Scott signs order opening door to age-based health insurance pricing

The order comes after Scott rejected S.190, the Legislature’s most ambitious health care cost proposal this year.

Gov. Phil Scott on Wednesday signed an executive order aimed at reducing health insurance costs by loosening several state rules, including a move that would let Vermont insurers set premiums partly by age.

The order comes after Scott rejected S.190, the Legislature’s most ambitious health care cost proposal this year. In vetoing that bill, he argued that savings should be spread across the health care system rather than targeted toward certain groups of insurance buyers.

At a Wednesday news conference, Scott said the ideas in the order were widely used in other states and were intended to expand affordable coverage options, strengthen insurance markets and lower expenses. The package is built largely from proposals his administration first outlined in January and is focused especially on small businesses and younger people purchasing coverage.

One of the central changes would allow age-based pricing in Vermont’s commercial insurance market. Vermont is one of only two states that currently prohibits age rating, a policy meant to keep premiums the same across age groups. Supporters of the ban have argued that older adults tend to cost insurers more, while younger adults often pay more than they use in care and may decide to go uninsured if prices climb too high.

Kaj Samsom, commissioner of the Vermont Department of Financial Regulation, said age rating reflects the basic reality that health care use tends to rise with age. Under the order, Samsom could authorize commercial insurers to raise or lower premiums by up to 20% from the age-neutral rate. The change would not apply to Medicare or Medicaid.

The directive also tells DFR to develop a way for insurers to vary rates based on tobacco use.

Another part of the order seeks to make it easier for small employers to band together in group insurance arrangements. Vermont limited some of those plans in 2020 over concerns that they weakened the Affordable Care Act marketplace risk pool and pushed costs higher for the people who stayed in it. Bringing those plans back would require lawmakers to act, but Scott instructed his administration to use existing authority to broaden options where possible.

The governor also directed Samsom’s department to look for new tax incentives that could encourage small businesses to provide health coverage to workers or help them get it through the Affordable Care Act marketplace.

Health care advocate Mike Fisher criticized the approach, saying the age-rating proposal would shift costs from younger buyers to older ones rather than spread savings evenly. He also said expanding alternatives outside the Affordable Care Act market could make the remaining pool less stable.