Last fall, regulators aggressively cut into hospital budgets in a bid to bring Vermont’s sky-high health care costs under control. This year, the Green Mountain Care Board is signaling they’ll continue leaning hard on hospitals to reduce spending.
Members of the five-member board, which oversees hospital budgets, are at work on guidance that would tell hospitals to charge private insurers 1% less in 2027 than they are this year. While it’s rare for the cost of anything to actually go down over time, GMCB Chair Owen Foster says that’s the only way long-sought reforms will actually come to fruition.
It’s been a goal for a decade, he noted, for Vermont to move more care out of hospitals and into cheaper settings.
“We're never going to do it unless we actually start having smaller numbers,” he said.
Vermont’s 14 nonprofit hospitals have objected to the proposed guidance, and argued that they can’t balance the books without some revenue growth when the cost of business — and in particular labor — keeps going up.
“People take care of people, and many of our staff, clinical staff, are under labor contracts that have been set well in advance of this year's guidance,” Vermont Association of Hospitals and Health Systems CEO Mike Del Trecco said in an interview.
The Green Mountain Care Board’s posture reflects the Vermont regulatory landscape’s laser focus on the costs of private health insurance. Vermonters face some of the highest premiums in the country, and the rising cost of claims threatened to put the state’s largest insurer, BlueCross BlueShield, out of business.
To ease the financial burden on hospitals, Del Trecco said regulators are also contemplating giving them some new flexibility. Previously, the board capped the revenues that hospitals could bring in from all insurers — public or private. This year’s guidance would only restrict what hospitals can bring in from commercial insurers, which would give providers some room to get additional revenue out of publicly insured patients.
About half of all insured Vermonters are covered by private payers like BlueCross BlueShield, MVP or Cigna. Medicare and Medicaid take care of the rest.
Regulators also want some hospitals — those that are comparatively cheap — to actually do more business, if that means drawing patients away from higher-cost settings. Foster noted that while the general guidance the board issues may instruct hospitals to bring in less revenue from privately insured patients, the individual budget orders that the board issues later this fall will likely give certain facilities more room to breathe.
Mike Fisher, Vermont’s chief health care advocate, said that in an ideal world, he’d like the board to be even more aggressive about reducing hospital prices. But he thinks regulators may be reaching the upper limit of what they can ask of providers.
“This is a tough balancing point, because I'm afraid if we went higher or much higher, that it would have, you know, real, immediate negative impacts on the availability of care in communities,” he said.
