Earlier this year, Blue Cross Blue Shield of Vermont – the state’s financially beleaguered and largest health insurance company – proposed a new type of plan offering for individuals and families who buy health insurance on their own.

The proposed “Basic Plans” would have featured slightly lower premiums for Individual Market health plans while having slightly higher deductibles and more limited provider options.

They would meet all requirements under federal Affordable Care Act (ACA) regulations and would be offered alongside – not in place of – lower deductible preferred, select and standard plans (see BCBS VT explanation of plan types).

The Vermont Green Mountain Care Board (GMCB), which has broad powers over the health plan choices available to Vermont, expressed skepticism about making more lower premium options available to consumers and deferred taking action on the proposal.

As a result of the delays, BCBS VT decided to withdraw its proposal.

Vermonters will not benefit from more affordable options next year.

What’s in a “Basic Plan?” Basic Plan premiums would have been 5% to 9% less expensive than the current cheapest plan available on Vermont’s Individual Market health insurance exchange (Vermont Health Connect).

The current average “benchmark” health plan (where the insurer pays 70% of costs and consumers pay 30%) costs $1,300 in Vermont, so the Basic Plan option could have saved consumers anywhere from $60 to $117 per month.

That’s a meaningful difference in a state struggling with affordability across the board. Importantly, the plans would likely have kept more people in the individual market risk pool. A bigger risk pool – especially with more younger, healthier enrollees who are the most likely to opt out if prices are too high – generally reduces costs for everyone.

Consumers would need to weigh the differences between Basic Plan design and the standardized plans currently available.

The highest deductible would have been $11,800 compared to the current maximum of $9,000.

Subscribers would have had access to providers in Vermont and contiguous counties in Massachusetts, New York, and New Hampshire (including Dartmouth Hitchcock). Access to specialty providers outside of that area would be limited. Out-of-state emergency care would have been covered.

Why Is Vermont So Restrictive? Most state-regulated health insurance plans offered in Vermont are subject to review and approval by GMCB as well as oversight by the Department of Financial Regulation (DFR).

State regulations limit the choices available to consumers in the Individual and Small Employer Markets. GMCB is also empowered to go beyond ACA regulations by restricting changes to each plan’s deductibles, co-pays, and other features from year-to-year.

This reduces the number of options available to consumers and makes it harder to structure and price plans to satisfy individual circumstances and financial situations.

DFR Commissioner Kaj Samsom supported making the Basic Plans available, saying it makes no sense to require people to choose between a BMW and walking to work when a Chevrolet would do.

Regulators and bureaucrats justify limiting affordable choices by claiming too many choices results in “congestion” and “decision fatigue.” They claim higher deductible plans provide only the “illusion of affordability” rather than keeping people covered and saving them from being exposed to the entire cost of a major medical hospital bill out of pocket.

Few other states (CA, CT, MA) restrict plan options to the same degree as Vermont.

Further, Vermont has many decades-old, counterproductive insurance pricing restrictions that undermine the more balanced approach taken in the federal ACA.

What’s NFIB VT doing about it? NFIB VT strongly supported Governor Phil Scott’s package of health insurance reforms aimed at eliminating outdated regulations, reducing premium prices in a sustainable manner, and increasing the number of affordable options available to small businesses and workers.

For more information Governor Scott’s package and the key reforms supported by NFIB VT, see: VT House Bill 585 Will Deliver Better Health Coverage Options – NFIB.

We will continue to fight for more affordable healthcare options that help small business owners hire, grow, and take care of themselves, their families and their employees.