cummings, a member of the Swanton School Board, asked about education funding. This year several schools with minimal budget increases saw dramatic increases in tax rates.
Around the state 35 school budgets were rejected, 33 of those schools had an increase in per pupil costs of more than eight percent, said Shumlin. Per pupil costs are one of the key numbers in the formula for determining tax rates.
One of the biggest drivers of the increase in tax rates has been the decrease in housing values around the state, although property values in communities near Lake Champlain have not declined. Because the statewide grand list is worth less, higher tax rates are required to raise the same amount of funds, he explained.
Health care costs are also driving cost increases, he said.
“There’s never been a school fundraising formula in Vermont that you could explain,” Shumlin said.
Shumlin acknowledged the difficulties of using property taxes to fund education. “We use a very regressive system to pay for an important obligation,” he said. However, he did not offer an alternative.
“Our challenge together is we’ve got too much infrastructure for two few kids,” said Shumlin.
He did say the Legislature has a bill to change the formula for determining per pupil costs. The current formula averages students based on perceived needs and age, with older students weighted more heavily than younger students regardless of the actual money being spent. In addition, the formula protects schools from losing too many students from their pupil count at one time, allowing schools to receive credit for students that don’t exist and artificially lowering the school’s per pupil cost. Conversely, schools may end up with fewer students in their official pupil count than they actually have, artificially inflating their per pupil cost.
The Vermont House is also considering requiring an in depth study of state spending on special education.
Asked about the issue of teacher pensions and health care, Shumlin said a deal is in the works and should be completed by the end of the legislative session. He was reluctant to discuss the details publicly until an agreement has been reached.
The state currently has about $20 million in unfunded health care costs for retired teachers, according to state treasurer Beth Pearce.