Vermont Health Care Regulators Adjust Insurance Premium Increases

Vermont’s leading health care regulators have instructed health insurance companies operating under the state’s affordable care law to implement a yearly premium increase that is notably lower than what these companies had proposed earlier this year.

On Friday, the Green Mountain Care Board revealed its final decision regarding the percentage increase allowed for what are termed qualified health plans available through Vermont Health Connect, which caters to both individuals and small groups. Originally, the Regulatory Commission had suggested higher annual price increases for these plans.

This year, Blue Cross Blue Shield of Vermont, one of the two insurers offering plans via Vermont Health Connect, initially sought a significant 13.5% increase for individual markets and a 23.5% hike for small group markets. Ultimately, the care board approved increments of just 9.6% and 4.4%, respectively.

Meanwhile, MVP Health Plan Inc., the other insurer in Vermont, had asked for a 6.2% increase in the individual market and a 7.5% hike for small group plans. Again, the care board’s approved increases were much lower: 1.3% for individual plans and 2.5% for small group plans.

The implications of this decision suggest that Vermonters may encounter higher insurance costs compared to residents of other states while also placing Vermont’s Blue Cross Blue Shield at risk of facing financial difficulties.

According to Owen Foster, chair of the Green Mountain Care Board, the aim of the approved premium rates is to safeguard the state’s largest insurer while trying to keep costs manageable for Vermonters. “Blue Cross is in a tricky financial situation, but Vermont is, too. Our job is to find a balance between these competing needs,” Foster noted. He stressed that allowing steep increases would negatively impact people’s access to care and that the current trend of double-digit hikes was not acceptable.

Andrew Garland, vice president and spokesperson for Blue Cross Blue Shield, expressed uncertainty about whether these reduced rates would adequately cover costs in 2026. He indicated that the assessment would hinge on annual reviews of hospital budgets and subsequent pricing negotiations between hospitals and insurers.

Though there are challenges ahead, Garland seemed hopeful, commenting, “A lot has changed since we submitted these rates back in May.” He referenced a new law signed by Governor Phil Scott in June, which aims to reduce claims that certain hospitals can make for outpatient drugs in 2026, with hopes that this will save members millions.

Additionally, Garland mentioned that Blue Cross Blue Shield would gain higher risk transfer payments from MVP than initially anticipated. This is part of a strategy to balance out the lower-risk patients with higher-risk ones, as the Affordable Care Act mandates. In 2024, MVP is expected to have a majority of lower-risk enrollees, meaning they will contribute financially to this risk adjustment for Blue Cross Blue Shield.

The Regulatory Commission also determines how much each of the state’s 14 hospitals can increase their charges to insurers each year. Though preliminary indications suggested a 3% rise in fees for 2026, final decisions for each hospital won’t come until mid-September.

Simultaneously, insurance companies braced for potential significant losses, given the anticipated discontinuation of federal insurance subsidies that have been critical during the COVID-19 pandemic. Blue Cross Blue Shield projects that 12.6% of individual market members might lose their coverage, leaving only those who most need it, likely leading to a rise in overall costs.

Foster remarked that the recent decision will probably align Vermont’s rates more closely with those approved by other states or expected in the upcoming Marketplace Premiums. Across the nation, individuals and insurance companies might also face financial challenges due to the loss of federal aid.

MVP’s spokesperson, Michelle Golden, highlighted on Monday that the new board-approved rates are a testament to collective efforts aimed at ensuring accessible, quality care while managing costs effectively for the entire community.

During the briefing, Foster indicated that insurers often feel they lack the ability to negotiate fair prices with hospitals. Recently, the state’s Department of Financial Regulation has emphasized its role in bolstering insurers’ negotiating positions, stating it wouldn’t approve plans that jeopardize their financial stability.

Insurance companies do have the option to appeal the board’s ruling within 30 days, though as of now, there hasn’t been any confirmation on whether they plan to pursue that avenue.