January 6, 2020

by Rob Roper

WDEV’s morning host, Dave Gram, likes taxes and doesn’t like it when people refuse to call a tax a tax, which, he feels, demeans taxes. This led to a clarifying exchange between himself and Rep. John Killacky (D-S. Burlington) on December 31 over the Transportation Climate Initiative (TCI), which is nothing more than a regional carbon tax on motor fuels. Here are the transcript highlights:

JK. The other big dance [in the upcoming legislative session] is going to be this regional pact, the

Rep. John Killacky

Climate Initiative.

DG. The Transportation Climate Initiative.

JK. The governor has now put out a draft MOU to have Vermont join with eleven other states and the District of Columbia to do a cap and trade on carbon emissions. It’s a really interesting idea. Some people are calling it a carbon tax. I don’t think of it as a carbon tax. It’s a regional thing, and what happens is the money that is going to be taken out of this will be invested back into green energy and a green economy here in Vermont. And, if these other states do it surrounding us and Vermont doesn’t do it, the money will be invested in Maine and New Hampshire [Note: NH has already pulled out of the program.] and different places, so, it seems to me– but to get twelve states to agree is going to be interesting and to get our state – I think the legislature and the Democrats seem see the validity and the importance of this. The governor – he put out the draft, so I think he’s testing the waters on this….

DG. I’m going to give you a little push back on this tax thing. I’ll tell ya. I’m somebody who likes to keep language as clear and simple and direct as possible. That’s what I’ve always pushed for in my work as a reporter and also these days on the radio. I like to call things what they are…. I think shying away from that word sort of leaves a lot of voters with the impression that you’re trying to dodge something. I’m saying, if it is a tax, if we need to have a tax…. Why can’t we call things what they are?

JK. Well, you know Dave, I don’t mind calling it a tax. I think the distinction I hear, and maybe it doesn’t change that in your framework it could a tax, is that it’s invested back into the state. That this money isn’t just –

DG. That’s all the taxes that we pay! I pay taxes and it’s invested back into public safety. It’s invested back into (Talking over each other)

JK. Okay, then, I-I don’t disagree with you.

DG. When people hear people say, uh, it’s not a tax, it’s a fee or some other magical formula where, yes, you’re going to pay more money but we’re going to get all these benefits. I thought that’s what other taxes are….

Yes, that is what all taxes are, and TCI is a tax. A $20-$90 million carbon tax (5¢ – 17¢ per gallon) on Vermont drivers.

Proponents of TCI, like Rep. Killacky and many others, have been traveling the state in advance of the legislative session to peddle the notion that TCI is not a tax because the money raised will be “invested” in government programs with the full expectation that we, dumb citizens, will buy actually buy it. This is perhaps one of most absurd and disingenuous arguments ever put forward by elected officials (which is saying something), and Gram demonstrates just how easy it is to blow this argument out of the water. Thanks for that.

Here’s the full interview, with the relevant bits found between 1:20:00 – 1:25:00.

Rob Roper is president of the Ethan Allen Institute. 

If you have an opinion about TCI, they are asking for public input. Make your voice heard HERE.

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January 2, 2020

by Rob Roper

Bill Schubart perfectly encapsulated the elitist, totally-out-of-touch mindset of Vermont’s carbon taxers in his latest VT Digger column in which he congratulates himself for heroically purchasing an electric car and supporting Vermont’s participation in the Transportation Climate Initiative (TCI), the left’s latest carbon tax scheme.

Much of Schubart’s piece focuses on why electric vehicles in their present state of development don’t make a lot of sense in Vermont. They perform poorly in cold weather, which we have an abundance of, and they don’t have sufficient range to be practical in a rural state, especially for work. But, no fear, Schubart is morally up to the task of living with and around these shortcomings, writing what to my mind is the money-line of the piece: “…if it’s freezing cold and I have a round trip to Montpelier [from Hinesburg], a stop at Red Hen Bakery in Middlesex for a quick charge, a latte and a croissant isn’t much of a price to pay for doing my part.”

What part? Apart from virtue signaling, Schubart’s EV purchase and support for TCI accomplish precisely nothing in regard to climate change while inflicting unnecessary pain on a lot of people. This is immoral. According to TCI’s own analysis, if the region did not adopt TCI, carbon emissions would drop by 19% over ten years anyway. If we adopt the mildest recommendation (5¢ tax), that number will go to 20%. Almost imperceptible. If we go whole hog (17¢ tax), the number goes to 25%. A 6% very minor regional change with no perceptible climate impact on a global scale whatsoever, but at a cost of over $50 billion – that’s with a “B” – in regressive, highly disruptive taxes on working people. Some of that money will be used to subsidize electric vehicle purchases, leaving owners like Schubart with more disposable income to spend on French pastry and fancy coffee. Not a particularly equitable arrangement.

Schubart opines, I imagine wiping buttery crumbs from his lips with a silk handkerchief, “It’s disheartening to hear special interests and climate deniers [he earlier made specific reference to EAI] froth on about their temporal material interests.” Yeah, temporal material interests like driving to and for work, getting our kids to school, going to the grocery store, etc., all of which you want to make more difficult and more expensive just so you can feel good about yourself without actually having to accomplish anything.

I’m happy for Bill Schubart that he can afford the time and money to nibble croissants, sip lattes, and indulge in fantasies that he’s heroically saving generations from future fire, floods and famine during the time it takes his $40K car to charge, but these are not luxuries most working Vermonters can afford. Forcing this burden upon them – especially when doing so will have no impact whatsoever on the problem you claim to want to solve — is nothing more than self-indulgent cruelty. It’s certainly not something to break your arm patting yourself on the back over. This is what folks like Bill Schubart don’t understand or care to contemplate.

Rob Roper is president of the Ethan Allen Institute. 

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By John McClaughry 

On December 17 the Georgetown Law Center revealed its long-awaited Transportation and Climate Initiative (TCI) draft Memorandum of Understanding (MOU). It will be open for on-line comments until February 28. At some point after that Gov. Scott will be asked to sign Vermont into TCI. Presumably the legislature would have to enact some provisions to make it enforceable on Vermont fuel dealers.

Here are twelve questions and answers that will explain what TCI is and expects to do.

Q: What is TCI? TCI is a multistate regional agreement to drive up the price of motor fuel (gasoline and on-road diesel). It proposes to start at five, nine or seventeen cents per gallon, and escalate upward from that, with no declared maximum.

Q: Why do the TCI backers want to drive up the price of motor fuel? Because they are convinced that “climate change poses a clear, present, and increasingly dangerous threat to the communities and economic security of each [participating state].”  The MOU says that the participating states will “need to implement bold initiatives to mitigate the impacts of greenhouse gas emissions from the transportation sector,” which produce 40% of human-caused emissions.

Q: How will TCI drive down those emissions? By driving up the price of gasoline and diesel fuel so you will drive less, drive smaller cars, use electric vehicles, walk, ride bicycles, use public transportation, move closer to school and work, and so on.

Q: How does TCI drive up motor fuel prices? It creates what it calls a “cap and invest” system. TCI sets a cap, or limit, on carbon dioxide emissions from burning motor fuel. Every distributor of motor fuel – of which there are eighty in Vermont – will be required to purchase “allowances” to match the motor fuel sold in each reporting period.

Q: So, motorists, including passenger cars, pickups, SUVs, vans, school buses, delivery trucks, contractor vehicles, milk tankers, ambulances, and motorcycles will end up paying for the allowances?  Yes, of course they will.

Q: What does the state get for imposing these costs on motorists? TCI will distribute among the participating states some fraction of the revenue from its sale of “allowances”, according to an as yet undetermined formula. The states are supposed to use these revenues to further drive down gasoline and on-road diesel use, and “help their residents transition to affordable, low-carbon transportation options”. Paying people to buy electric cars, and building charging stations for them, is a recommended use of the funds. However, the states can use what they receive for anything their legislature desires.

Q: How many “allowances” will TCI issue? As many it sees fit. TCI will invent them out of thin air, and motor fuel distributors will be required to go into TCI’s auction market to buy enough of them with real money to match their motor fuel deliveries over a preceding reporting period. The cost of these “allowances” will be included in the price you pay at the pump.

Q: Won’t this plan hit hardest on working people and the poor, especially in Vermont’s rural areas? Of course. It’s regressive.

Q: How much will the preferred TCI scenario reduce carbon dioxide emissions from motor fuel? Drew Cline of New Hampshire’s Josiah Bartlett Center analyzed the TCI economic model. He found that the “reference case” used by the Georgetown Climate Center to project what would happen from 2022 to 2032 if states did not implement the TCI would likely be a 19% reduction in carbon dioxide emissions. If TCI is implemented, emissions are projected to fall by between 20% and 25% over that decade. So TCI will produce an additional emissions reduction of between 1 and 6 percentage points on top of a presumed reduction of 19 percent. In short, TCI would extract $56 billion from motor fuel users to reduce carbon dioxide emissions by a little more than 5 percent over ten years.

Q: Will that reduction of emissions actually reduce “climate change”? Certainly not measurably. Probably not at all.

Q: Wait a minute. Isn’t this TCI “cap and invest” scheme just another carbon tax in a fancy package, designed to make it look like it’s not a carbon tax?  Yes, of course.

Q: Gov. Phil Scott has steadfastly promised to veto a carbon tax. Won’t he reject the MOU, as New Hampshire Governor Chris Sununu has already done, and veto any legislation to force Vermont fuel dealers to buy those funny money TCI allowances that will drive up the price of gasoline and diesel fuel for all Vermonters?  As of now he won’t say, so if you don’t want to see the TCI drive up your fuel prices year after year, it wouldn’t hurt to encourage him to strengthen his resolve.

John McClaughry is vice president of the Ethan Allen Institute.

 

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by Rob RoperRob Roper

The Vermont legislature returns in January with a long list of daunting challenges, all with potentially astronomical price tags for Vermonters, who are already some of the most highly taxed people in the United States.

Among this list includes a projected 6% increase in property taxes to fund an education system already topping $2 billion to serve a declining population of less than 80,000 students. The system is so dysfunctional that former House Education Committee Chair, Dave Sharpe (D-Bristol) recently claimed legislators were “hoodwinked” by special interests into supporting Act 46, the 2015 school district consolidation law that was supposed to lower costs by increasing efficiency. That has not worked out.

The Green Mountain Care Board recently authorized rate hikes of 12.4% (Blue Cross Blue Shield) and 10.1% (MVP) for people with Vermont Health Connect insurance plans, and approved a 59% increase to $1.42 billion for OneCare, the state’s latest healthcare cost-containment boondoggle. One suspects considerable hoodwinking here as well.

Also of concern is the state’s $4.5 billion in unfunded pension liabilities for teachers and state workers. To put this cost in some perspective, every Vermonter – man, woman, and child —  is currently on the hook for over $7000 (a number that is growing quickly) to pay for these benefits, and feeding this beast will consume 14% of the state’s general fund in 2020. (In 2018 that general fund expenditure was nearly $200 million, and this is an annual obligation over the next twenty years.) If this is not addressed, public employees risk losing some or, in an unlikely but not impossible scenario, all of their benefits.

Act 64, the water quality law passed in 2015, is about to hit businesses, municipalities, public schools and even some individual residences full force with stormwater regulations and fines with associated costs and taxes that will run into the hundreds of millions of dollars over the next few years, and billions over the next decade. This has the very real potential of bankrupting many Vermont businesses.

These are costs already on the books. Here’s what we have to look forward to.

Leaders of the majority party seem poised to pass a minimum wage increase, which by last estimate, on top of the increased costs to employers and consumers, will require an estimated $86 million for Medicaid over five years either in tax increases or program cuts.

And, they seem resolved to pass a mandatory Paid Family Leave program which will come with a new payroll tax taking an estimated $76 million per year out of working Vermonters’ pockets, just to start.

If this weren’t enough, in what one legislator described as what will be “our banner legislation” for 2020, many lawmakers want to entangle Vermonters in the latest carbon tax scheme called the Transportation Climate Initiative or TCI. This multi-state collaborative would amount to a proposed 5, 9 or 17 cent per gallon tax on gasoline and diesel fuel, at a total cost to Vermonters of an estimated $20 to $90 million, a number that will grow annually ad infinitum.

These are just the big ticket items. Who knows what nickel and dime tax and fee increases they have in store, like plastic bag taxes, new and increased professional licensing fees, etc.

In all seriousness, how do our representatives expect us to pay for all of this? There are only about 320,000 taxpayers in Vermont. This ever-growing burden on so few shoulders is crushing. It has to stop. It would be one thing if we were getting our money’s worth out of all this, but the existing programs outlined above, apart from being wastefully expensive, are all examples of gross mismanagement. Can we realistically expect any better from the proposed programs?

A recent news story out of Rockingham, Vermont, described a community discussion billed as “Attracting and Retaining Young People” in which one person described as an “older resident in work jeans and boots” summed things up very well. “Our taxes are absolutely nuts,” he said. But, “There’s so much potential.”

There is so much potential in Vermont. This is a wonderful place, but these taxes and regulations are smothering the people who try to live her. As long as our taxes remain “absolutely nuts,” and the money is poured into programs that do not work as intended or promised, that potential sadly cannot and will not be realized.

Rob Roper is president of the Ethan Allen Institute. 

 

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December 31, 2020

By David Flemming

It is becoming more and more clear that the fight against the TCI will be a fight between the legislative/bureaucratic elites and everyday working Vermonters.

David Van Deusen is the newly elected president of Vermont’s chapter of the  AFL-CIO, an alliance of private sector labor unions with around 12 million members nationwide. While he is not against all green energy proposals, he views the Transportation Climate Initiative (TCI) as being horrible for Vermont’s working class.

Deusen lambasts the TCI: “…a bold social project needs to be funded through progressive taxation and other creative means which do not regressively put more burdens on low income & working class people… Any scheme which seeks to price working people out of driving a gas-powered vehicle (without having a comprehensive public transit system & affordable electric cars readily available first) will not result in workers driving less. Rather, such moves will do nothing more than take dollars out of the pockets of working people; money which we desperately need…. we cannot sustainably create such a society by breaking the backs of working people in the process….charging the working class more money to get to their job? I fail to see how any friend of Labor could stand by such a proposal.”

This puts the TCI in an entirely new context. If the government officials nod their heads to the TCI, they will label themselves as “enemies of labor.” And not just from Vermont’s union membership, but from all low and middle income Vermonters who are not part of any union, but will bear the gasoline tax equally.

The choice of whether or not Vermont should join the TCI is easy. On one side, legislators eager to get Vermont’s rural working class out of their cars on the promise that, someday, somehow, the worker’s sacrifice will give them a reliable busing network.

On the other side: labor unions, Vermonters struggling under the burden of more taxation, and common sense. Choose wisely.

David Flemming is a policy analyst at the Ethan Allen Institute

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December 31, 2019

by Rob Roper

Commenting on David Van Deusen’s, the president of the Vermont AFL-CIO, article condemning the Transportation Climate Initiative (TCI) as regressive and anti-worker, John McCormack, founder of the Louise Diamond Committee to Protect Next Generations, wrote:

“Yes, TCI increases gas price while providing off-budget funds for transportation options without increasing State taxes.”

Uh… yeah.

Get used to this level of obfuscation and disinformation over the next couple of months as advocates push for this latest version of a Carbon Tax, which will add as much as 17 cents per gallon to gasoline and diesel purchases.

Let’s translate:

“Off budget funds” – A tax that politicians don’t want to call a tax. The way TCI works is a private organization, authorized by participating states, will force motor fuel suppliers to buy “carbon credits” for gas and diesel they sell above some determined amount. This artificial cost (eg. 17 cents a gallon) gets passed along to the customer (you) and comes out of your wallet — just like a tax. The money raised from selling these carbon credits is the redistributed by TCI into the treasuries of participating states – just like a tax. From here, the money gets spent on government projects – just like a tax. In case this isn’t clear, TCI is a tax.

“Transportation options” – Pet political projects, in this case the subsidization of some individuals electric vehicle purchases, municipal purchases of electric busses, etc, and building electric vehicle charging stations. In a nutshell, this is where government forces you, every time you fill up the ten year old pick-up truck you use for work, to help pay for the environmental lawyer down the street’s new Prius.

“Without increasing State taxes.” – As noted above, this is a tax. It is a government imposed cost on a product, paid for by the consumer with the money that goes into the state treasury to be spent on state projects. That’s a tax. Specifically, this is a Carbon Tax — a tax imposed for the specific purpose of reducing carbon emissions. Politicians and activists telling you anything else – and there will be plenty – are not honest.

Rob Roper is president of the Ethan Allen Institute. 

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December 18, 2019

by Rob Roper

Advocates for the Transportation Climate Initiative (TCI) will argue that the pain they intend to inflict on Vermonters via a 17¢ per gallon Carbon Tax on gasoline and diesel is necessary to combat climate change. Their theory is by making gas and diesel too expensive for people to afford, people will be forced to find alternatives (or give up driving), and this will, in turn, lower Vermont’s carbon footprint and stave off climate change.

But by how much?

According TCI’s own data, if the New England/Mid-Atlantic states considering this pact DID NOT join TCI and pay the Carbon Tax, carbon emissions would still drop by a projected 19 percent regardless. If the states did sign on to TCI and pay the Carbon Tax, those emissions would drop to somewhere between 20 and 25 percent. That’s only a 1 to 6 percent difference over the course of a decade, 2022-2032.

And what would that very minor deviation cost?

The 1 percent impact option (7¢ per gallon), again according to TCI, will cost people in the region $1.4 billion ANNUALLY, or $14 billion over that ten years. The 6 percent impact option (17¢ per gallon) will cost drivers $56 billion.

The biggest question, of course, is what impact on future climate trends would moving the needle from a 19 percent CO2 reduction to 26 percent in these dozen states at the staggering cost of a $56 billion Carbon Tax have? So little as to be imperceptible.

TCI isn’t so much an actual public policy with meaningful goals achieved at reasonable costs – a well thought out and careful use of the public’s dollars for the public’s benefit — as it is a form of mass torture inflicted on the heretical population by the high priests of Climate Change. No thanks.

Rob Roper is president of the Ethan Allen Institute. 

 

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December 18, 2019

by Rob Roper

On December 17th, the Transportation Climate Initiative (TCI) released its draft memorandum of understanding to the twelve potentially participating states and the District of Columbia. That number dropped by one when, within hours, New Hampshire Governor Chris Sununu announced the Granite State wanted no part of what would essentially be a 17 cent tax on gasoline and diesel fuel.

With his rejection of the proposal, Sununu said, “I will not force Granite Staters to pay more for their gas just to subsidize other states’ crumbling infrastructure. New Hampshire is already taking substantial steps to curb our carbon emissions, and this initiative, if enacted, would institute a new gas tax by up to 17 cents per gallon while only achieving minimal results. This program is a financial boondoggle and the people of New Hampshire will never support it.” (Boston Herald, 12/17/19)

Now Vermonters want to know where Governor Scott stands. Scott said recently that if TCI is indeed a Carbon Tax, he will not support it. And, in 2016, during a debate with his then opponent Sue Minter, Scott argued forcefully that a regional, cap & trade program targeting transportation fuels based on the Regional Greenhouse Gas Initiative — which is exactly what TCI is — “sounds like” a Carbon tax! Here’s the video:

Scott v. Minter on TCI

Governor Scott must now consider not only his past and present campaign promises, but also the fact that with New Hampshire not participating, Vermont stores that sell motor fuel along the New Hampshire border will be at an even greater competitive disadvantage than they are now given the sales tax disparities (New Hampshire doesn’t have one). And, Vermont businesses that rely on motor fuels to do their work will also be at a competitive disadvantage.

Governor Scott has been on the right side of this issue from the beginning. Why would he wait to make an announcement? Perhaps he’s waiting for more of his political opponents to go on the record supporting what is a politically unpopular, economically foolish policy.

Rob Roper is president of the Ethan Allen Institute. 

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For Immediate Release
December 17, 2019
Contact: Rob Roper
802-999-8145
rob@ethanallen.org

Vermont – Today the Transportation Climate Initiative (TCI) is supposed to unveil its draft memorandum of understanding that, if adopted, would create what is essentially a regional carbon tax on motor fuels throughout thirteen Northeastern and Mid-Atlantic states. The hit to Vermont drivers could be as high as an extra 18 cents per gallon for gasoline and diesel, and that’s just to start. The added cost to motor fuels would increase every year with the intent of making it so economically painful to use these fuels customers will be compelled to abandon them – whether or not viable alternatives exist as replacements. This is a cruel policy.

The concept behind the TCI carbon tax is regressive in nature, hurting low income people disproportionately, and it will disproportionately penalize rural states where citizens are more reliant on their vehicles for work and the other essentials of life. Vermont, being a rural state, will assuredly end up as one of the states holding the short end of the stick in this agreement. We will pay more into the program than we will get out of it. As such, it would be foolish for Vermont to agree to take part.

The Ethan Allen Institute has played a key role in putting together a multi-state collaborative in opposition to the TCI carbon tax. Today these organizations released the following open letter:

TCI Open Letter

.          We, the undersigned, represent citizens and businesses in states currently considering participation in an interstate compact known as the Transportation and Climate Initiative (TCI), a carbon tax “cap and trade” proposal for reducing carbon dioxide (CO2) emissions from fossil motor fuel use.
While the specific details of the TCI are expected to be released on   December, 17th, 2019, the framework was made public in October and the primary purpose behind the idea is not in dispute. The TCI is intended to make purchasing transportation fuels so painfully expensive that the astronomically high price discourages people from buying it. In short, consumers will have to pay more at the pump to fund increased government spending. Make no mistake, this is a tax. More precisely, it is a carbon dioxide tax being implemented through a gas tax.
.         But, unlike motor fuel taxes levied to pay for roads, bridges, and transportation infrastructure (a reasonable fee for use), the TCI would be the equivalent of a “sin tax” – a penalty for engaging in bad behavior. We do not believe that driving to and for work, transporting children to school, transporting goods, going to the grocery store, and all the other necessary activities that generally require a vehicle should be treated by governments as a sin. These are not activities people can, or should be forced to, avoid.
.         The TCI will also increase state and municipal spending, as public services such as snow plowing, collecting garbage, and transporting school children will be burdened with significantly higher fuel costs. Furthermore, fuel-reliant small businesses that transport goods or provide services will suffer higher operating costs. Those increased expenses ultimately will be passed along to consumers and taxpayers. Citizens in TCI states can expect to be hit with higher personal costs, higher costs for goods and services, and higher taxes.
.         Gas taxes are regressive in nature. The TCI will hurt lower-income and rural residents much more significantly than their higher-income, urban peers. Since motor fuels are economically “inelastic,” the higher costs imposed by the TCI’s fuel tax will have to come out of other areas of household budgets. People already struggling to make ends meet will be forced by their own governments to make painfully difficult choices. Economically speaking, this is bad policy. Morally speaking, it’s just cruel.
.          Among the 13 Northeastern and Mid-Atlantic states currently contemplating joining the TCI are some of the most heavily taxed in the nation. Adding another significant burden to the already over-taxed families of these states is neither desirable nor fair. The first formal details of the TCI come out this month and will certainly raise more questions and concerns about the constitutionality of the program. State legislatures, legally required to or not, should vote on any proposal for their state to join the TCI. Legislators should not allow one citizen of a state — the governor — to impose such serious financial burdens on all other citizens. Such a decision rightfully belongs to the people’s representatives and should be reached through the legislative process, not by the decree of a single executive.
.         The TCI is a poorly conceived, fundamentally regressive, and economically damaging proposal. It would — on purpose — make the day-to-day transactions of life painfully expensive, especially for those of us who are going through bad times and are struggling every day to get by. Government should not do this to its citizens. Government exists to serve the people, not to bend them to the will of elite opinion. For these philosophical and financial reasons, states should reject the TCI at the first available opportunity.

Respectfully,

Carol Platt Liebau
President
Yankee Institute for Public Policy, CT

Christian N. Braunlich
President
Thomas Jefferson Institute for Public Policy, VA

Paul D. Craney
President
Fiscal Partners, MA

Mike Stenhouse
CEO
Rhode Island Center for Freedom and Prosperity, RI

Grover G. Norquist
President
Americans for Tax Reform, DC

Carl Copeland
Executive Director
Massachusetts Fiscal Alliance, MA

Rob Roper
President
Ethan Allen Institute, VT

Chrisopher R. Summers
President
The Maryland Public Policy Institute, MD

Leo Knepper
Chief Executive Officer
Citizens Alliance of Pennsylvania, PA

Christopher R. Carlozzi
State Director
NFIB in Massachusetts, MA

Matthew Gagnon
Chief Executive Officer
Maine Heritage Policy Center, ME

Michael Kracker
Executive Director
Unshackle Upstate, NY

Chip Ford
Executive Director
Citizens for Limited Taxation, MA

Adam Brandon
President
FreedomWorks, DC

Andrew Cline
President
Josiah Bartlett Center for Public Policy, NH

John Toedtman
Policy Director
Caesar Rodney Institute, DE

Thomas J. Pyle
President
Institute for Energy Research, DC

Regina Egea
President
Garden State Initiative, NJ

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December 12, 2018

by Rob Roper

The Burlington Free Press just ran an excellent article on the legal dispute between the Green Mountain Surgery Center and the Green Mountain Care Board (GMCB), the six member panel appointed by the governor to oversee healthcare in the state. At the heart of this particular kerfuffle is a “Certificate of Need” (CON), which is essentially a permission slip from the government to operate a health-oriented business or service.

GMBC’s purpose is to “contain costs, and make sure everyone has access to high-quality health care services in Vermont.” It supposedly does this by “prevent[ing] unnecessary duplication of health care facilities and services.” In other words, it eliminates competition, and, if you’ve been paying attention to your health insurance premiums lately, you know exactly how well this approach works.

This is a case of the Surgery Center, after spending two years and a bucket of money to go through the CON processes and, after thinking it had its CON, investing another $11 million in their new facility, the GMCB now saying not so fast. The Surgery Center argues the GMBC is going back on its word, and GMBC says that it never agreed to allow what the Center is now attempting to do. All in all, a colossal waste of time and money that could have been spent treating patients.

But the big question here is why should doctors need to get permission at all from a half a dozen bureaucrats, most of whom have no real experience in the healthcare business, to treat patients who, by all accounts, are desirous of being treated? These doctors are clearly addressing a “need” – patients waiting for service in their communities. The Center believes (and has evidence to show) that they can provide equal or better service for a lower cost to the patient. The bureaucrats, perched in Montpelier, say there is no need, so you’re prohibited from providing the service (that, if there were no need, there would be no occasion to provide). Yes, that’s how stupid government managed healthcare is.

Why not just let the market work? If there is a need for a service, let these doctors meet it without having to jump through these bureaucratic hoops. If the doctors are right, they will benefit as will their patients. If they are wrong, they close up shop. That’s a risk they voluntarily choose to take.

If the Surgery Center can treat patients for less money and more conveniently than their competitors can, great! GMBC, who’s mission it is to lower cost and improve access, should be all over this, right? But that’s not really their mission. Their mission is to protect politically connected/preferred providers from competition, granting monopolies, which, of course, ultimately drives up costs and restricts access for patients.

Vermont has more areas of healthcare subject to CON laws than any other state, and we have some of the highest healthcare costs. This is not a coincidence. We should get rid of our CON laws, and, while we’re at it, the Green Mountain Care Board.

Rob Roper is president of the Ethan Allen Institute.

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