Health care advocates warn Vermont system ‘on the precipice,’ point to hospital costs and insurer stress

Mike Fisher, chief of the Office of the Health Care Advocate, told a legislative committee on Jan. 16 that Vermont’s health care financing system is under deep strain and requires policy action to prevent facility closures and large cost hikes.

Fisher said Vermont is approaching a tipping point: “I fear that we are really on the precipice of that,” he said, describing sustained pressure from high prices at hospitals and across the system. He said the pressures show up in insurers’ financial statements and bond‑rating actions and warned the state cannot rely on a new federal funding stream to rescue the system.

Fisher and other legislators cited specific warning signs. Fisher referenced a recent communication about Blue Cross bond‑rating concerns and said UVM Health Network reported revenues in excess of expenditures last year (the briefing cited figures reported to state regulators). He said the cost pressures were likely to push insurers to seek substantial premium increases this year; he said, “I'm expecting a 20% rate increase.”

Advocates argued the core policy problem is provider prices, particularly at larger hospitals, and called for consideration of tools to control prices and move funds toward primary care and community providers. Fisher said provider rate setting (sometimes discussed as reference‑based pricing) is a necessary tool to rebalance where money flows in the system if Vermont wants to shore up clinics, primary care and other services.

Legislators at the briefing echoed calls for coordinated, cross‑sector action. Several speakers said Vermont needs a convening table of state leaders, regulators, providers and payers to assess the crisis, weigh tradeoffs and accept changes to preserve essential services. One legislator said the Oliver Wyman (Hamre) report and Green Mountain Care Board findings indicate a systemic problem and urged collective action rather than assigning blame.

Fisher noted the political and technical difficulty of policy changes but emphasized urgency: hospitals and parts of the delivery system that do not have enough revenue risk closure or insolvency. He said state policymakers will need to weigh difficult choices about allocation of scarce resources.

HCA staff said they support several policy measures being discussed this session, including provider rate setting for public employee plans, private‑equity regulation in health care and continuing work on Medicaid dental coverage for adults. They also pointed to prescription drug pricing and pharmacy benefit manager activity as major federal‑level cost drivers that constrain state options.

No formal decisions were taken at the briefing; the session was a staff presentation and question period that flagged the need for follow‑up work by legislators, state agencies and regulators.