Sen. Cummings: New insurance rating system will be bad for many Vermonters
August 4, 2026To the Community:
The average Vermonter doesn’t pay much attention to the ins and outs of insurance rate setting, nor should they. However, Gov. Phil Scott’s recent proposal to move to an age-based rating system for health insurance will make an already painful situation worse for most Vermonters.
Age-based rating is not a new idea; it is one Vermont abandoned decades ago. Insurance rates are based on two factors: the cost of delivering the service and the number of individuals in the insured pool to absorb that cost. The bigger the pool, the lower the cost per individual.
Vermont is a small state, which gives us a relatively small pool over which to spread the risk. Vermont once allowed the market to rule. Insurance companies could offer relatively low-cost health insurance to young, healthy people. People who were older and sicker paid substantially more. I believe it was under Gov. Richard Snelling that Vermont decided to move to a community rating system. Under this, our present system, insurance companies are required to base their rates on the cost of providing services to everyone in the state, and the risk is spread over everyone. The result is that healthy, generally younger people pay the same rates as older, less healthy people.
The governor’s proposal would allow insurance companies to charge lower rates for younger, healthier people, and higher rates for everyone else. He has proposed a cap of 20% up or down. That would be great for young families, but how many older, sicker people can afford to pay 20% more?
Rather than enacting a divisive system that would pit one group of Vermonters against another, the Legislature has been focused on reducing the cost of health care, the primary reason for the increased cost of health insurance in Vermont. Our costs are being driven by the cost of maintaining our small rural hospitals that are struggling to survive financially and the rates charged by our largest hospital system, University of Vermont Health. The UVM network of hospitals and healthcare providers provides excellent care. Nobody wants to change that. Unfortunately, they also charge some of the highest rates in the country. It has been well publicized that the Legislature has been working with the Green Mountain Care Board and UVM Health to bring those rates down.
We have also been working with our small rural hospitals to help them transition into the needs of today’s world and regain financial stability. The process has been slow and sometimes frustrating, but we are making progress. This year, we began reference-based pricing for some hospital services. Under this system, hospitals are limited to a percent increase above Medicare rates.
It was our hope that any savings realized from this change would be applied to the premium costs of those who recently lost their federal health insurance subsidies and to the cost of teachers’ health insurance. The cost of health insurance is a leading driver in the increased cost of education property taxes. The governor vetoed that bill. Instead, he has proposed an age-based system.
Sen. Ann Cummings
Montpelier
Sen. Cummings, D-Washington, chairs the Senate Finance Committee and is a member of the Senate Health and Welfare Committee. A Montpelier Democrat, she is running for re-election in the Aug. 11 state primary.