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Earlier this month, voters across the country decided a number of state initiatives that affect both the services they receive and the taxes they pay. The most important probably occurred in Colorado, where voters overwhelmingly rejected a major tax increase aimed at funding an ambitious new state health program. With president-elect Trump and a Republican Congress likely to reduce the federal role in health care, the Colorado battle may be just the first of many.
Voters in the Rocky Mountain state sorted through no fewer than nine ballot measures earlier this month. In the end, they increased the minimum wage, allowed assisted suicide, and approved three measures that changed voting rules. They rejected both a tobacco tax hike and exempting some small leaseholders of government land from property tax.
But they resoundingly rejected the most significant initiative: Amendment 69, that would have created the nation’s first universal healthcare system, financed by a new 10 percent income tax. Almost 80 percent of Coloradans voted no.
ColoradoCare would have been a state-run single-payer health care system. It would have been by financed by a new 10 percent tax on most income. Two-thirds of the portion applied to wages would have been paid by employers and one-third by workers, though economists generally believe that the employer share of any payroll tax is eventually passed on to employees in the form of lower wages.
The initiative would have both vastly expanded the size of state government and doubled the amount of state taxes collected. It would have introduced a program with a budget that, when fully in place, would have been about one-third larger than the state’s current FY2017 $27 billion budget (so it would have more than doubled the total size of state government).
Proponents argued that a single-payer system would help restrain medical costs and ensure coverage for all. It’s unclear whether voters objected to the single-payer system, the program’s cost, or its effect on Colorado’s business environment. Or all of the above.
Single-payer health care and a big tax increase were always going to be a tough sell in tax-conscious Colorado. After all, it is the home of constitutional limits on how much state taxes can grow (the Taxpayer Bill of Rights or TABOR) and on how revenues are allocated. Indeed, the expansion needed to happen at the ballot box as it required an exemption from the TABOR rules.
But voters overwhelmingly rejected the idea of paying higher taxes for better access to health care. That is especially interesting given what are likely to be major changes Washington may make in the next few years to the federal-state relationship, especially in health care. President-elect Trump and congressional Republicans are preparing to dismantle the Affordable Care Act, including its expansion of Medicaid. They may also consider ways to cap the federal contribution to Medicaid, the joint state-federal health program for low-income mothers and children, people with disabilities, and the frail elderly. Those changes will give states new flexibility, but the price may be more responsibility as federal funding lags rising costs.
In that environment, don’t be surprised to see voters in other states struggle in the coming years with the trade-off between health costs and taxes.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
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In this Oct. 17, 2016, photo, supporters applaud Sen. Bernie Sanders, I-Vt., who spoke at a rally in support of Colorado Amendment 69, a ballot measure to set up the nation's first universal health care system, on the campus of the University of Colorado, in Boulder. Amendment 69 would repeal the current health insurance system and make coverage universal. (AP Photo/Brennan Linsley)