Vermont Gov. James Douglas has vetoed a bill, H. 524, that could have created a new health coverage program for uninsured Vermont residents.[@@]

Rep. Harry Chen, D-Mendon, Vt., the author of H. 524, has been hoping to use the Green Mountain Health program proposed in the bill as the foundation for a program that would offer health coverage to all Vermont residents by 2009, according to the bill text.

One major section of the bill would have funded a Green Mountain Health trust fund by requiring employers to pay a 1% “health effort tax” on the first $50,000 of each uninsured worker’s annual wages. An employer of an uninsured worker who earned more than $50,000 in wages would have to pay a 3% health effort tax on wages in excess of $50,000, according to the bill text.

Uninsured individuals would have to pay an individual health effort tax equal to 1% of their federal adjusted gross annual incomes.

The trust fund would use the tax revenue to provide basic health coverage for residents without other forms of health coverage.

Chen says H. 524 would encourage employers to offer health coverage by requiring uninsured workers and their employers to pay their fair share for workers’ care, instead of dumping responsibility for uninsured workers’ medical bills on state taxpayers and employers that do pay for health coverage.

H. 524 also includes a variety of other proposals. One section, for example, would keep plaintiffs from using apologies from physicians as evidence of negligence in malpractice suits.

Another section would let state-regulated health insurers offer discounts on premiums for employers that adopt serious wellness programs.

Members of the Vermont House approved the bill 79-55, and members of the Vermont Senate approved it 18-7.

Douglas, a Republican, says he has vetoed the bill in part because the health effort tax would amount to a regressive tax on struggling small businesses that are unable to provide health coverage and on struggling individuals who are unable to afford to insure themselves.

Although supporters of H. 524 say it would force big, national retailers to provide health coverage for their employers, the reality is that those national retailers are far better equipped to pay for health benefits than Vermont’s small businesses are, Douglas argues in a message discussing his decision to veto H. 524.

In addition, Douglas writes, employers might be able to block the health effort tax in court, by charging that it violates the federal Employee Retirement Income Security Act by imposing a de facto requirement that employers provide health coverage.

“ERISA prohibits states from requiring employers to offer health care coverage or from requiring employers to offer a prescribed level of benefits,” Douglas writes.

America’s Health Insurance Plans, Washington, has issued a statement praising Douglas for vetoing H. 524.

“We strongly support the goal of expanding access to health coverage, but we opposed this legislation because it would have inevitably led to less choice, long waits and lower quality health care for the citizens of Vermont,” AHIP President Karen Ignagni says in the statement. “Vermont’s uninsured would not be well served by a one-size-fits-all approach. In fact, more and more single-payer systems are reaching out to health insurance plans to learn about private-sector tools and techniques that improve quality and ease cost pressures.”

The best way to improve access to health coverage is increasing competition between commercial carriers and forming partnerships between private organizations and public agencies, Ignagni says.

Douglas has posted a copy of the message explaining his reasons for rejecting H. 524 on the Web at http://www.vermont.gov/tools/whatsnew2/index.php?topic=GovPressReleases&id=1360&v=Article

Links to the text of the bill and other information about the bill are on the Web at http://www.leg.state.vt.us/database/status/summary.cfm?Bill=H%2E0524&Session=2006