Health Care

Vermont’s health care exchange premiums fifth-highest in U.S.

Source: U.S. Department of Health and Human Services
Data Source: U.S. Department of Health and Human Services/Graphic by Andrew Stein

Vermont’s 2014 health insurance premiums are among the highest in the country.

The rates are well above the national average, and health care economists link more expensive premiums to less competition.

The U.S. Department of Health and Human Services released numbers last month with the premium rates for 48 of the country’s 50 states in anticipation of the opening of new Web-based health insurance exchanges mandated by the federal Affordable Care Act. The rate analysis does not include subsidies for Americans earning up to 400 percent of the federal poverty line, or almost $46,000 for an individual.

Plans in these new markets must cover 10 essential benefits, and they fall into one of four categories: bronze, silver, gold and platinum. The plans scale up, with bronze plans featuring the lowest premiums and least coverage and platinum plans featuring the highest premiums and most coverage.

HHS compared the premiums of the second-lowest cost silver plan, the lowest cost silver plan and the lowest cost bronze plan for every state in the country except for Massachusetts and Hawaii.

On all three levels, Vermont has the fifth-highest premium rates in the country.

Blue Cross Blue Shield of Vermont and MVP Health Care are the only two insurers participating in Vermont’s new market, and they are each offering nine plans.

The Blue Cross Blue Shield silver plan, which costs $412.83 a month for an individual, compares to the national average for the second-lowest cost silver plans of $328. The Blue Cross silver plan, at $395.26 a month, compares to the average for the lowest cost silver plans of $310. And the MVP Health Care bronze plan, at $336.13, compares to the national average for lowest cost bronze plans of $249.

The authors of the federal analysis point to a link between weak market competition and high premiums.

“States with the lowest average premium tend to have a higher average number of issuers offering qualified health plans,” the authors of the HHS report wrote. “There are, on average, 8 issuers participating in the Marketplace in the states with average premiums in the lowest quartile, compared to an average of 3 issuers in states with average premiums in the highest quartile.”

Linda Blumberg is a former health policy adviser to President Bill Clinton, and a senior fellow at the Urban Institute’s Health Policy Center. She says the Affordable Care Act and its standards are more effective at controlling the growth of health care costs in states where there are higher levels of competition.

“The problem is in the states where you have a dominant hospital system that can’t be negotiated with because you’ve got to have that hospital system, or you have a single insurer that has a vast majority of the market, then it’s much harder to engender competition,” she said. “In states with markets, like Oregon and Colorado, with multiple hospital systems and insurers competing, the Affordable Care Act can open up the possibility for increased competition to bring premiums down lower.”

Vermont has both a dominant hospital system and insurer. Fletcher Allen Health Care in Burlington generates about half Vermont’s total patient revenues. Fletcher Allen Partners — the parent organization for Fletcher Allen, Central Vermont Medical Center and two New York hospitals — controls an even larger share of the market.

On the insurance side, Blue Cross controls more than 75 percent of the individual and small-group health insurance market. Those are the populations that will buy insurance on the state’s new market, Vermont Health Connect. In 2014, Vermonters buying insurance independently or via businesses with 50 or fewer employees are legally mandated to purchase coverage through this market.

Robin Lunge, director of Health Care Reform for the Shumlin administration, speaks at a Vermont Health Connect forum in Montpelier last month. Photo by Roger Crowley/for VTDigger
Robin Lunge, director of Health Care Reform for the Shumlin administration, speaks at a Vermont Health Connect forum in Montpelier last month. Photo by Roger Crowley for VTDigger

Robin Lunge, director of Health Care Reform for the Shumlin administration, said Vermont’s guaranteed issue and community rating policies drive up premiums. The state’s guaranteed issue policy ensures that people receive health insurance for pre-existing conditions, and its community rating policy requires that all insurers charge patients the same rate for the same insurance policies.

“When you look at Vermont and compare it to other states that are coming into ACA compliance now, what you will see is Vermont’s covered population is more expansive, and so our uninsured rate is lower,” Lunge said. “We are covering a more diverse group of population than most other states, and that means a wider age range and a wider range of people with varying health conditions.”

Since the state requires insurers to cover Vermonters with serious health care needs, this drives up the cost of insurance for the risk pool.

Vermont also has the second-oldest population in the country, with a median age of 42.4 years old. The actuarial logic follows that older people require more health care. Since Vermont’s system doesn’t discriminate based on age, the older population is a driver of higher premiums.

Cynthia Cox is a health care economist at the Kaiser Family Foundation who co-authored a recent report comparing premiums in the new health insurance marketplaces. For a 40-year-old, Kaiser’s analysis found that Vermont has among the highest premiums in the country.

“Younger people will have higher premiums in Vermont than they might if they lived elsewhere, whereas older people might have lower premiums than if they lived elsewhere,” she said.

A Manhattan Institute analysis shows that Vermont’s premiums are going up as much as 133 percent for individuals in their 20s, while New York’s are dropping 29 percent. New York also has a community-rated system, but its demographics are different and its population is much larger. The Manhattan Institute compared the average of the least five expensive plans before the Affordable Care Act to the average of the least five expensive plans under the Affordable Care Act on a state-by-state basis.

Both Cox and Blumberg said their organizations are not planning to run such analyses juxtaposing pre-Obamacare plans with new ones because it would be like comparing apples to oranges.

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  • Brian McAllister

    I’m surprised we’re only fifth highest. When you have a monopoly running it and only one choice, of course it’s going to be one of the highest.

    I was under the impression that the exchange was supposed to offer us choices, not pseudo “choices” offered by only one company.

  • Stan Hopson

    No complaining people, you all voted for this nonsense at the Federal and State level -overwhelmingly.

    • Brian McAllister

      So, you know how I voted now? Wow.

      So, what else can you tell me? What did I have for breakfast? What is my favorite book?

      Hell, those should be easy questions…after all, you apparently know how everyone voted.

      • David Dempsey

        We all voted for the politicians who made this decision.

        • Brian McAllister

          Um, no. We all didn’t. I wrote in candidates, and I know many others that did too. Unfortunately there weren’t enough of us doing that to make a difference.

  • Hod Palmer

    Wasn’t that the AFFORDABLE Care Act. What part of “affordable” don’t they understand?

  • Craig Powers

    Good job Montpelier! You sure do know how to “bend the cost curve” to bring affordable coverage to Vermonters.

    I echo Stan’s comment above. You voted for this…so don’t complain!

    • Lee Russ

      What does Montpelier have to do with the FEDERAL ACA?

  • John S. Hameline

    “Where health care has failed is in designing a cost containment mechanism that works.”
    Peter Shumlin

    Gov. Peter Shumlin says a payroll tax could be used to fund the single-payer health care system.
    Many questions have been raised on how the state would raise an estimated $1.6 billion for the system.
    The governor says a payroll tax is just one option on the table. Opponents say this would be the biggest tax increase in Vermont’s history.
    “Maybe so, but it will be the biggest reduction of health care premiums in American history. You will not pay a premium anymore. Everybody covered, everyone in and we all pay based on our ability to pay. Currently some people pay and some choose not to,” said Shumlin, D-V

  • Kathy Callaghan

    John Hameline: And you believe that??

    • John S. Hameline

      Kathy, don’t misinterpret the reasons for posting what I did.
      I believe that the Governor is either ignorant of the realities of the free market, or is deliberately misleading Vermonters.

      I utterly reject the “we know what’s best for you” crowd’s headlong rush into an fundamentally flawed, fiscally unsustainable and irresponsible boondoggle that borders on the immoral.

  • The ACA is what the insurance industry lobbied for. It does contains some needed reforms such as elimination of pre- existing conditions and very high deductible junk policies as a way to deny claims..that said, we will still have a overly expensive, convoluted, inefficient and unequal health care system until we get to single payer in 2017!

    • Walter Carpenter

      “The ACA is what the insurance industry lobbied for.”

      I know. This is everything that the industry could ever want. If it could just get rid of the protections for enrollees embedded within the ACA, it would be in heaven.

  • Andrew Stein


    That is a very good question. Vermont uses pure community rating. The administration argues that the new ACA rules, which are less stringent than Vermont’s, do not preempt the state’s authority. All Vermonters buying the same plan are supposed to pay the same price regardless of age. Here is a Joint Fiscal Office brief on the issue:


    • john bennett

      Your answer made it into the comments; my question did not. Perhaps this is because I mistyped my email. The question I tried to post is:
      You wrote:
>Since Vermont’s system doesn’t discriminate based on age, the older population is a driver of higher premiums.<
The meaning of this is unclear to me. Are you saying all Vermonters from 20 to 65 pay the same price for the same plan. I know that under ACA the price that the oldest pay can't be more than 3x what the youngest pays. Did Vermont on its own change 3x to 1x?!

      Feel free to switch your comment and my reply.

    • john bennett

      Now here’s a real reply to your reply. I have not been to the exchange, and I have more questions about the age issue for you or anyone else who has visited it. First, does the site ask for age or date of birth? If Vermonters will really pay the same amount regardless of age, I guess the exchange need not ask age. If it does ask for age, have you or anyone you know of tried (or would someone out there be willing to try) just changing your age on you input to see if all else being equal the rates are same.

      Now, I’ll show my cards–I’d be astonished if you could get through the process without divulging your age (of course your ss# gives it away anyway), and I would be nonplussed if all else being equal a 25 year old and a 60 year old were asked to pay the same price for the same plan.


    Outside the new Community Health Center in Burlington is a sign that says “Sign up for Vermont Health Connect and free food too. Are they giving away food or signing people up for food stamps?

  • Pete Novick

    Cost containment in the ACA? Well, it’s a mixed bag, though here’s a paper published by the Urban Institute (Dec 2012) which provides a look at cost containment, and it’s a read methinks.

  • Jon Corrigan

    Obviously there’s a lot of federal money being thrown around to get 50 different states up and running (or not). Why wasn’t this done regionally, which could have saved hundreds of millions? If someone lives near a border, why shouldn’t they be able to purchase a policy from the cheaper state? Why should Vermont care if a person has insurance through NH or NY? Isn’t the main concern that they have insurance?

  • When will Governor Shumlin come forward and accept responsibility for the incredible messes, yes plural, he has created in Vermont.

    He has spent hundreds of millions of taxpayer dollars to bring us what he calls healthcare reform. What do Vermonters get out of this mess? Higher rates, poorer access to health care services, unhappy and disappearing doctors from Vermont practice….. what is it we get?

    We can talk about the Governor’s renewable energy boondoggle, his role in creating the economic disaster related to closing Vermont Yankee or Vermont’s lofty ranking as the highest user of illegal drugs in the country at a later date.

    The more one thinks about it, the Jerry Dodge deal was one of the Governor’s better efforts.

    But today, can anyone please tell us what the pay off is from Gov. Shumlin’s health care reform efforts?

  • Peter Everett

    Ha, Ha, Ha!!! And you will keep these same people in office, come the next election.
    We all think that our leaders are dumb, nothing compared to the STUPID, STUPID voters.
    We can change the environment, but, we
    (you) won’t have the guts to try some one new. As for me, no incumbents will be checked off on my ballot. Enough IS enough!!!!

  • Theresa Maurice

    Boy oh boy… employer has paid out lots of cash in several lawsuits from employees treated wrongly. Can Shumlin help oust the non-Administration we have here, thereby increasing our cash at hand, and decreasing employee out of pocket expenses for insurance premiums? Seems a simple solution. Revolving door turnover is also an expensive issue here. Sick of hearing about health costs, when this facility is a proponent of waste. And in VERMONT. Help us.

  • Walter Carpenter

    “What do Vermonters get out of this mess? Higher rates, poorer access to health care services, unhappy and disappearing doctors from Vermont practice”

    The exchange is federal. Shumlin did not bring this. And how do you know that the access will be poorer than it is now? And if the doctor’s practices are disappearing as you say they are, they were doing so long before the exchanges.

    • Bill Gardyne

      Actually, our situation here in VT is unique due to our Governor’s insistence that the Exchange be the ONLY market for health coverage in the State. That was done in order to get us all in a row to waltz into single payer. Other states still have their existing health care marketplace plus the Exchange as an alternative. THAT would have made MUCH more sense for us here in Vt. and that will become very clear very fast..

      • Kate Purcell

        This comment is absolutely correct. Had we built an exchange or marketplace as the ACA required,we might have,probably would have been successful requiring fewer dollars while providing competitive choices for consumers.

        Instead, we built or are trying to build an expensive platform bridging us to a no choice noncompetitive single payer if Gov.Shumlin gets his way before we potentially go bankrupt. No doubt whoever does not win the single payer contract, be it MVP, BCBS or another company will certainly sue Vermont (meanings taxpayers) defend and pay a substainial bill.

        That is of course based on the technology working. Which as of today does not. Having 30 years in the software business. I have seen success and failures. In this case like the DMV and Judicial software which failed, the taxpayers or VT millions, for which they are on the hook or responsible through taxes.

        Someone clearly bought the demo! We cannot afford failure on this project,it would be catostrophic on so many levels. I voice my concern and what I believe is the reality. Yet I want only the best for all Vermonters and Vermont: A working, reasonably
        priced, user friendly system.

  • John Smith

    Wait, so moving toward a health insurance system that commands a captive mandatory market, yet is still administered by profit-driven corporations, didn’t yield low premiums? AMAZING.

    When are we going to wake up and realize that federal single payor is the only affordable universal option? Enough of this corporate health siphon.

    Who is going to deliver true universal federal coverage? Any other option will cost more and provide worse coverage.

  • Wayne Andrews

    In my town the governing body choose the platinum plan and that plan cost about 30% higher than the plan the employees currently have. That platinum plan (the best available) has higher deductables as well so our town is getting the shaft and the employees are getting the shaft. The winners you may ask? The low lifes already sucking off the system and contributing nothing.

  • Peter Everett

    Cost of the exchanges will not make any difference. Most applying to ACA are going to receive subsidies anyway. Vermont, full time residents, are not flush with cash.

  • Jacob Miller

    Mr. Stein,

    Vermont also has the second-oldest population in the country, with a median age of 42.4 years old. Source? My source claims Vermont has the 4th oldest population and the 2nd lowest birth rate. Thanks, in advance, for the clarification.

  • Comparing Vermont and Wyoming, two states with small populations and expensive health care, is indicative of the actuarial problem we are confronted with. Rates would have been better for Vermonters with a New England wide health care system.

  • rosemarie jackowski

    Bombshell: Federal judge suddenly green-lights lawsuit that could stop Obamacare in its tracks

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  • Jon Corrigan

    The White House will be meeting with Insurance Co Execs today. I don’t think this meeting would happen if things were going well. What is probably happening is that the insurers are now able to forecast massive losses over becoming a party to this disaster, and want guarantees or bailouts. They are putting up with forced cancellations of hundreds of thousands of policies with no complaint, figuring that they can earn it back through the new coerced plans. But now they are forecasting that will not be possible. The next several weeks should be interesting.