Committee hears support for H.35 to keep individual and small-group insurance markets separate

The House Health Care Committee on Jan. 22 heard testimony supporting H.35, the bill to make permanent the current separation of Vermont's individual and small-group commercial insurance markets. Mike Fisher, a healthcare advocate, told the panel that "the HCA supports this bill as drafted," and urged lawmakers to maintain the unmerged marketplace.

Committee members and witnesses framed the measure as a stability step while federal premium tax credits remain uncertain. Sarah Teachout, representing Blue Cross and Blue Shield of Vermont, told the committee that "Blue Cross strongly supports passage of this legislation to keep the 2 markets separate permanently," saying the change makes the state's approach more similar to other states and eases future responses to federal policy shifts.

The bill would preserve the current market structure that was put in place temporarily after a prior federal change. Emily Brown, Deputy Commissioner of Insurance at the Department of Financial Regulation, told the committee that DFR "supports the bill and maintaining the unmerged market, the status quo as it is now, for the foreseeable future," and urged quick legislative action because of upcoming regulatory and rate-setting deadlines.

Why it matters: witnesses said federal policy could change after 2025, possibly ending enhanced premium tax credits, and that outcome would affect how many people can afford plans and how insurers set rates. Mike Fisher and others pointed to an analytical report presented to the committee estimating roughly 32,000 to 34,000 people in the individual market, with about 5,800 above 400% of the federal poverty level who could lose tax credits if federal enhancements are not extended. Fisher described the "cliff at 400% of poverty" under the Affordable Care Act and said losing enhanced credits could mean substantial increases in premiums for some families.

Testimony described trade-offs if markets were remerged: witnesses said remerging could lower some individual premiums slightly but would push small-group premiums higher. Insurers and regulators said that uncertainty complicates rate-setting: Blue Cross said it and the Green Mountain Care Board plan to file two rate scenarios for next year (one with federal subsidies continuing and one without), and Emily Brown said DFR needs time to file any federal notifications and requested the committee move quickly.

Committee members asked questions about timing and consequences. Witnesses and members repeatedly cautioned that H.35 does not change federal subsidy rules; it preserves the current state structure so Vermont can respond to future federal developments without a disruptive midstream market change.

The committee chair indicated the panel hoped to hold final markup and vote on H.35 at its next session, and invited any remaining witnesses to submit written testimony in the interim. No formal committee vote was recorded during the hearing.

The hearing also included informational remarks about the Department of Financial Regulation's role, licensure of pharmacy benefit managers, and the limited number of state-regulated insurers in Vermont's fully insured commercial market (Blue Cross and Blue Shield of Vermont, MVP and Cigna were listed as active carriers).