A little over a decade ago, Bernie Sanders’s home state tried to build a single-payer health system — one government plan for everyone — and balked at the cost. This month it went the other direction.
The sickest market in America
Vermont has the highest average health premiums in the country: $1,299 a month for the benchmark silver plan. That is nearly 60% more than neighboring New York and three times the cost in New Hampshire. Even the cheapest tier averages $824 a month — with a deductible near $10,000. You pay rent-sized premiums and still owe a used-car-sized bill before coverage kicks in.
How did it get this bad? Strict rules drove insurers out. Only two remain, and one — Blue Cross — is nearing a monopoly with almost 70% market share in 2024. Vermont is also one of only two states, with New York, that ban insurers from charging older customers or cigarette smokers more.
That sounds kind. Here is what it does: it makes coverage a terrible deal for the young and healthy, so they leave. Vermont’s uninsured rate for young adults runs nearly triple the state average. When the healthy leave, premiums rise for everyone who stays, which pushes more people out. Economists call that a death spiral, and it is not an exaggeration here.
What the order changes
Governor Phil Scott issued an executive order this month with the most substantial health reforms Vermont has seen in decades. The state will roll back the mandates that forced young people to overpay. It will look for ways to help small businesses find affordable coverage. And it will apply for a federal reinsurance program — a backstop that has lowered premiums in other states.
The headline change: premiums may now vary up to 20% based on age and nicotine use. For scale, ObamaCare itself lets states allow up to a 3-to-1 variation. The legislature had refused even a 5% version of this — lawmakers instead passed a bill shifting costs onto the business market, which Scott vetoed in June. He said the system needs “structural reforms that expand affordability, increase choices and ensure savings are shared broadly across the system.”
The rest takes time: the reinsurance application, and expanding association health plans — arrangements that let businesses band together to buy coverage. But the stage is set for double-digit percentage premium declines. More important, it is set for young people to come back to a market that cannot survive without them.
Why this is on our desk-side reading list
No stock is attached to this story. It matters anyway, because health premiums are a planning line item, not a political argument. The lesson is blunt: prices are information, and when a rule forbids a price from carrying information, the market stops working rather than becoming fair.
Watch for copycats. If Vermont’s reinsurance-plus-age-variation package delivers the projected declines, it becomes a template for other states — and premium assumptions inside early-retirement plans will need a fresh look. The state that tried single-payer first may end up teaching the free-market lesson.