Gov. Phil Scott issued an executive order Wednesday that included a number of measures to decrease health insurance regulations in an effort to lower costs, including implementing age-based insurance premiums.
“None of these ideas are radical,” Scott said in a Wednesday press conference. “In fact, they’re very mainstream, and we know they work, because we’ve seen how these practical reforms have helped other states expand affordable choices, strengthen their insurance markets and reduce costs.”
The order follows Scott’s veto of S.190, the Legislature’s most robust attempt to rein in healthcare costs this year. In vetoing it, Scott cited the need to “focus on system-wide savings for all,” rather than directing savings to specific, vulnerable groups of people buying insurance.
The Wednesday order pulls from a series of ideas Scott and his administration put forward in January. The package largely looks for ways to achieve savings for small businesses and young people buying insurance.
Chief among the governor’s changes is a provision that would allow Vermont insurers to price premiums partially based on age.
Vermont has been one of only two states in the country that does not allow this kind of age rating, a move that aimed to equalize premiums across age groups — though older people generally cost an insurer a bit more, while younger people are generally less expensive. Some see that approach as pricing out young people, who might forgo health insurance altogether if it’s too pricey.
Kaj Samsom, the commissioner of the Vermont Department of Financial Regulation, which oversees insurance in the state, described the basic philosophy Wednesday: “Age rating recognizes that as we get older, you use more healthcare,” he said at the press conference.
The order also tasks DFR with developing a plan to allow insurers to adjust rates based on a person’s tobacco use.
Samsom, as commissioner, can give commercial insurers the ability to increase or decrease rates by as much as 20% compared to what the age-neutral rate would be. The change would only impact people buying commercial insurance, not those on Medicare or Medicaid.
Another provision in Scott’s order attempts to make it easier for small businesses to form group insurance pools. Vermont stopped allowing some of those plans in 2020 due to concerns that they fracture the state’s Affordable Care Act marketplace pool and drive up costs for those who remain. To reintroduce the plans would require legislative approval, but Scott has tasked members of his administration with using their existing authority to expand the options however possible.
The governor additionally tasked Samsom’s department with finding new tax incentives for small businesses to offer employees health insurance or pathways to access it through the Affordable Care Act marketplace.
Mike Fisher, Vermont’s health care advocate, said Scott’s push for age-rating felt like a stark contradiction to the governor’s stated attempt to distribute savings equally.
“The age rating proposal is literally increasing costs for older people in order to decrease costs for younger people,” he said.
Fisher also sees the move to give businesses more options to leave the Affordable Care Act market as destabilizing for those who remain in that community pool.
“You don’t get to give people these options for lower-cost plans without raising the costs for others,” he said.
