Green Mountain Care Board tells appropriations committee Vermont health system faces acute financial strain

The Green Mountain Care Board told the Vermont House Appropriations Committee on Feb. 20, 2025, that the state’s health-care system is under acute financial strain as hospital prices, utilization and declining insurer reserves are driving rapid premium increases that threaten access and the solvency of some providers.

Board Chair Owen Foster, testifying with Executive Director Susan Barrett, said the board has reduced hospital budgets in recent years and reallocated money to primary care and other community services but that those steps may not be sufficient to stabilize the system. “We have a system wide view, and I would argue that all of our decisions are interconnected with the rest of the health care system,” Foster said. “We don't regulate many, many, many, many facets of the health care system,” he added, to clarify the board’s authorities.

The board told the committee that the state’s overall health-care spending is roughly $7 billion to $8 billion and that hospital budgets reviewed by the board total about $3.7 billion. Foster said the board enforced budget limits in recent years: in fiscal year 2023 the board’s enforcement reduced charges that would have been borne by commercial payers by roughly $90 million; in fiscal year 2024 it reduced hospital budgets by about $50 million; and in fiscal year 2025 it reduced budgets by approximately $145 million, saying those reductions were intended to lessen commercial insurers’ cost exposure.

Why this matters: committee members were shown charts linking rising premiums and employer/education plan losses to the state budget and property taxes. Foster and Barrett said insurer reserves have declined sharply and that some hospitals and other community providers — including Federally Qualified Health Centers and mental-health agencies — have very low days-cash-on-hand, putting service continuity at risk.

The board outlined several drivers of Vermont’s cost increases: high hospital prices relative to national peers, pharmaceutical costs, and rising utilization and acuity. Foster emphasized the limits of the board’s authority on some items (for example, Medicare and Medicaid rates, out-of-state providers and many non-hospital providers) and said hospital price is one lever the board can directly influence. “The only thing you can control really in all these is hospital price,” he told the committee.

Committee members pressed the board for more granular explanations of utilization increases and service-line drivers; Foster said the board’s hospital-budget team is three staffers reviewing 14 budgets and that it does not have bandwidth to perform detailed national comparisons across service lines. “We do it at a high level,” he said. The board instead reviews expense growth, administrative costs, provider productivity and clinical quality as part of each budget review.

Witnesses also raised the impact on public and employer plans: Foster said the State of Vermont’s employee health plan lost about $40 million after rate increases and that a sample Blue Cross family plan shown to the committee had a platinum premium near $50,000 for a family of four plus roughly $15,000 in out-of-pocket costs under some scenarios. Federal subsidies that currently lower individual-market costs are set to expire at the end of the calendar year unless extended, the board noted.

Foster and Barrett recommended state-level prioritization of services and funding to protect primary care, local emergency and urgent care, mental health and long-term care as interdependent pieces that support hospitals. Foster said the state should avoid allowing community-based providers to fail, because their collapse would increase emergency-department use and further destabilize hospital finances.

The committee also heard data on insurer solvency. Foster described declines in reserve metrics for a major carrier and noted some hospitals now have 30 to 50 days cash on hand or less, while a few have substantially higher reserves. The board told the committee that a healthy range for the metric they referenced is about 1.25 to 1.75 (as presented in the board’s slides), and that values below the lower bound create rapid vulnerability.

The board and committee members acknowledged there are no simple fixes; Foster said pharmaceutical pricing is difficult for the state to control, utilization and acuity have complex causes, and protecting community providers will require systemwide policy choices and funding. He told the committee the board will continue to prioritize reallocating funds to primary care, mental-health and long-term care where possible and urged legislative action to coordinate statewide priorities.

The committee did not take formal votes during the session; the board’s remarks described prior, formal budget orders it has issued in past fiscal years.