Gov. Phil Scott on Tuesday vetoed a bill that sought to speed up reference-based pricing — one of lawmakers’ most significant efforts this session to lower health care costs — arguing that any savings generated through state regulation of hospital prices should be shared by all Vermonters who buy health insurance, not just a select group.
In a veto message to lawmakers, Scott said “basic concern for fairness is the primary reason for this veto.”
“Vermont will not solve its affordability crisis by directing savings to some payers while excluding others,” Scott said. He said the proposal, S.190, may have overstated potential health care savings and would have created “unnecessary complexity, inequity, and cost.”
The bill was lawmakers’ latest effort to rein in Vermont’s soaring health care costs through reference-based pricing, a system that would cap what hospitals can charge for certain services by tying payments to a benchmark, often a percentage of what Medicare pays for the same care. It would have accelerated that approach by allowing the Green Mountain Care Board, Vermont’s health care regulator, to set hospital payment limits beginning next year for plans sold through Vermont Health Connect and for school employee health insurance.
Scott argued in his veto letter that the board already has the authority to reduce hospital revenues and incorporate those reductions into insurance rates. He pointed to previous board actions that cut hospital revenues and said regulators should continue pursuing reductions that “apply across all payers,” as directed by state statute.
Supporters viewed Vermont Health Connect and school employee health plans as logical starting points because the state has direct authority over them and both have faced growing affordability pressures. Vermont Health Connect covers individuals and small businesses that buy insurance through the state marketplace, while school employee plans are tied to local education budgets. Lowering premiums in those markets could help consumers and also reduce pressure on property taxes.
Sen. Ginny Lyons (D-Chittenden-Southeast), who sponsored the bill, said she was surprised by the governor’s decision, noting that the measure had previously received broad support among Republicans when it passed the Senate. She also rejected Scott’s argument that the bill’s potential savings were unclear.
“The governor apparently wants to protect insurance companies rather than Vermonters struggling to pay for health care,” she said.
Lyons said the veto would delay relief for Vermonters who could have benefited from lower premiums, including educators, school employees, small businesses and individuals buying coverage through Vermont Health Connect.
“It’s a very sad day,” Lyons said.
Scott’s decision comes as Vermont faces mounting pressure over health care affordability. Hospital budgets, insurance premiums and medical costs have all climbed sharply in recent years, straining household budgets, employers and taxpayers. Last week, UVM Health announced it was laying off 76 employees and restructuring another 66 positions, in large part because of budgetary pressures.
Scott said he intends to pursue other health care reforms through executive action, including portions of H.585, a broader health care affordability package that failed to gain traction in the legislature.
Lawmakers are not currently scheduled to return for a veto session, when lawmakers could attempt an override.