by Clara Morrison
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.