Vermont House lawmakers have approved legislation that would put tens of millions of dollars into the pockets of low-income seniors, but their plan to fund the proposal would give Vermont the highest top marginal corporate income tax rate in the nation.
When low-income Vermonters turn 65 years old and qualify for Medicare, they often lose out on some of the benefits they previously enjoyed on Medicaid. Essex Junction Rep. Lori Houghton, a Democrat who chairs the House Committee on Health Care, said that transition can result in thousands of dollars in out-of-pocket costs for individuals making as little as $16,000 a year.
“This is known as the Medicare cliff,” Houghton said Tuesday. “Just when you are likely to need more help from the health care system, you lose key supports. This is not fair.”
Legislation approved by the House this week would expand income eligibility limits for Medicare subsidies, and cover annual Part B premiums for an additional 19,000 low-income Vermonters. If enacted, the proposal would save low-income seniors an estimated $40 million annually in avoided premiums.
Democrats, however, want to use an increase in the corporate income tax to pay for the measure. Republican Gov. Phil Scott said the bill would give Vermont the dubious distinction of having the highest corporate income tax rate in the country.
“Not exactly a great marketing strategy when you consider the businesses we need to locate here,” Scott said Wednesday. “And not a great strategy to keep employers here who are already dealing with high costs, from property taxes to payroll taxes to utility costs and numerous other mandates, much of which put Vermont at a competitive disadvantage already.”
“Just when you are likely to need more help from the health care system, you lose key supports. This is not fair.”Essex Junction Rep. Lori Houghton
Houghton said the financial benefits that will flow into the Vermont economy are well worth the $15 million in state revenues that would be needed to fund the new program. That state money will allow Vermont to draw down an additional $85 million annually in federal Medicaid funds, according to Houghton.
She said the state will also see a reduction in overall health care costs when low-income residents have affordable access to early and preventative care.
“We estimate there will be significant savings on both out-of-pocket costs for hospital and outpatient services and prescription drugs,” Houghton said.
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