A little over a decade ago, the home state of Senator Bernie Sanders tried to implement a single-payer healthcare system, only to balk at the cost to taxpayers. This month it went the other direction.
The worst individual market in America
Vermont has the highest average premiums in the country — $1,299 a month for the benchmark silver plan, nearly 60% more than in neighboring New York and three times as high as in New Hampshire. Even the cheapest tier averages $824 a month with a nearly $10,000 deductible.
One reason is that the state’s strict rules have driven insurers out. Only two now offer plans, and one, Blue Cross, is nearing a monopoly with a nearly 70% market share in 2024. Vermont is also one of only two states — New York is the other — that ban insurers from charging higher premiums for older policyholders and cigarette smokers. The uninsured rate for young adults is nearly triple the statewide average, because it is cheaper for them to go without coverage than to buy such expensive plans. That combination drove the market into a death spiral.
What the executive order does
Governor Phil Scott issued an executive order this month implementing the most substantial healthcare reforms Vermont has seen in decades. The state will roll back mandates forcing young people to pay disproportionately high premiums, identify barriers to affordable coverage for small businesses, and apply for a federal reinsurance program that has lowered premiums in other states. The order allows up to a 20% premium variation to account for nicotine use and age — against an ObamaCare ceiling that permits states to adopt as much as a 3-to-1 variation.
The legislature had refused. Democrats who control both chambers balked at the governor’s earlier proposal to let insurers vary premiums by a mere 5% based on age, and instead sent him a bill that would have lowered individual-market premiums by raising costs on the business market. Scott vetoed it in June, declaring that Vermont’s healthcare system needs “structural reforms that expand affordability, increase choices and ensure savings are shared broadly across the system.” Other reforms will take time, including the reinsurance application and the expansion of association health plans that let businesses band together. The stage is set for double-digit percentage declines in premiums — and, more importantly, for young people to return to a market that cannot survive long-term without them.
No trade. This is on the desk because premiums are a planning line item, not a political argument. The sickest individual market in America is quietly admitting that prices are information, and that when you forbid a price from carrying information the market stops functioning rather than becoming fair. Watch for copycats: if the reinsurance-plus-age-variation package produces the declines projected here, it becomes a template, and health-premium assumptions inside retirement plans for clients retiring before 65 will need revisiting. We model those premiums explicitly rather than assuming them flat, and this is the kind of item that moves the number.
No tickers. This is a planning input, not a position.
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