State lawmakers began scrutinizing a plan for universal health care Tuesday, raising concerns about financing the $2.8 billion-a-year proposal through tax increases.
“We do need to be cognizant of the fiscal situation as we move forward,” Sen. Robert Garagiola, D-Montgomery, Senate chairman of the Joint Committee on Health Care Delivery and Financing said at a hearing.
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The Maryland Citizens’ Health Care Initiative’s plan would be funded mainly through a 2 percent payroll tax increase on all employers, a 10-cents-per-drink alcohol tax increase and a 75 cents-per-pack cigarette tax increase.
The plan, announced last month, aims to expand access to Maryland’s 775,000 uninsured — particularly for small businesses — by pooling employees to reduce administration costs and get better insurance rates. The state would cover so-called catastrophic care for the sickest patients, expand Medicaid eligibility, and offer subsidies to cover insurance premiums.
Del. James Hubbard, a Prince George’s County Democrat, is expected to introduce legislation for the plan in the next session.
But increasing taxes to pay for it may be a tough sell for lawmakers.
“It’s probably a non-starter this year,” Garagiola said, adding there may be aspects of the plan that can be pursued this year, such as improvements in health technology and prevention efforts.
The proposal does keep the spotlight on the need to increase health care access, Garagiola said.
Republican Sen. Andy Harris, from Baltimore County, said a payroll tax was “the most regressive kind of tax” and would penalize low-wage workers and drive those jobs out of the state.
“It’s amazing to me we are even having a discussion on a $2.5 billion tax on employers in the middle of the recession,” Harris said after the hearing.
Baltimore business owner Alexis Coates, who testified in support of the plan, said he wouldn’t mind the 2 percent increase, because it would allow him to save money through lower insurance premiums.
Baltimore County Democratic Del. Dan Morhaim, House chairman of the committee, said some taxes could be raised to fund parts of the plan, but only if employers see immediate savings in health care coverage.
“If we can’t do it all, maybe we can do some of it,” he said.
Bradley Herring, an assistant professor at the Johns Hopkins Bloomberg School of Public Health who helped craft the plan, recognized it was “ambitious” but said it would cut health care costs in the long run.
“In large part,” he said, “you can view this as an investment.”
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