Gov. Phil Scott has vetoed , a healthcare bill designed to fast-track premium savings for two groups of insurance customers: public school employees and people buying plans on Vermont鈥檚 Affordable Care Act marketplace.
The bill was one of the few healthcare reform initiatives the Legislature passed this session.
It would have sped up the state鈥檚 ability to begin using a cost-saving tool called reference-based pricing, but only for those two groups of insurance buyers.
In a Tuesday Scott said he intends to use executive action to instead push forward parts of an insurance reform bill his administration put forward this session.
Scott cited fairness throughout the insurance marketplace as the primary reason for his veto.
鈥淰ermont will not solve its affordability crisis by directing savings to some payers while excluding others,鈥� he wrote in his Tuesday letter. 鈥淟asting progress will require structural reforms that expand affordability, increase choices, and ensure savings are shared broadly across the system.鈥�
Rep. Alyssa Black, D-Essex Town, who chairs the House鈥檚 healthcare committee and championed S.190, was incensed that the governor vetoed a bill she said his administration had been integral to creating, alongside her and other healthcare policy experts.
鈥淚t鈥檚 almost like he鈥檚 taking revenge. It felt vengeful,鈥� she said. 鈥淗ow he vetoes something that was the one final step in everything that we have done collaboratively for two years, I cannot wrap my head around it.鈥�
Reference-based pricing ties insurers鈥� payments to hospitals to an external benchmark 鈥� usually a percentage of the rates that Medicare pays hospitals. In 2025, lawmakers to implement reference-based pricing for all of the state鈥檚 hospitals. However, that change requires the Green Mountain Care Board, the state鈥檚 main healthcare regulator, to go through a rulemaking process, which would not be finalized by the start of the coming hospital fiscal year in October, delaying the pricing reform implementation.
Lawmakers aimed to expedite that with S.190. The bill proposed giving the care board the ability to direct hospitals to implement reference-based pricing for two health insurance groups: public school employees and people who buy coverage on Vermont鈥檚 Affordable Care Act marketplace.
Yet Scott wrote that targeting those specific insurance markets chafes against the Green Mountain Care Board鈥檚 to share cost savings equally among insurers and the insured.
Kaj Samsom, the commissioner of the Vermont Department of Financial Regulation, which regulates insurers and closely followed the bill, emphasized the point.
鈥淭o take such a significant hospital revenue reduction and focus it just on a minority of Vermonters was problematic,鈥� he told VTDigger in May, before the bill was passed.
The care board still has the regulatory power to trim hospital budgets this summer 鈥� it just won鈥檛 have the ability to direct those savings at specific insurance buyers, as S.190 proposed.
鈥淭his care board has shown no hesitancy to find savings,鈥� Samsom said in May. 鈥淚 guarantee you that with or without reference-based pricing, the care board is going to drive down hospital revenue and insurance like they always do, in the existing framework.鈥�
Scott echoed Samsom鈥檚 rationale in his letter, writing that the care board has called for $40 million in hospital revenue reduction this fiscal year 鈥� following last year鈥檚 , which, in turn, led to smaller commercial insurance rate increases.
鈥淚 urge the GMCB to follow-through with that policy and generate the same level of savings it otherwise would have achieved while ensuring those savings benefit all payers,鈥� read Scott鈥檚 letter.
But Black said Scott鈥檚 plan wouldn鈥檛 generate meaningful savings for insurance customers.
鈥淲e ran those numbers, and there would be no discernible effect on premiums. None,鈥� she said of the further hospital revenue cuts. Spread evenly across premiums, those savings would be marginal, she said.
Black said lawmakers chose to target teacher insurance because those costs are borne by property tax payers. And with the loss this year of , people who buy Affordable Care Act marketplace plans have also faced increased costs worth targeting, she said.
Instead, Scott expressed his intention to bring back reforms his administration put forth in a different healthcare bill, , that did not become law. That bill sought to allow insurers to charge different premiums based on age and the state鈥檚 small businesses to form insurance buying pools, among other reforms. H.585 was widely supported by Democratic lawmakers in the House before it died in the Senate.
The state鈥檚 chief healthcare advocate, Mike Fisher, said he鈥檚 disappointed the governor vetoed the reference-based pricing bill. But he said the veto doesn鈥檛 derail the years-long work of reducing hospital costs and health insurance premiums, which last year鈥檚 reference-based pricing law still sets in motion.
鈥淢y main message needs to be: veto, not veto 鈥� it doesn鈥檛 change the dynamic. We still have the most expensive insurance rates in the country,鈥� Fisher said. 鈥淭he task of reducing prices to make sure Vermonters aren鈥檛 priced out of the ability to get coverage is a big, big job, and we can鈥檛 afford missing a year.鈥�
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