Blue Cross Gets Rate Hike, But Is It Enough? Vermonters Face Higher Premiums Amid Insurer's Financial Crisis
While the rate increase provides desperately needed revenue, BCBSVT leadership and state regulators agree it will not, on its own, solve the insurer's profound financial problems.
State regulators approved a double-digit rate increase for Blue Cross Blue Shield of Vermont (BCBSVT), a critical step in the insurer's fight for financial survival. But as Vermonters brace for higher insurance bills, the pressing question remains: Is this latest hike a lifeline that can pull the state's largest insurer out of its financial tailspin, or just a temporary patch on a deeply wounded healthcare system?
The Green Mountain Care Board (GMCB), which oversees insurance rates, granted BCBSVT a significant, albeit reduced, increase for its large group plans. The insurer, which covers over 230,000 Vermonters, had requested a 17.3% increase for employers with 100 or more workers. In a decision announced Thursday, the board trimmed that request, approving a formula that projects to an average increase of approximately 13.7%.
This decision directly impacts thousands of employees at Vermont's larger businesses. While the exact premium change will vary for each employer based on their specific experience, the underlying message is clear: the cost of health coverage is going up, substantially.
For the tens of thousands of Vermonters who buy insurance on the Vermont Health Connect marketplace as individuals or small businesses, a decision on their rates is still to come later this year. However, if the large group decision is any indication, they too should prepare for a significant price jump.
Is It Enough to Save BCBSVT?
In a word: no. While the rate increase provides desperately needed revenue, BCBSVT leadership and state regulators agree it will not, on its own, solve the insurer's profound financial problems.
"Until Vermont's healthcare leaders come together to address our state's soaring costs head-on, premiums will continue to rise," BCBSVT CEO Don George has stated publicly, framing the issue as a systemic crisis, not just an insurance problem.
The rate hike is one part of a mandatory capital restoration plan BCBSVT is operating under with the Department of Financial Regulation (DFR). The insurer's financial reserves, which act as a crucial safety net to pay claims, have been decimated by four straight years of staggering losses totaling nearly $152 million. The insurer lost a staggering $62.1 million in 2024 alone, plummeting its reserves from a healthy $133.5 million in 2019 to just $58 million by the end of last year.
This financial bleeding led to a credit downgrade and forced BCBSVT to take a $30 million loan and affiliate with the larger Blue Cross Blue Shield of Michigan to help shore up its stability. Officials are clear that while they are not on the brink of bankruptcy, the situation is precarious. The approved rate increases are essential to begin the slow process of rebuilding those reserves to a level regulators deem safe.
How Did We Get Here? A Perfect Storm of Costs
The roots of this crisis are deep and tangled, with no single villain. For years, a combination of factors has been brewing, creating a perfect storm of financial pressure:
Soaring Healthcare Costs: This is the primary driver. BCBSVT reports that claims paid for its members have surged 17% annually since 2020. It points to Vermont's hospital prices, particularly for outpatient care, being among the highest in the nation. The escalating cost of prescription drugs, especially new, high-cost treatments, has also added immense pressure.
More People, Sicker Patients: In the wake of the pandemic, Vermonters are seeking more medical care, and they often have more complex conditions. This increased utilization, combined with high prices, means the total bill for healthcare has skyrocketed.
Premiums Lagging Behind Costs: For several years, BCBSVT has argued that the premium increases approved by the GMCB were not enough to cover the blistering pace of rising healthcare expenses. The GMCB, tasked with the difficult job of balancing insurer solvency with consumer affordability, often approved rates lower than what was requested. This gap between income and expenses was covered by the insurer's reserves, which have now all but vanished.
A Unique Market: Vermont's health insurance market has very little competition. BCBSVT holds a dominant 89% of the individual market, with MVP Health Plan being the only other option on the state exchange. This dynamic, coupled with a complex regulatory environment where one state body (DFR) oversees solvency and another (GMCB) controls rates, has created a challenging landscape.
What Will This Mean for the Average Vermonter?
For those in large group plans, the impact will become clear during their next open enrollment period. For individuals and small businesses on Vermont Health Connect, their fate will be decided in the coming months. Last year, the GMCB approved similarly painful increases, but the impact was uneven.
Many Vermonters who qualify for federal subsidies saw those subsidies increase, blunting the financial blow. However, for middle-income individuals and families who earn too much to qualify for assistance, and for the small businesses that are the backbone of Vermont's economy, the full weight of these "painfully high" increases falls on them, making affordable health coverage an ever-greater challenge.
In trimming the large group request, the GMCB cited recent state action to cap the cost of hospital-administered drugs and ordered the insurer to account for budget enforcement actions against hospitals that overspent. This signals a growing consensus that the only sustainable path forward involves tackling the underlying cost of care itself.
For now, Vermonters are left watching and waiting, caught between the necessity of keeping their largest health insurer afloat and the ever-increasing strain on their own wallets. The latest rate hike provides some breathing room for BCBSVT, but it is a symptom of the crisis, not the cure.