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by Clara Morrison and Alison Despathy
Vermonters have every reason to be frustrated with the state’s healthcare system. Costs continue to climb, insurance premiums consume a growing share of household budgets, and access to care remains uncertain for many families.
That frustration helped fuel support for S.190. But good intentions do not always produce good policy. Breaking down the problem with S.190 will help Vermonters understand the Governor’s veto and why this legislation was not a real solution.
S.190 was labeled as “reference-based pricing reform,” but true reference-based pricing relies on choice, not mandates. Providers may charge more than the benchmark price set by insurers, but they must compete on cost and quality because patients who choose higher-priced providers pay the difference.
After California’s public employee retirement system (CalPERS) implemented this kind of reference-based pricing for joint replacements, the average price charged to CalPERS for joint replacement surgery declined by 26.3% in the first year, with total savings of $3.1 million attributable to reference pricing.
But instead of letting insurers set benchmarks that drive negotiation, S.190 would have allowed the Green Mountain Care Board to cap prices and prohibit hospitals from billing patients above those limits. The Board would also have been required to ensure premiums fell accordingly, meaning regulators, not the market, would be deciding both what hospitals can earn and what insurers can charge.
That’s not reference-based pricing. It’s a government-imposed price ceiling that could have a devastating effect on the financial stability of Vermont’s already struggling hospitals.
Two-thirds of Vermont hospitals lost money in 2025, leading to service reductions across the state.
Gifford Medical Center has closed its urogynecology and chiropractic services. Copley Hospital shuttered its birthing center, sleep disorders clinic, and aquatic therapy pool. Central Vermont Medical Center closed its inpatient psychiatry unit.
Prices help hospitals allocate resources, sustain services, and maintain operations. When government suppresses prices below sustainable levels, providers lose revenue needed to invest in care and remain viable.
Hospitals testified that they would struggle to absorb the losses this policy could impose, risking further service reductions, staffing cuts, delayed investments, and diminished access to care, particularly in rural communities.
Additionally, S.190 applied only to Qualified Health Plans and Vermont Education Health Initiative (VEHI) plans, leaving the majority of insured Vermonters outside its scope.
This creates a classic cost-shifting problem. When revenue is capped in one part of the market, providers often make up the difference by charging more for services or insurance plans not subject to the cap. Costs are not eliminated, only redistributed, meaning people outside the scope of S.190 could have ended up subsidizing savings for those inside it.
This is the real inequity.
As Governor Scott noted in his veto message, one purpose of the Green Mountain Care Board is “achieving greater administrative simplification in healthcare financing and delivery.” S.190 was in direct contradiction to that goal – it would have created a new layer of rate-setting, oversight, and compliance requirements in an already highly regulated system.
Vermont’s healthcare market has been under increasingly extensive Green Mountain Care Board oversight for years, yet costs have increased and access has diminished. Vermont’s healthcare challenges stem from a lack of market options and competition, and regulation cannot create competition where none exists.
Vermont’s insurance market is dominated by just two major carriers: Blue Cross Blue Shield of Vermont and MVP Health Care. Legislative policies enacted decades ago drove out most insurers and stifled the market. With only two options in the fully insured market, it becomes difficult to provide options and keep prices down. Price controls like S.190 do not fix that problem, instead they lock in the existing structure while squeezing everyone’s margins.
The frustration driving support for S.190 is legitimate. Healthcare costs in Vermont are unsustainable, and families are right to demand action. But durable cost reduction requires more choices and competition in Vermont’s insurance market.
That means reducing barriers that prevent new providers from entering Vermont’s healthcare market. It means making it easier for small businesses, which currently have little leverage in the insurance market, to self-insure or pursue alternative coverage arrangements. It means enabling true reference-based pricing as a tool for broad cost reduction, not a mandate imposed by regulators that threatens access to care. Market pressure, not government fiat, drives costs down and applies savings across the system rather than to a select few, as was the case with S.190.
Governor Scott’s veto of S.190 was not a vote against affordable healthcare.
It was a recognition that price controls imposed on financially strained hospitals, covering only part of the market, with uncertain benefits and significant risks, were unlikely to deliver the lasting reforms Vermonters need.
Vermonters deserve lower healthcare costs. They deserve more choices. They deserve better access.
Achieving those goals will require reforms that expand the market and increase transparency, not policies that rely primarily on government price-setting.
Vermont deserves real healthcare reform.
S.190 wasn’t it.
Clara Morrison is the Executive Director of the Right for Vermont Foundation. Alison Despathy is a member of its Advisory Council.
The author is a clinical nutritionist in St. Johnsbury.
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Categories: Commentary, Health Care, Legislation
My Dad was a general practitioner from 1952 until 1981 when his heart condition did not allow him to practice anymore. He always felt the more government intervention the more costly healthcare would become. He also felt that eventually all the doctors and medical practices would be owned by hospitals and or insurance companies which would lead to the most efficient delivery of medical services possible.
One of his most famous quotes that I will never forget is “they are going to take the Healthcare business and make a Health business and nobody’s going to care.” This from a man that used to write off $250,000 a year (late 1970’s) in accounts receivable because he knew the clients couldn’t pay and it wasn’t going to make any thing cheaper to try to collect money from people that couldn’t pay. He always felt he had been fortunate enough to survive World War III and subsequently earned a medical degree and that his clients meant everything to him. He knew we would be fine even if they could not pay and their health was as valuable as ours.
My father was in the pharmacy business, had 30 years of clients, he was selling the drugs for less than the big box stores, but Vermont passed legislation under dean that in order to “keep costs down” they were going to go with the big pharma crowd and deny the independents from being able to fill prescriptions.
Have drug prices gone down? lol.
He for a kick in the teeth while going out the door, because the state banned independents, he had to sell to a big box store, and suddenly the suppliers all offered their products to the big Bo’s store for less money!
So independents could provide a cheaper , better or equal product on less of a margin. Year after year. Look at all the pharmacy’s that have opened and closed, look at how expensive, deadly and ineffective our. Drugs have become.
Vermont is completely owned and controlled by lobbyists
Your father was one of the last true Vermont primary care providers. Sadly, what he said became true. It was very common for providers like him to write off such accounts. They just did it and didn’t advertise it.
Sadly Vermont has the answer and we are not even using it, because it was not in the new world ordering dictate.
Captive Insurance.
Not only could Vermont change and trans form our own state, we could actually lead the nation in something worthwhile, and we could become astronomically financially independent.
But no, we are stuck in our Marxist rule mentality of some pigs are more equal than others. Which leads to not only the down fall of the farm, but our state and souls.
The Hospital Administrators, medical personnel and hospital employees do the best they can with what money they are allocated. The system that was implemented 35 years ago and patched every year is at fault. We have underfund the needs of the states healthcare system year after year and each year a healthcare facility cuts services. The cuts happen by and large in patient care services. Hence the closing of ICU’s, Maternity and reduction of in-house beds. Professional healthcare workers look to facilities that have top healthcare delivery systems. Rural and smaller communities cannot attract physicians, nurses, therapists, nuclear med personnel to an area that cannot compete in professionally, financially and living standard categories. We set up a death spiral in healthcare and are now reaping the end times. Many Vermonters go out of state for healthcare. We cannot even get a family physician. There are none. If you are not growing you are dying. Our healthcare system needs to be overhauled, put as top priority and funded accordingly. We need Health Savings Accounts. Small companies should be helped in offering these to their employees. State workers and education personnel should have HSA’s and/or a plan equal to the average worker in Vermont. The Certificate of Need Program should be abolished. The Green Mountain Care Board should be abolished and the responsibility put back in the hands of elected officials. Hospital budgets should be focused on what the public needs and wants for services. Not what the government decides to allow. In short nothing but a complete overhaul of the Vermont funding mentality and the freedom for healthcare professionals to supply care is needed.
Interesting you should bring up ‘out of State’ healthcare, at least in Southern VT most of the healthcare, hospitals and practices have been bought up by out of State New Hampshire Dartmouth Hitchcock and their subsidiaries. They market them as ‘joint ventures’, a stretch.
Ron, Albany New York, Springfield Ma, Lebanon and Keene New Hampshire are all areas used heavily by Southern Vermont. Boston is used also. Maybe instead of having an expensive medical center at UVM sucking up dollars we should distribute funds to bring up the quality of healthcare in other areas like Rutland, Springfield, Bennington and Brattleboro. That would give us four corner points covering Southern Vermont with solid hospital care.
Hey, don’t forget us up here in the NEK! They are still trying to “restructure” our hospital in Newport.
Gerry, Living within a ‘stone’s throw ‘ and a frequent user of Dartmouth health systems in Bennington, most all practitioners were pushed out the certificate of need program and overhead costs. There is little push to send patients to Albany NY unless a serious (Helicopter) emergency or patient protest; the big push is to have services done at the home campus of Dartmouth in Lebanon NH and as far as Keene NH goes those facilities were also joined with Dartmouth Hitchcock in Hanover, NH. Very few patients in this area use Bay State in Springfield Ma., due to insurance network considerations and their poor reputation in patient relations. But point is taken on UVM being a money drain for VT.
Outlawing Health Insurance and replacing with Health Savings Accounts would immediately reduce healthcare costs by a significant amount. Many people are saying healthcare is a basic human right. If that’s the case, then the government should not be involved with it at all. Not to provide it and certainly not to control it: it seems obvious that the more control government has over it, the fewer choices and less affordable it becomes.
There are several issues involved with the cost of health care in Vt., but one of the biggest issues is insurance carriers-IMO. When I returned to Vt. about 20 years ago and learned that there were only two carriers I was astounded! WHAT?!
BTW-excellent article Clara.
one of the basic foundations of Obama care, and truthfully it was none of his idea, it was all done prior to him coming to office by the lobbyists and long time administrators in Washington.
the real point…they were guaranteed a 15% return on what they spent, so if you wanted more profit, you just……..spent more money!!!
There is widespread news that ivermectin in combination with other drugs are stopping cancer in 84% of the people dealing with it….but see it only costs $17…..so you can’t make any money on that one!!!!!
But if you get your vaccine on the schedule, you are guaranteed billions of dollars, parents are forced to do for their kids in school AND you can’t sue them for any adverse effects. NOW that is a money train they love.
Also all the “state” insurance companies, blue cross blue shield are owned under the same holding company….so one owner, not going to compete with yourself.
https://generaldispatch.whatfinger.com/we-found-84-4-of-cancer-patients-taking-ivermectin-for-6-months-declared-their-cancer-was-either-completely-gone-regressed-or-stopped-spreading/
Overview of Captive Insurance
Captive insurance is a form of self-insurance where a company establishes its own licensed insurance company to cover its specific risks. This approach allows businesses to manage their risks more effectively and can lead to significant cost savings on insurance.
Key Features of Captive Insurance
Structure and Ownership
Wholly Owned: A captive insurance company is owned and controlled by the insured parties, meaning it primarily serves the insurance needs of its parent company or affiliated entities.
Tailored Coverage: Captives can provide customized insurance solutions that align with the unique risk profiles of the parent company.
Benefits
Cost Savings: Companies can potentially reduce insurance costs based on their own historical loss experience.
Stabilized Pricing: Captives can offer more consistent premium costs year-over-year.
Direct Access to Reinsurance: Captives can access reinsurance markets with fewer regulatory barriers, often at lower costs.
Retention of Underwriting Profits: Any profits generated from underwriting can be retained within the company.
Types of Captive Insurance Companies
Type of Captive Description
Pure Captive Insures risks of its parent and affiliated companies.
Protected Cell Captive Consists of a core and multiple segregated cells, allowing for shared resources while protecting individual cell assets.
Association Captive Insures risks of member organizations within an association.
Micro-Captive A small captive designed for midsize companies, often used for cost-effective risk transfer.
Special Purpose Captive Formed for specific risks or purposes, often with unique structures.
Conclusion
Captive insurance is increasingly popular among businesses looking to take control of their risk management strategies. By forming a captive, companies can tailor their insurance solutions, potentially reduce costs, and retain profits, making it a compelling alternative to traditional insurance markets.
btw, Vermont is the leader in captive insurance, companies LOVE it and so do the employees!
Neil, This week reiterated to me how much I despise the VT captive health insurance company, BC/BS VT, which it seems on conversations with representatives that is is handled out of Texas, and thankful that they dropped many seniors from coverage in January. Received a bill from Dartmouth Hitchcock, Southern Vermont Medical Center, once known as Bennington Hospital, for a blood test that was done in November 2025, almost 8 months later; my plan said blood tests as part of an annual physical, which this was are fully covered. SVMC told me BC/BS VT had told them I have a coinsurance on the service. Contacted BC/BS VT where a customer service rep on telephone advised, she saw my side looking at the summery of benefits that this should be fully covered and she would escalate to review. Received a notice from BC/BS VT this weekend saying there definitely was a coinsurance, when I questioned today was told the summery of benefits is not a contract and I need to review the full contract, the fully covered blood test only paid for the phlebotomist to draw the blood, but the lab work had a coinsurance. Had difficulty with them at the beginning of the Affordable Care Act when covered with them as only insurance available to me at that time. There favorite saying then when questioned on something not paid was latterly the statement “because the affordable care act says we can”! Hope I never need to use them again and happy that I recently had MVP and now have Humana.
Interesting how the author points to a successful example of referenced-based pricing being California’s public employee retirement system (CalPERS) in one paragraph, but then parrots the Governor’s claims that, because S.190 applied only to Qualified Health Plans and Vermont Education Health Initiative (VEHI) plans, it left the majority of insured Vermonters outside its scope. But that’s just what the CalPERS’ example did. Also, not all hospitals are going broke. UVM has a $1BB+ surplus while paying six-digit salaries to too many C-suite administrators.
Despathy, a candidate for VT House, has on her website her belief that, “we are so fortunate to live in a country where we have the opportunity to choose and create our own path…and that despite our differences in world views, life experiences and belief systems we can comfortably live here and know that our choices will be respected.” When it comes to health care, nothing is further from the truth. We can no longer choose our own health care path or live here comfortably because we have the highest health insurance premiums in the USA, which is causing businesses and families to go broke or leave the State. All politicians tremble with fear when the BC/BS and Vermont Association of Hospitals and Health Systems come anywhere near them, and bow to their pressure.
When my son went to university in Canada, he could walk into any hospital or see a doctor any time, anywhere, and walk out either with no invoice or a $15 charge. Tuition was $15k/year. Meanwhile, my husband and I pay $34k in health insurance premiums + deductible for 2 preventive visits per year. That $34k covers all hospital costs and insurance administration that Medicare, Medicaid, and uninsured Vermonters do not pay for. If this isn’t an industry that needs regulation, then we may as well not regulate anything anymore. One political party is protecting the astronomical profits of insurance companies and UVMMC’s bloated administration at the expense of regular working Vermonters now struggling under the weight of premiums that consume over 20% of our income.
One thing that is always left out of the Canadian comparison, is there, people can and have gone in for a broken bone only to be carried out due to MAID, being talked into by a doctor to choose Medically Aid In Dying. This year the leading cause of death in Canada if reported to by MAID. Oh yeah, it is FREE.
Back in 2014 health issues forced me to retire from my work overseas so I came back home for 2 summers to pave my re-entry, so regarding health coverage, for my wife and I,I went to my insurance man, who was also a selectmen in my town ,as we both had health issues ,looked into my options, and he asked if I had private Swiss health insurance, and I said yes, and he said, “Whatever you do, keep it!” My town still does not have a Dr. 12 years later, to man the medical center, because no doctor in their right mind wants to move their families there, and send their kids to the local school, as the schools systems have a pronounced political agenda that is far reaching beyond education. They been looking for a Dr for years.
A sorry state of affairs then the Governor has to bribe people to move there as the lawmakers in the Capital are so radically bad.
So I decided not to return to Vermont, as I had seen firsthand, across the globe, from my working days, what kind of a mess progressive leftist lawmakers make of a good thing.
Just look at the European Parliament a couple days ago.
They stood up en mass shaking their clenched fists into the air and shouting, “Send them back! Send them back! Regarding the onslaught of migrants over running Europe, and destroying some of the finest cities in the world, and American leftists did the same thing with their open borders, leaving Trump and team a complete mess, to clean up.
I truly hope my fellow Vermonters throw out every one of these leftist two dollar dummies.
It is not too late to clean up the manure they left in their wake, and build strong and secure fences, around the dooryard, to keep the varmints out, that over ran the state, due to political correctness overkill, put forth by leftist elected officials, and their minions, working in government, hand in hand ,with a media, with a agenda, far beyond, reporting the news.
Nope…not for us thank you, and obviously not for a Doctor to run the local health center either.
Thanks a lot you leftists wing nuts!
Better yet…”Send them back…send them back from where they came from.
Empty Montpelier and Washington of them.
VOTE THEM OUT!!!
Thank you for your attention of this matter! (Chuckle)