Health insurance companies are proposing more modest rate increases for 2026 plans offered on the state marketplace than in recent years. But health care regulators say the proposed costs are still insurmountable to many people purchasing insurance after three years of double-digit rate hikes.
Insurers testified last week to state regulators on the Green Mountain Care Board to explain their proposed rate increases for plans offered on Vermont Health Connect, the state marketplace. Just over 35,000 individuals purchase health insurance for themselves and their families on the state marketplace, and thousands more are covered under businesses with fewer than 100 employees.
Marketplace rates typically reflect broader trends in the commercial health market, though care board staff note that they aren’t a perfect proxy.
The insurer MVP Health Care proposed raising rates by just under 3% for both individuals and small businesses.
Proposed rate hikes from BlueCross BlueShield of Vermont are much higher — an estimated 15% increase for individuals and 7% increase for small businesses, according to actuaries contracted by the Green Mountain Care Board.
Officials cite the risk of insolvency at BlueCross to explain why the insurer needs to charge customers more money.
“Our financial position is very compromised,” Ruth Greene, the company’s chief financial officer, said during hearings last week. “Our reserves are depleted and we have to avoid any further losses.”
BlueCross reported losing $62 million in 2024, the fourth year in a row that patient claims exceeded income from premiums. Health care costs for the insurer continue to be higher than expected this year.
“It really will be important to see how the whole full year 2025 results pan out before we understand if the premiums from 2025 even were adequate,” Greene said.
Rate requests could have been even higher, insurance companies said. Recent legislation that caps how much most hospitals in the state can charge for specialty drugs helped insurance companies reduce rate increases by about four percentage points, according to public testimony.
For years, premium increases in Vermont have far exceeded the rest of the country. That’s why plans offered on the state marketplace this year are the most expensive in the nation.
Several people who spoke during public comment last week urged the Green Mountain Care Board to reject the proposed rate hikes because of affordability concerns.
“I just feel like Blue Cross Blue Shield, UVM Health Network, they've kind of lost the plot,” said Shasta Fowler, of Montpelier, who works for a social service agency and says their work is compromised by the rising cost of premiums. "This is not going to work for anyone if we can’t afford to live here.”
Expiration of federal tax credits
Many also raised concerns about federal tax credits put in place in 2021 that are set to expire at the end of the year. Those subsidies capped marketplace premiums at 8.5% of income for people who make over roughly $62,000, or four times the federal poverty line.
Without those tax credits, middle- and upper-income earners will have to pay the sticker price for insurance plans, in some cases doubling or tripling their premiums.
Amy Lester of Plainfield said that’s the case for her son, a 28-year-old roofer in Addison County who doesn’t get insurance from his employer. He currently purchases health insurance on the state marketplace and benefits from the subsidies. Lester doesn’t think her son will be able to afford the full cost of a plan next year.
“I can guarantee his truck payment is going to take precedence over health insurance,” Lester said. “And that scares the living s— out of me.”
Without an act of Congress, those changes will go into effect on Jan. 1, regardless of the Green Mountain Care Board’s actions.
During testimony, BlueCross representatives said they estimate over 3,000 people will leave the market as a result of the subsidies expiring. Both MVP Health Care and BlueCross say losing those members, who are generally healthier, are causing 2026 premiums to increase by over 6% more than they otherwise would. That’s in line with estimates from other insurance companies across the country.
The board will issue a decision on whether to approve the proposed insurance rates for next year by Aug. 22.
