Governor Shumlin's Medicaid Plan Could Save Vermont Schools $3 Million and Municipalities $900,000 Annually

Strategic Insights -

Governor Peter Shumlin's plan to address the Medicaid cost shift could provide significant financial relief for Vermont schools and municipalities. The proposal involves a payroll tax of 0.7% for employers, which would raise $90 million annually, allowing the state to draw down hundreds of millions in federal funding to shore up Medicaid rates and lower private insurance costs. As a result, schools and municipalities are expected to see a reduction in health care costs, with schools saving almost $3 million and municipalities saving around $900,000 per year.

Key Takeaways:

  • The Governor's plan could save Vermont schools nearly $3 million per year by reducing health care costs, with estimated savings of $9.5 million and a payroll tax of $6.5 million.
  • Municipalities could save around $900,000 per year under the plan, with estimated savings of $3.1 million and a payroll tax of $2.2 million.
  • The plan would involve a payroll tax of 0.7% for employers, raising $90 million annually, and would be matched by federal funds to generate an additional $100 million.
  • The $190 million thus raised would be dedicated to shore up Medicaid payments, drive down private insurance rates by 5%, and invest in strengthening the overall health care system.
  • The proposal would benefit from analysis by the Vermont Department of Labor, Tax Department, Agency of Education, and Wakely Consulting, which used data to demonstrate the potential savings for schools and municipalities.
  • A seven-tenths of one percent payroll tax is expected to cost employers less than $1,000 per year for the majority of Vermont employers.
  • Gov. Shumlin's plan aims to use money that would be spent anyway to draw down federal funding, reducing the burden on employers and property tax payers.

Statistics:

  • Vermont schools are projected to have a payroll of $931.8 million next year and spend $190.3 million on health care costs.
  • Municipalities are expected to have a payroll of $309.4 million next year and spend $61.3 million in health care costs.
  • The payroll tax of 0.7% would raise $90 million annually, matched by federal funds to generate an additional $100 million.
  • This would result in a total of $190 million for Medicaid and private insurance cost reductions and infrastructure investments.
  • The 5% premium reduction in private insurance costs is expected to result in a reduction of $9.5 million in health care costs for schools and $3.1 million for municipalities.
  • The estimated savings for schools is $3 million per year, while municipalities are expected to save around $900,000 per year.

Sources:

  • Vermont Office of the Governor, Office of the Governor Peter Shumlin
  • Vermont Department of Labor
  • Vermont Tax Department
  • Agency of Education
  • Wakely Consulting