State officials warn Vermont health system faces fiscal strain; Oliver Wyman report and Act 167 work to guide changes

Jenny Samuelson, secretary of the Vermont Agency of Human Services, Owen Foster, chair of the Green Mountain Care Board, and Emily Brown, deputy commissioner of insurance at the Department of Financial Regulation, told the Healthcare Reform Oversight Committee on Nov. 22 that Vermont’s health system is under sustained financial pressure and that the state is pursuing a mix of payment reforms, hospital transformation work and targeted investments under Act 167.

The officials said insurers and providers have seen a sharp rise in claims and utilization since the COVID-19 low, leaving insurers with monthly losses and hospitals with dwindling reserves that threaten service lines in some communities.

Why it matters: Committee members were shown data and a set of recommendations from the independent Oliver Wyman review commissioned under Act 167. The report and the state’s subsequent work are intended to map options — including the federally negotiated AHEAD model, hospital global budgets and targeted investments in primary care, mental health and long-term care — to sustain hospitals, protect access in rural areas and slow premium growth.

State and regulator overview

Jenny Samuelson, secretary of the Agency of Human Services, said the agency, the Green Mountain Care Board and the Department of Financial Regulation are coordinating on the Act 167 charge, which asked them to evaluate multi‑payer payment models, global hospital budgets and stakeholder engagement. "I'm Jenny Samuelson, the secretary for the Agency of Human Services," she told the committee as the presentation began.

Owen Foster, chair of the Green Mountain Care Board, described a years‑long effort to understand system fragility and the budget pressure facing hospitals. "We have not lost the hospital in Vermont," Foster said, adding that the state has preserved hospital access to date but at growing fiscal cost.

Emily Brown, the Department of Financial Regulation deputy commissioner who oversees solvency work, said Blue Cross Blue Shield of Vermont — the state’s domestic carrier — is recording much higher per‑member costs now than during COVID lows: "we're seeing $839 per member per month" in 2024, she said, explaining that the number covers most lines of business (excluding blue card, federal employee plans and Medicare primary).

Key findings and financial signals

- Rising claims and utilization: Officials reported a substantial claims surge since the pandemic low; prescription drug costs, outpatient use and greater acuity from delayed care were cited as early drivers.

- Insurer stress: DFR said the carrier has reported month‑to‑month losses driven by underfunded premiums and unexpected claim experience.

- Hospital finances: Foster showed that hospital revenue has grown far above the all‑payer model targets (3.5–4.3% annual growth), noting the state has spent hundreds of millions more than those targets. Hospital days cash on hand have declined, a basic measure of financial health; Foster said the decline is worrying even though no Vermont hospital has closed.

- Community providers: Presenters reviewed examples from federally qualified health centers and behavioral‑health providers showing steep declines in days‑cash‑on‑hand and multi‑million‑dollar operating losses at some sites. Community Health Centers of Burlington was cited as an example of days‑cash falling from about 145 to 62 and a multi‑year operating loss that officials described as unsustainable.

Oliver Wyman recommendations and state response

The independent Oliver Wyman review produced a menu of recommendations for the Legislature, the Agency of Human Services and the Green Mountain Care Board. Foster and Samuelson said the report’s findings overlap with earlier work the state has been doing and provide a basis to prioritize actions. The state is pursuing a mix of approaches rather than a single silver‑bullet model.

Major themes from the report and the agencies’ presentation:

- No single federal model meets all needs: Officials said different federal options (for example, AHEAD/REACH and other multi‑payer arrangements) may need to be paired or adapted to Vermont’s priorities.

- Global hospital budgets: The Green Mountain Care Board has drafted a customized global budget methodology and submitted a draft to federal partners; officials described the approach as complex and noted tradeoffs between capping hospital revenue and downstream impacts on Medicaid and commercial markets.

- Targeted investments: The presentation highlighted priorities such as substance use disorder services, mental health, long‑term care and primary care. Samuelson noted state programs already under way — for example, crisis services and increased youth mental‑health capacity — and framed payment reform as one element of a broader transformation.

- Regionalization and service line planning: Oliver Wyman recommended assessing whether some services should be consolidated into centers of excellence by region; the agency is planning a contractor‑led process to work hospital‑by‑hospital on locally appropriate transformation plans.

Policy and operational considerations discussed

Committee members raised the timing and practical risks of making system changes while providers are already thinly resourced. One senator warned that services in some communities could be lost within months if immediate steps are not taken. Officials acknowledged the urgency, and said some near‑term stabilization funding and targeted actions are already underway while the longer policy and regulatory work continues.

Other operational items discussed included reference‑based pricing for commercial payers, simplifying Certificate of Need and licensing processes, improving electronic health record interoperability, EMS regionalization and workforce scope‑of‑practice changes. Foster cautioned that aggressive, rapid reference‑based pricing targets could be disruptive and urged careful calibration.

Provisions and uncertainties called out in the meeting

- Premiums and subsidies: Foster and others emphasized that individual market premium subsidies are scheduled to change after 2025 and that a sunset of federal subsidies would raise premiums for many Vermonters and could increase uninsured rates, which would in turn create financial pressure across the system.

- Medicaid and safety‑net funding: Multiple presenters said Medicaid is a major payer for safety‑net providers and that Medicaid reimbursement has limited capacity to absorb the rapid expense growth providers are seeing.

- Implementation risk: Officials described significant operational and staffing requirements to implement global budgets or federal models, and said federal negotiation timelines and changing administration priorities add uncertainty.

What happens next

Officials said the state is moving to (a) finalize an approach to negotiated federal participation if it is feasible and aligned with Vermont priorities (for example, AHEAD elements related to primary care and behavioral health), (b) contract for hospital transformation assistance to operationalize regional plans and (c) continue regulatory and budget work at the Green Mountain Care Board to balance affordability and provider sustainability. The Agency of Human Services also said it will deliver legislative reports and that some analyses (for example, an EMS assessment and a telecom/telehealth report under Act 119) will come forward in the months ahead.

The committee left the meeting with agreement among members and presenters that the state must act in several domains — payment models, targeted investments, regulatory adjustments and near‑term stabilization — and with the recognition that coordination across agencies will be central to any successful approach.

Ending note: The presenters repeatedly framed the work as collaborative and iterative; Foster said the Oliver Wyman report provides a menu of options rather than a single prescription and urged the Legislature and agencies to prioritize based on feasibility, community impact and the state’s ability to resource transformation.