When Gov. Phil Scott last week vetoed the Legislature’s boldest attempt this year to lower health insurance costs, he said his own package of proposals offered a better alternative.
Specifically, in a letter sent to the Senate, Scott highlighted efforts from a bill, H.585, that his administration put forward in January.
“These proposals included proven approaches that expanded affordable choices in other states,” Scott wrote, highlighting the boon he said the bill could provide to small businesses in particular.
Now, Scott says he will pursue executive action to implement some of those ideas, but so far, he hasn’t said which.
H.585 set out to accomplish such a wide-ranging suite of health insurance-related reforms and expansions that it ultimately died in the Senate Finance Committee.
“It had a lot of pieces that were a good faith attempt at lowering healthcare costs, but none of them felt ready for primetime,” said Sen. Ruth Hardy, D-Addison, who sits on the committee.
The bill Scott vetoed, S.190, would have sped up the state’s ability to begin using a cost-saving tool called reference-based pricing. That approach ties insurers’ payments to hospitals to an external benchmark, usually a percentage of the rates that Medicare pays hospitals. S.190 would have made that change for just two insurance groups — public school employees and people buying plans on Vermont’s Affordable Care Act marketplace — an approach Scott said was unfair because it prioritized savings to some insurance groups over others.
But for Hardy, reference-based pricing had been better vetted in Vermont — and beyond — compared to Scott’s ideas in H.585.
What’s in Scott’s plan
Inside the 25-page bill, Scott’s team included a wide-ranging slate of efforts to expand insurance types in the state, particularly for young people and small businesses.
H.585 outlined a case for bringing association health plans back to Vermont. Those allow small employers to collectively create a larger pool of insured people through associations, such as a chamber of commerce, rather than purchasing through the marketplace. Those people would then leave the collective insurance pool, making the shared marketplace smaller.
The state stopped allowing those plans to operate in 2020, following a federal court decision and concerns that they incentivized healthier people to exit the collective insurance pool, leaving older, costlier patients paying higher premiums for their own care.
One section of the bill included provisions for allowing insurance premiums to be based partially on age, in an effort to make it more affordable for young, healthy people to purchase insurance, while another hotly-debated piece of it proposed phasing in a billing change that would let insurers pay the same amount for certain services provided in or out of the hospital.
Part of the reason Scott vetoed S.190 may be because his administration wants to seek a special federal waiver before Vermont attempts to pull prices down for plans on the Affordable Care Act marketplace.
The waiver would allow Vermont to keep any federal subsidy money that could be lost by lowering Affordable Care Act insurance premiums through efforts, such as reference-based pricing.
Kaj Samsom, the commissioner of the Vermont Department of Financial Regulation, which oversees health insurance, told VTDigger the state could use the waiver to create a reinsurance fund — basically, a pool of money insurers can draw from if they need to pay out expensive claims. That could lower health insurance costs even further, Samsom said.
Since his veto, Scott hasn’t said which healthcare reforms he will pursue through executive action. Amanda Wheeler, a spokesperson for Scott, said his office plans to announce more details later this week.
Political Schisms
Rep. Alyssa Black, D-Essex Town, who chairs the House’s healthcare committee, bristled at the idea of delaying efforts to reduce ACA premiums in the hopes of eventually securing a waiver to reroute those lost federal dollars.
“The (administration’s) argument was keep Vermonters paying more so that theoretically we can show that we achieved savings,” she said. “I found that disgusting quite frankly.”
She’s frustrated that collaborative work has become partisan. Black had championed a number of the provisions included in H.585.
Sen. Ginny Lyons, D-Chittenden Southeast, who leads the Senate’s healthcare committee, said she was “dumbfounded” by Scott’s veto, especially after he has campaigned on affordability and efforts to lower property taxes, which she says S.190 could have done.
“I think he’s prioritizing insurers over individual people,” she said.
Republican leaders in the House and Senate did not respond to requests for comment.
Mike Fisher, the state’s healthcare advocate, worries the political battle at the heart of the veto distracts from bipartisan efforts already in-motion to pull down hospital prices across insurance groups.
“Vermonters are being priced out of getting care. We are hearing from more and more Vermonters who have very poor coverage or no coverage at all, and are scrambling to know what to do when they get sick,” he said, “We have to have political fortitude to do this work, and I sure hope the governor’s veto is not a sign of a lack of commitment.”
