Vermont Governor Signs Executive Order to Revise Health Insurance Pricing

On Wednesday, Governor Phil Scott signed an executive order designed to ease health insurance regulations in Vermont, aiming to reduce costs. A key initiative is the introduction of age-based insurance premium pricing. Governor Scott noted at a press conference that these changes are proven measures that have lowered costs and increased insurance options in other states.

This executive order follows Governor Scott's veto of the legislative proposal S.190, which targeted healthcare cost control. The Governor emphasized the need for broader cost savings rather than focusing on limited groups purchasing insurance. The order revives proposals from earlier this year, targeting reduced insurance expenses for small businesses and younger demographics.

Under the new measures, insurers in Vermont can set premiums partially based on age. Vermont and one other state historically did not permit this, aiming for balanced premiums across all age groups. The absence of age-based pricing often led younger individuals to opt out due to higher costs. Kaj Samsom, commissioner of the Vermont Department of Financial Regulation, mentioned that age rating aligns with increased healthcare use as people age.

The executive order directs the Department of Financial Regulation (DFR) to develop a plan for insurers to adjust premiums based on tobacco use. Samsom can authorize commercial rate adjustments up to 20%, differing from Medicare or Medicaid plans. This move aims to enhance risk management and align with anticipated regulatory compliance requirements.

Another component of the order seeks to simplify forming group insurance pools for small businesses, a practice halted in 2020 due to its potential impact on the state's Affordable Care Act marketplace. While reintroducing these plans requires legislative support, the administration is encouraged to expand options within existing regulatory limits.

Additionally, the order tasks Samsom's department with exploring new tax incentives to help small businesses provide health insurance or access plans through the Affordable Care Act marketplace. This initiative supports the insurance carrier ecosystem by potentially broadening the payer base.

However, Vermont health care advocate Mike Fisher expressed concerns that age-rating could shift costs from younger to older populations. He also worried about potential destabilization of the Affordable Care Act market if businesses seek alternative plans. Fisher argued that while some may benefit from lower-cost plans, it could increase prices for those remaining in the market.