The sense of urgency that dominated last month’s joint hearing on Vermont’s crumbling healthcare system has translated into fast-moving legislative action—but even lawmakers acknowledge the proposed changes will be hard and may strain an already challenged system.

Following powerful testimony about solvency threats facing hospitals and insurers, and the unsustainable financial load carried by employers, the Legislature is advancing three healthcare bills with wide-ranging implications: H.482, S.63, and S.126.

Senate Works to Advance H.482: Emergency Authority to Prevent Collapse

The Senate Health and Welfare Committee continues to review H.482, which would temporarily give the Green Mountain Care Board (GMCB) emergency powers to reduce payments to hospitals under specific circumstances—specifically if a domestic insurer is facing an “acute and immediate” solvency threat. The reductions would apply only to hospitals with recent operating surpluses and over 135 days cash on hand.

Another provision would authorize the GMCB to appoint independent observers to hospitals that misrepresent data or deviate from approved budgets. Hospital leaders have expressed concern that these moves could damage and destabilize already struggling institutions. Still, lawmakers insist that temporary measures are needed to stave off deeper collapse.

House Committee Acts on S.126: Cost Cap and Structural Reform

The House Health Care Committee has advanced S.126, a sweeping reform bill with both immediate and long-term implications. Central among them is a short-term measure to reduce hospital budgets by 2.5% for FY26, by October 2025. While this is intended to offer near-term relief to commercially insured Vermonters, the reduction will likely require hospitals to make steep budget cuts next year, adding further pressure to a system already operating on razor-thin margins.

Beyond the cap, S.126 sets the stage for broader structural reform. It directs the GMCB to develop a new hospital sustainability plan, lays the groundwork for potential reference-based pricing, and calls for investments in primary care to reduce long-term costs.

S.63 Tightens Oversight on ACOs and Health IT

Also voted out of House Health Care is S.63, which strengthens oversight of Vermont’s Accountable Care Organization (ACO) and shifts coordination of the state’s health information technology (HIT) plan to the Department of Vermont Health Access. The GMCB would retain final approval authority, but the bill is designed to increase transparency and clarify roles in a fragmented regulatory environment.

No Easy Fix—and No Clear Lead

What unites all three bills is a shared acknowledgment that Vermont’s healthcare crisis is not theoretical—it is unfolding in real time. Employers are preparing for another round of double-digit premium increases, and hospitals are bracing for constrained revenue. With no single entity clearly empowered to balance system stability, affordability, and access, legislators are acting out of necessity—but with uncertainty about whether the interventions will go far enough, or too far, in a system already at the breaking point.

Business on the Brink

The Vermont Chamber continues to hear from businesses facing impossible decisions. Health insurance costs are cannibalizing other investments, employees are shouldering more of the burden, and many employers worry they’ll soon be forced to drop coverage altogether.

Stabilization, if it’s possible, won’t be painless. But doing nothing is not an option.

A joint hearing of the Senate Health and Welfare and House Health Care Committees made it clear that Vermont’s healthcare system is beyond warning signs—it is in active crisis. Testimony from the Green Mountain Care Board (GMCB), Agency of Human Services (AHS), and hospital leaders revealed a system in financial freefall, with both insurers and providers facing mounting pressure from solvency threats, skyrocketing costs, and growing gaps in care access.

Leaders from across the healthcare landscape shared stark realities: more than half of Vermont’s hospitals are operating at a loss, and Blue Cross Blue Shield of Vermont, the state’s only remaining domestic insurer, is under analysis by the Department of Financial Regulation (DFR). One number captured the urgency: $200 million. That is the amount BCBSVT says it needs by July to avoid double-digit premium increases and to cap 2025 rate hikes at 5%. Without it, businesses and their employees could face yet another year of devastating cost escalation.

In a critical moment of testimony, GMCB member Jessica Holmes articulated the unsustainable load employers have carried: Vermont’s declining commercial population is shouldering a disproportionate burden because the system “has essentially been financed by the high prices paid by the commercially insured population and their employers. They cannot afford to do so any longer.” Her comments underscored the central tension in the crisis—businesses are being priced out of a system that relies on their continued contributions to stay afloat.

Senate Reviews an Emergency Powers Bill, Passed by the House

The Senate Health and Welfare Committee is reviewing H.482, a House-passed bill that gives the Green Mountain Care Board temporary emergency powers to stabilize Vermont’s healthcare system.

One provision would allow the Board, with input from the Department of Financial Regulation, to reduce insurer payments to hospitals if a domestic insurer faces an “acute and immediate” solvency threat. Reductions would apply only to hospitals with over 135 days cash on hand and a recent operating surplus. Testimony questioned the fairness and accuracy of this metric, with some calling for a higher threshold and exemptions for Critical Access Hospitals.

A second provision would let the Board appoint an independent observer if a hospital misrepresents financial data or breaks its budget. Hospital leaders warned this could hurt bondholder confidence. Lawmakers are considering clearer definitions and safeguards to avoid unintended financial harm.

Who’s in Charge?

Even as the crisis intensifies, fundamental questions persist: Who is responsible for making the decisions that will prevent system collapse this summer? Oversight is fragmented among the Legislature, the Governor’s administration including the Agency of Human Services and DFR, and the GMCB, leaving no single entity clearly empowered to intervene in ensuring the balance between insurance solvency and support for hospital systems that are critical to communities, at the speed the moment requires.

The lack of a designated crisis authority has fueled concern among lawmakers and advocates alike. Vermonters and Vermont employers deserve clarity on who holds the reins. Without decisive leadership and accountability, the system’s stability and the financial wellbeing of the state’s business community remain at risk.

Impact on Vermont Employers

Without intervention, Vermont employers could face premium increases of 20% or more for a fourth consecutive year. That would force businesses to reduce benefits, shift more costs onto employees, or forgo coverage altogether. At the same time, staffing shortages, care delays, and hospital instability could hinder employee health and hiring efforts statewide. The Vermont Chamber remains deeply concerned  about the economic ripple effects. The business community cannot continue to subsidize a collapsing system without support or reform.

Legislative hearings in both the House Health Care Committee and Senate Health and Welfare Committee have brought sharp focus to the growing instability of Vermont’s healthcare system. Testimony from providers and advocates painted a clear picture: the system is “speeding toward a cliff,” and without swift intervention, employers and their employees will bear the brunt of the fallout.

A potential 20% insurance premium increase, following three years of double-digit increases, is just one piece of a worsening financial puzzle. Businesses across the state would face higher costs with few alternatives for affordable coverage. However, the implications extend well beyond higher premiums: Vermont faces a $300 million loss in Medicaid funding, as well as the potential loss of one or both of its commercial insurance carriers. The exit of either—let alone both—would be catastrophic. Businesses would be left with drastically limited options, and the broader employer-based insurance market could collapse under the weight of increased risk and cost.

Meanwhile, regional hospitals are also at risk. The possible closure or downsizing of local facilities would force employees to travel farther for care, create delays in treatment, and reduce the quality and availability of health services—key concerns for employers striving to maintain a healthy workforce and recruit new employees. While the Senate-passed healthcare reform bill contains elements of long-term structural reforms, testimony made clear that it fails to address the immediate challenges now threatening the system’s solvency.

Legislators also highlighted those who hold responsibility for charting a path forward. Rep. Lori Houghton stressed the importance of clarifying roles, noting that not everyone involved has the authority to enact changes, and that Vermonters deserve to know who to hold accountable. Decision makers including the Governor, his administration, those in the Legislature, as well as the hospitals, insurers, and the Green Mountain Care Board, are all responsible for making challenging decisions to quickly stabilize the system.

The Vermont Chamber remains deeply concerned about the ripple effects this crisis could have on the state’s economy. Without short-term interventions to stabilize costs and coverage, employers may face untenable benefit expenses, workforce health challenges, and increasing difficulty recruiting and retaining employees. As these critical policy discussions continue, the Chamber urges all decision makers to prioritize immediate action to prevent collapse.

The Senate Health and Welfare Committee is considering significant healthcare reforms aimed at increasing access and affordability. The legislation calls for a statewide healthcare delivery plan, directing the Green Mountain Care Board (GMCB) and the Agency of Human Services (AHS) to identify ways to expand access, reduce administrative burdens, and address service gaps. Business groups and insurers support this effort, provided it builds on existing planning structures and remains practical, cost-conscious, and transparent.

Strategies to create a centralized clinical and claims data system to improve efficiency and collaboration are also part of this plan. However, ensuring comprehensive Medicare data integration, quality, continuity, and cost-effectiveness before implementation remains vital.

The committee is also considering hospital budget oversight and payment reform, directing the GMCB to explore reference-based pricing (RBP), a model that ties commercial hospital rates to a percentage of Medicare prices. Stakeholders have expressed concerns over this transition, highlighting the need for both hospital and payer input, phased-in implementation, and safeguards against unintended consequences.

The inclusion of total cost of care targets and global hospital budgets has prompted calls for alignment with existing models and additional resources to maintain access and quality. Concerns remain about implementation without a federal agreement on Medicare payments and ensuring rural hospitals remain financially stable.

The bill also expands the GMCB’s regulatory authority and staffing, allocating new funding to the board rather than reallocating existing resources. Some stakeholders warn that the proposal could lead to rigid mandates, tying hospital service reductions directly to lower health insurance premiums.

While insurance rates are not the primary focus of this bill, lawmakers hope these system reforms will ultimately help control costs and increase efficiency in the healthcare system. The Vermont Chamber continues to advocate for solutions that promote affordability, sustainability, and limit regulatory burden for Vermont employers and employees.

Last year’s staggering 19% increase in commercial health insurance rates remains top of mind for businesses as affordability priorities are debated in Montpelier. These rising costs have compounded challenges for employers already struggling to absorb double-digit increases in property taxes, the payroll tax, and a variety of new regulations from the past year.

Following Governor Scott’s budget address, Speaker Jill Krowinski emphasized healthcare as a critical factor in the affordability conversation that requires action this year. This week, a new coalition, VHC911, emerged, calling on the legislature and administration to address healthcare reform. At a press conference, the group highlighted Vermont’s commercial insurance costs compared to neighboring states but did not propose specific policy solutions. If the current state of housing and education finance has made anything clear, it’s that inaction on growing issues can lead to dire consequences.

As the House Health Care Committee and Senate Health and Welfare Committee explore solutions, several opportunities for progress remain. Legislators, administration officials, and healthcare leaders must collaborate to develop a balanced reform plan. Additionally, bold and innovative workforce solutions are needed to address the demographic and labor shortages affecting not only healthcare but all industries in Vermont.

As discussions continue, the Vermont Chamber will advocate for solutions that balance affordability, access, and sustainability in Vermont’s healthcare system.