For years, Vermont lawmakers have aimed a barrage of legislation at a seemingly intractable and impossibly complex problem: Health care costs are increasingly unaffordable for residents.
Vermonters and their insurers spend $12,756 per person on direct health care annually — making Vermont the sixth-highest spending state in the U.S, according to 2020 data from the health policy think tank KFF. And between 1991 and 2020, Vermont’s annual health care spending per capita grew faster than any other state, KFF reported.
Separately, rising insurance premiums have outpaced wage growth and strained residents’ wallets, advocates say. Last year, when insurers requested double-digit rate increases, many members of the public responded with alarm.
“The requested rate hikes are unaffordable and unconscionable,” wrote Pownal resident Wendy Leffel to the Green Mountain Care Board last year. “Vermonters already cannot afford the monthly health insurance premiums.”
Ambitious health care reform efforts in the state have either foundered — see the infamous 2014 demise of Vermont’s single-payer model — or have yet to noticeably slow rising costs, like the state’s current efforts to implement an “all-payer” model.
Now, this session, lawmakers are pursuing a raft of less comprehensive reforms, ones they hope will nevertheless make a dent in Vermonters’ bills.
“It’s ongoing,” said Rep. Brian Cina, P/D-Burlington, who serves on the House health care committee and is a member of the recently formed Universal Healthcare Caucus. “Every year that I’ve been in the Legislature, we’ve looked at the affordability issue,” said Cina, who was first elected in 2016.
Medicaid eligibility
The most ambitious piece of legislation — H. 721 and its Senate counterpart, S. 240 — would dramatically expand eligibility for Medicaid in the state.
Speaking broadly, Vermont adults 19 to 64 are currently eligible for Medicaid if their income is below 133% of the federal poverty limit, meaning a four-person household must have a monthly income of $3,450 or less to qualify in the current year.
Generally, pregnant Vermonters with incomes of 208% of the federal poverty limit are eligible, and youth under 19 are eligible for Dr. Dynasaur — the state’s public health insurance program for children — if their household income is up to 312% of the federal poverty limit.
As currently written, the bill would significantly expand those limits, allowing pregnant Vermonters and all Vermonters up to the age of 26 to qualify for Medicaid with income up to 312% of the poverty limit.
Meanwhile, eligibility for adults 26 to 64 would gradually increase to 312% of the federal poverty limit by 2030 — meaning a four-person household with a monthly income of $7,925 would qualify.
The bill would also increase reimbursement rates to providers in the fields of primary care, mental health, substance use disorder, and long-term care, among other reforms.
“I think the bottom line is, we are trying to make health insurance and health care more affordable for Vermonters,” said Rep. Lori Houghton, D-Essex Junction, the chair of the House health care committee and the bill’s primary sponsor.
Prescription drugs
Other bills focus on drug prices. S.98 would allow the Green Mountain Care Board to review prescription drug costs to determine whether they create “affordability challenges” for Vermonters, and give the board the power to cap the price of certain drugs with high or fast-growing costs.
“We are hearing in the news all the time about countries that pay far, far less than we do (for drugs),” said Sen. Kesha Ram Hinsdale, D-Chittenden Southeast, the primary sponsor of the bill. “And I think just having a process to look at each prescription, to look at its affordability, its comparators, and give Vermonters more information and hopefully some relief, is a really valuable step forward.”
Another bill, H.233, would create a licensing system for pharmacy benefit managers, third-party entities that negotiate drug coverage plans with drug companies, insurance providers and pharmacies. It would also impose stricter regulations on how they could operate in the state.
Pharmacy benefit managers have come under increasing scrutiny nationally, amid criticism that they operate opaquely and drive up drug prices for consumers.
“Nationally and in our state we have had many conversations over the years about how the costs of health care are increasing,” Rep. Mari Cordes, D-Lincoln, said in an interview Wednesday. “And one of the drivers, the biggest drivers, if not the biggest driver, of those health care costs increases are pharmaceuticals.”
Another bill, S.164, would require private health insurers and Medicaid to cover the cost of obesity treatment. The proposal comes amid the booming popularity of new weight-loss drugs and the promise of their effectiveness in reducing the prevalence of chronic diseases linked to obesity.
Lawmakers are also considering a “provider burden” bill, H.766, aimed at cutting some of the bureaucratic requirements of health care by streamlining interactions between providers and insurers. The bill takes particular aim at a practice called prior authorization, in which insurers must sign off on certain procedures or drugs before they can be administered to a patient.
That legislation intends to allow providers to help patients more quickly and easily. While not explicitly aimed at cost, the bill aims to free up providers and improve access to healthcare — something that “goes hand in hand” with affordability, Houghton, the chair of the House health care committee, said.
“As providers spend more and more time on administrative duties, they have less time for patients,” Houghton said.
Price tags
But those proposals will carry their own costs, which may be a hard sell at a time of vanishing pandemic aid and ballooning property taxes. And even as Vermont lawmakers target the bureaucracy of health care, industry critics have argued that some of that complexity actually exists in order to make care more affordable.
Insurance companies have pushed back on H.766, the “provider burden” bill, saying that an insurer’s ability to sign off on treatments actually saves consumers money by cutting down on unnecessary procedures.
Sara Teachout, an in-house lobbyist for Blue Cross and Blue Shield of Vermont, told the House health care committee that the bill, if passed, would actually end up costing its members more — over $100 million, she said. (Lawmakers expressed skepticism about that figure.)
“There always needs to be a balance between the costs for patients and the increase in the price of care, and your goals for trying to decrease administrative burden,” Teachout told lawmakers in a testy committee hearing Wednesday. “We believe this goes too far in the other direction.”
Pharmacy benefit managers, meanwhile, argued that their ability to negotiate with drug companies and pharmacies actually helps keep drug costs lower.
“PBMs exist to do one thing, which is drive down the cost of prescription drugs,” Sam Hallemeier, the senior state director with the Pharmaceutical Care Management Association, the national organization for pharmacy benefit managers, told lawmakers Wednesday. “PBMs exist to deliver savings.”
And requiring Medicaid to cover obesity treatment could ultimately end up costing the state as much as $75 million annually in drug costs within a few years, according to a preliminary estimate from the Department of Vermont Health Access.
“These are very popular medications, and they do carry significant costs,” Alex McCracken, a spokesperson for the department, told lawmakers last month.
There is no price tag for H.721, the sweeping Medicaid expansion bill, yet.
“The Department is actively working to put together cost estimates for the sections of H.721 which would have a budget impact,” McCracken said in an email. But he noted that Gov. Phil Scott’s proposed budget did not include the costs that the bill would create.
Jason Maulucci, a spokesperson for the governor, said that the administration “(supports) the policy goal” of the Medicaid expansion.
“However, in a year with very limited budgetary capacity, we would need to better understand which programs the bill’s sponsors would plan to cut in order to pay for it,” Maulucci said.
Correction: An earlier version of this story misstated the ranking of Vermont among states with the highest health care costs, and the year of Rep. Brian Cina’s election.
