by John Reynolds
Too many Vermonters are struggling under the weight of extraordinarily high health insurance costs, high health care prices, and too few choices.
An expensive healthcare system is a drag on the state’s growth and competitiveness. Vermont has some of the highest health insurance premiums in the country and inexplicable disparities with many of our neighbors.
This contrast is especially stark in the health insurance market for individuals and families who buy coverage on their own.
At a staggering $15,600 per year, Vermont’s average second lowest cost silver plan, the “Benchmark Plan,” is the highest in the country according to the Kaiser Family Foundation.
That compares to $4,800 per year for the same plan in New Hampshire.
The same disparity exists in the small business health insurance market. A group insurance policy for just five employees can cost over $32,000 more in Vermont compared to a similar plan in New Hampshire.
The exorbitant prices have profoundly negative impacts. High costs create economic barriers for Vermonters. Subsidies mask some pain but do not erase the disparity with lower cost states.
Federal and state premium subsidies are scaled based on income and phase out entirely above certain income levels. A difference of less than a thousand dollars in wages could take a 40-year-old in Chittenden County who makes $62,000 from paying $750 per month for a silver plan to paying over $1,500 per month.
It’s not uncommon for employees to decline promotions because the loss of insurance subsidies outweighs the increased compensation. Or for a parent to stay home because going back to work risks losing the family’s subsidy.
Aspiring entrepreneurs stay tied to dead end jobs for health insurance instead of starting their own shop. Some skip coverage because they can’t afford the options available to them.
Fortunately, when every state features more affordable health coverage, options for reform are abundant. Vermont doesn’t have to look far to get started.
In the early 1990s, Vermont, New Hampshire and Maine all experimented with strict health insurance pricing regulations. These rules tried to flatten premium prices regardless of a person’s age and other risk factors, creating a very high floor price.
The results were not positive. As Maine and New Hampshire discovered, high prices quickly drive younger and healthy people to drop their health plans. This flight, in turn, raises prices for everyone else.
New Hampshire and Maine eventually unwound the most counterproductive pricing restrictions. Their experiences served as a lesson for architects of the ACA.
Many of those failed restrictions remain in Vermont. This includes regulations that upend the more balanced approach in the ACA, like allowing limited pricing variation based on factors like age and tobacco use.
Simply following some ACA pricing rules would reduce premiums for all age groups.
Looking east offers more lessons for lowering costs and increasing options.
Five years ago, New Hampshire adopted an Individual Market reinsurance program. Reinsurance reduces premiums by sharing the cost of expensive medical bills for things like cancer and heart disease.
Eighteen states – red, blue, and purple – have established similar programs. All of them have lower premiums than Vermont. Sixteen have more competition in their insurance markets.
Vermont lawmakers tied reinsurance to a controversial bill that was destined for a veto this year.
Like most states, the Granite State allows small employers to buy health insurance together through regulated Association Health Plan (AHPs). This helps small businesses find better plans at better prices.
Vermont has banned AHPs since 2019.
Short-term health plans are an important bridge for those priced out of traditional health insurance, between jobs, or striking out on their own. They trade more limited coverage for much lower premiums. While not for everyone, they can provide a level of financial protection in the event of an expensive medical issue.
New Hampshire just modernized its rules to let people buy short-term plans for up to a year and renew them for two more years.
These plans are not available in Vermont.
Most large businesses self-insure for employee health coverage. These federally regulated plans offer greater flexibility to design affordable plans tailored to the needs of workers.
New Hampshire follows the national model that balances risk and access for small businesses who want the same opportunity.
Vermont has some of the most restrictive rules in the country.
The pattern – and problem – is clear. Other states allow consumers to find the best fit for their needs.
Vermont puts up roadblocks.
This year, Governor Phil Scott asked state lawmakers to legalize more affordable coverage options for small businesses and families.
Too many lawmakers scoffed at the proposals because they didn’t fit into narrow ideological boxes that have dominated healthcare politics for too long.
Vermont can’t wait any longer. It’s time for the state to unshackle itself from a broken approach.
Restore a full range of options for consumers. Give small businesses, workers, and families every opportunity to buy affordable coverage that works for them.
Increase competition among insurers, hospitals and healthcare providers. Make it easier for doctors to open practices that don’t rely on traditional insurance.
Give Vermonters choices and they will make the right decision.
John Reynolds is the state director for the National Federation of Independent Business (NFIB) in Vermont, which represents more than 800 small businesses in the Green Mountain State.