NCPA - National Center for Policy Analysis

Vermont' Drove Out Private Insurers

April 29, 2004

Health insurance mandates in Vermont have driven many private insurers out of the market, forced many more people into Medicaid, and raised insurance premiums, according to the Heartland Institute.

In 1991 and 1992, then-Vermont governor Howard Dean pushed through legislation requiring guaranteed issue and community rating of private health insurance policies in small group an individual markets. In other words, private insurers could no longer charge policyholder based on their age and perceived risk. As a result:

  • Many private insurers have left the state's market; the percentage of the state's uninsured has risen from 9.5 to 9.7 percent.
  • Twenty percent of Vermont's population under the age of 65 is now covered by Medicaid, the second largest percentage in the country (Tennessee ranks first).
  • A private family health insurance policy with a $1,000 deductible now costs a staggering $543 per month in Vermont, compared with to $190 in Pennsylvania and $230 in Connecticut.

The rise in premiums has prompted many younger individuals to drop their private health insurance coverage, and the state has urged parents to drop private coverage for their children and enroll them in the state program. Hence, the cost of Medicaid for Vermont has risen from $86.7 million to $263.5 million, with federal taxpayers picking up about $458 million of the cost.

Current governor Jim Douglas estimates that if no reforms are taken the state will incur a Medicaid deficit of about $245 million by 2009, even if no new patients are added to the state's plan.

Source: Conrad F. Meier, "Health Insurance Meltdown in Vermont," Health Care News, Heartland Institute, March 2004.


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