For the first time since 2023, health insurance premiums for Vermont teachers won’t rise by double digits.
The Vermont Education Health Initiative, a self-insured trust that manages health benefits for about 33,000 school employees and their families, announced proposed premium hikes this month that will average 7.3% next year. In a filing memo, VEHI officials wrote that “bold intervention” from state lawmakers and regulators significantly cut costs and helped prevent premiums from spiking between 15% and 20%.
Rising health care costs have long strained school budgets, but the problem has grown increasingly acute in recent years. Education officials begged Montpelier to act, complaining that a focus on cost-containment reforms in schools that ignored health care was doomed to fail.
The Green Mountain Care Board, which sets hospital budgets in Vermont, acted aggressively this year, reducing the revenue plan for the state’s largest hospital by $88 million. The Vermont Legislature also passed a law this year capping the price that hospitals can charge for certain specialty drugs. Those two measures alone are projected to save VEHI an estimated $24 million next year, the trust said.
Nationally and in Vermont, insurers are also increasingly restricting coverage for GLP-1s, the class of drugs which include Ozempic and Wegovy. VEHI has followed suit, announcing that it would no longer cover the drugs for weight loss alone starting next year, a move that is projected to save the trust nearly $16 million.
Reducing coverage for the popular but expensive drugs was a difficult decision to make, said Mark Hage, a trust manager for VEHI. According to Hage, the cost of the drugs to the trust since their introduction in the market was on pace to climb tenfold, which he said put the group in an “untenable situation financially.”
VEHI’s proposed rates were welcome news to Sue Ceglowski, the executive director of the Vermont School Boards Association — at least relative to the hikes seen in prior years.
“Even so, Vermont’s health benefits costs remain among the highest in the nation, and the burden on school budgets is growing,” Ceglowski said.
In 2018, she added, health benefits accounted for less than 10% of school budgets, but today consume about 15%.
“As the percentage increases, school boards are forced to cut in other areas in order to pay for health benefits, such as opportunities for students and maintenance of school buildings,” she said.
All told, VEHI projects it will spend about $398 million on premiums next year, roughly $27 million more than this year. About 20% of the premium cost is absorbed by school workers themselves, who contribute to their health plans according to the terms of a statewide contract.
The Vermont Department of Financial Regulation typically finalizes VEHI’s rates in January.
