With the 2026 Vermont Legislative Session concluding at the end of May, we’re diving into issues that impact small business owners in the Green Mountain State.

Our first recap focused on taxes. The second edition looks at two more major drivers of the affordability problem in Vermont: healthcare and energy costs.

Association Health Plans, Affordable Short-Term Plans Fall Short. Governor Scott and Republican legislative leaders proposed a sweeping package (H.585) to improve affordable health coverage options earlier this year, but much of the bill ended up on the floor.

Most disappointingly, House lawmakers killed a proposed expansion of affordable short-term health plans and legalization of Association Health Plans got hung up in the Vermont Senate.

Short-term plans offer more limited coverage at prices 50% to 75% less than fully regulated comprehensive health plans, but strict state regulations effectively prohibit their sale in Vermont. Lawmakers had proposed easing some rules so people could use short-term plans as an affordable stopgap option for up to a year.

Association Health Plans allow multiple small businesses to band together to purchase health insurance. This gives them greater purchasing power and can offer lower rates and better coverage than small employers would get in the small group market. Vermont effectively banned these arrangements in 2019.

Read more about the Scott Administration’s health insurance reform proposal: VT House Bill 585: A Serious Attempt at Health Insurance Reform – NFIB.

Hospital Price Caps, Reinsurance Program Tied Together. Lawmakers approved a package (S.190) to limit what hospitals can charge for medical services to a fixed percentage above Medicare reimbursement levels.

This may reduce costs in the near term but will likely strain rural healthcare systems in the long run and may lead to service cuts.

The lone remnant from Governor Scott’s proposal – a reinsurance program to lower individual health insurance market premiums – was included in this bill. Individual market reinsurance is a state-federal program that uses a mix of state funds and reallocated federal premium subsidies under the Affordable Care Act to more effectively lower premiums across the board.

Seventeen states have utilized reinsurance programs to provide relief, increase competition, and improve access to individual market coverage.

With the highest health insurance premiums in the country, a reinsurance program would stabilize Vermont’s individual market and create more affordable options for consumers.

Governor Scott vetoed this bill over concerns that arbitrary price caps in select markets could lead hospitals to reduce or eliminate services, and that limiting the price caps to only two types of health insurance plans (individual market, schools) will result in higher prices for everyone else. NFIB will continue to advocate for individual market reinsurance to reduce the absurdly high cost of health plans in this market.

Lawmakers Leave Energy Affordability on the Wall. Northeastern states that adopted far-reaching climate mandates in the past decade are starting to come to grips with the expensive reality of those laws.

In its budget this year, New York rolled back its Climate Leadership and Community Protection Act (CLCPA), citing “extraordinary and damaging costs” of implementing the 2019 law without changes.

Despite pleas from Governor Phil Scott and a sometimes-bipartisan mix of lawmakers, Democratic and Progressive leaders declined to rein in Vermont’s version of the CLCPA. This leaves Vermont on a crash course to adopt expensive programs that will likely have no measurable impact on global greenhouse gas emissions but will definitely increase fuel prices and energy bills for Vermonters.

In one of the few major pieces of energy legislation to move this year, lawmakers paired a repeal of the 2023 Clean Heat Tax with funding for a new “Delivered Fuels” database (H.740).

This database would serve as the foundation for a range of carbon tax schemes.

In reality, the Clean Heat Tax law is dormant and cannot be implemented without additional legislative action. As a result, repealing the current statutory language is a largely symbolic gesture while establishing the Delivered Fuel Database sets Vermonters up for higher energy bills down the line.

NFIB Vermont raised concerns about the inevitable energy taxes that would come from this database, as well as the privacy issues for small business owners and families from giving state regulators the power to demand data on individual customer fuel deliveries.

Fortunately, the Vermont House ran out of time and was not able to finish their work on this bill. It is dead for this year but, like other carbon tax schemes, is likely to come back in 2027. Whether it advances depends on the makeup of the Vermont Legislature.