September Newsletter: The Tsunami of Health Care Costs

Rising health care costs in Vermont have emerged as a pressing economic and social challenge, with an outsized impact on working families across the state. As premiums and out-of-pocket expenses surge well above national averages, many households are grappling with financial strain that extends beyond medical bills to influence decisions on housing, education, and daily necessities.

Vermont families are facing some of the steepest health insurance premiums in the nation. As of January 2024, the average monthly premium for individual marketplace plans stood at $874, among the highest nationwide and more than double the national average even after accounting for subsidies. After federal subsidies, this figure drops to $243 per month, yet it remains the sixth-highest in the country, underscoring how even subsidized costs outpace those in roughly 40 other states. For families, the average annual cost of health insurance coverage reached $25,588 in 2023—double what it was a decade earlier and $1,500 higher than the U.S. average.

These figures translate to a significant portion of household income; in rural areas where median incomes hover around $65,000, health care can consume 10-15% of earnings, forcing families to cut back on essentials or accumulate debt. Recent premium hikes exacerbate this strain. Regulators approved the below increases which far exceeding the national average increase of 7% over this time period.

2024 and 2026 Premium Increases

	BCBS-VT 2024	BCBS-VT 2026	MVP 2024	MVP 2026
2024 Individual Plans	19.8%	23.3%	14.2%	6.2%
2024 Small Group Plans	22.8%	13.7%	11.1%	7.5%

The BCBS-VT increases are being driven by rising pharmaceutical costs, higher utilization of services, and the need to rebuild depleted reserves. While MVP's requests are more modest; combined, these hikes could push many families over the edge. Over the past six years, the monthly cost of a typical marketplace plan has doubled from $474 in 2018 to $948 in 2024, reflecting a relentless upward trajectory.

The expiration of enhanced federal premium tax credits at the end of 2025 poses an additional threat, affecting over 30,000 Vermonters who rely on Vermont Health Connect. Without renewal, premiums could surge by an average of 75% nationwide for ACA plans, compounded by a proposed 20% increase from insurers due to inflation, labor shortages, and medication costs. Specific examples illustrate the human impact: A single 50-year-old earning $30,000 annually might see their monthly premium jump from $12 in 2025 to between $105 and $142 in 2026. For a 64-year-old couple with a $90,000 income, costs could escalate from $638 to $2,724 per month for comparable coverage. These jumps not only strain budgets but also risk increasing the uninsured rate, currently one of the lowest in the U.S. at around 4%, as families opt out of coverage altogether.

If federal subsidies are extended, projected increases could moderate to 15.61% for BCBSVT individual plans and a slight decrease for MVP. Yet, without broader reforms—such as addressing pharmaceutical pricing, staff shortages, and unnecessary utilization—the trajectory remains unsustainable. BCBSVT alone reported a $62.1 million loss in 2024, highlighting the fragility of the system.

Rising health care costs are eroding the financial stability and well-being of Vermont families, with premiums doubling over recent years and potential cliffs ahead if subsidies lapse. These trends not only amplify economic inequality but also threaten the state's overall health outcomes and economic vitality. Policymakers must prioritize comprehensive solutions, including cost containment and expanded access to preventative services, to alleviate this burden and ensure equitable care for all Vermonters.

All of these reasons are why health care is high on our list of priorities for 2025. Joining it are issues like education, housing, and water quality (probably the biggest hidden liability the state has). Definitely check out our recently released research priorities for this year for more detail.

On behalf of Vermonters,

Pat McDonald
Campaign for Vermont

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