Who is on Medicaid? The popular program could be on the chopping block
72 million people in the U.S. are enrolled in Medicaid, the federal and state health insurance program for those who are disabled or low income.
- Blue Cross Blue Shield of Vermont (BCBSVT) faced financial difficulties due to rising hospital and prescription drug costs.
- BCBSVT implemented a recovery plan including expense reduction and support for legislative changes.
- High claims costs, especially from members with complex needs, significantly impacted BCBSVT’s finances.
- While a recent settlement provided some relief, BCBSVT emphasizes the need for long-term solutions to control health care spending.
Blue Cross Blue Shield of Vermont CEO Don George has been ringing the alarm on the finances of the largest health insurance provider since last July, when he sent an open letter via email describing Blue Cross VT’s “fragile financial situation.”
George said the insurer was being battered by escalating prices for hospital services and extraordinary markups in prescription medications, depleting its member reserves, driving up premiums and making health insurance all but unaffordable.
He said Blue Cross VT found itself in the “unprecedented position” of being forced to file an amended request to the Green Mountain Care Board for an additional 4% increase in contributions to its reserve fund, which comes from premiums paid by policy holders. The reserve fund is used to cover unexpected levels of claims, which Blue Cross VT was experiencing.
This week, George sent another open letter via email, thanking “stakeholders” for the overwhelming response to his raising the alarm.
“We want to express our appreciation to our regulators, legislators, government and health care partners across the state for their willingness to advance difficult but meaningful changes for our health system,” George wrote.
Blue Cross VT would like to see revenue caps on hospital expenses
George outlined the steps that have been taken to stabilize Blue Cross VT and avert a crisis:
- Establishing, in coordination with the Vermont Department of Financial Regulation (DFR), a comprehensive capital recovery plan to ensure our long-term stability.
- Expanding the value of our Blue Cross Blue Shield of Michigan affiliation, a key enabler of our mission to make health care work better for all Vermonters.
- Reducing our financial risk in Vermont Blue Advantage, our Medicare Advantage plan.
- Limiting our already lean administrative expenses.
- Actively supporting legislation to protect our members and safeguard our position within the marketplace.
- Continuing to offer the highest quality health plans and customer service to our members.
- Proposing and supporting systemic changes in our health care system, including urging the Green Mountain Care Board to implement hospital/payer-specific revenue caps − an important step toward affordability.
High prices, sicker patients, more patients all lead to financial crisis for Blue Cross VT
Blue Cross VT’s financial challenges were a long time coming, according to George, who said high hospital prices, increased utilization, sicker patients and premiums insufficient to cover escalating claims, all spelled trouble.
“Additionally, we’ve seen an increase in members with complex care needs and catastrophic conditions,” George continued. “In 2024, 15% of our members met these criteria and accounted for 54% of total claims cost. We’re incredibly proud to support Vermonters who are most in need of care. The high costs of these claims, however, requires a significant and steady draw on our finances.”
In 2024, George said that Blue Cross VT’s member reserves fell to $58.4 million, with the inclusion of a $30 million loan, “triggering regulatory solvency oversight by the DFR.” As a result, the portion of member premiums placed into the reserve fund rose to 7%.
“The DFR will determine when we can return to normal funding levels,” George said.
We’ve made some progress, but health care costs remain alarmingly high
While there were some “positive developments” in the first quarter of 2025, George said the cost of care remains “alarmingly high.”
“We currently pay $35 million per week in claims for our members, an amount fueled by hospital and drug costs that show no sign of slowing,” he said. “The cost of health care is putting tremendous pressure on Vermonters − our people, our businesses and organizations that fund benefits, and our economy. It’s simply unsustainable.”
George called out a recent settlement between the UVM Health Network and the Green Mountain Care Board as a “chance to reset,” but not a solution to the rising trajectory of health care spending.
“The $12 million promised to Blue Cross VT to resolve 2022 and 2023 overcharges is an important step, however, these funds are not nearly enough to offset our $62.1 million loss in 2024 or the cumulative millions over the past three years,” George said. “More deliberate, long-term actions are required to limit pricing, curb unnecessary utilization and ensure long-term stability of our organization and our health system.”
Contact Dan D’Ambrosio at 660-1841 or [email protected]. Follow him on Twitter @DanDambrosioVT.
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