by Timothy McQuiston, Vermont Business Magazine Blue Cross Vermont CEO Don George reiterated in an open letter this week for the need for major health care reform, as the financial system in support of it continues to lose ground. He noted that the insurers are suffering, providers must keep raising rates and patients are paying the price in both dollars and access. He said the underlying fundamentals are not sustainable. George sent a letter in mid-January to key healthcare stakeholders discussing the dire situation of Blue Cross Vermont in particular and the state's healthcare industry in general.
BlueCross BlueShield of Vermont has reported that it lost over $62 million in 2024, as health care expenses rose more than 15% compared to the prior year. BCBSVT lost $24 million in 2023, $46 million in 2022, and $17 million in 2021.
It’s the fourth year in a row expenses from patient claims exceeded income from premiums for the insurer, BCBSVT stated. Blue Cross Vermont covers over 230,000 Vermonters.
Meanwhile, the long-serving Blue Cross Vermont CEO announced in February that he would be stepping down at the end of this year.
Dear Colleagues and Community Leaders,
In January, I shared the significant financial challenges facing Blue Cross and Blue Shield of Vermont and the related, larger issues undermining the sustainability of Vermont’s healthcare system. I outlined how the ongoing and unrelenting, multi-year cost surge – driven by escalating prices for hospital services and extraordinary markups in prescription medications – depletes our member reserves, driving up premiums for our members, and impeding affordability. I also asked you to join us in advocating for cost constraints and system-wide reform that’s long overdue.
Grateful for Support
The response has been overwhelming, and we are grateful for the support from stakeholders across Vermont. Thank you to the many who reached out commending our transparency and our data-driven recommendations for mitigating this cost crisis. Overwhelmingly, our members continue to choose our health plans, despite high prices, because they value our comprehensive coverage and commitment to personal service. We’re honored by their ongoing trust and grateful to serve them.
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. We are encouraged by discussions among leaders across our state and confident in our collective conviction to lower costs and fight for affordability for all Vermonters.
Steps Toward Recovery
Since January, we have continued to stabilize our organization through immediate and long-term actions, that include:
- 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 insured marketplace.
- Continuing to offer the highest quality health plans and customer service to our members.
- We’re also proposing and supporting broader, systemic changes in our healthcare system. Our data shows that we must constrain the prices of healthcare services and prescribed medications. As a result, we urged the Green Mountain Care Board to implement hospital/payer-specific revenue caps – an important step toward affordability.
It’s important to acknowledge that Blue Cross VT’s financial challenges developed over a prolonged period, fueled by high hospital prices, increased utilization, increased care intensity, and fully funded premiums that were insufficient to cover escalating claims. Additionally, we’ve seen an increase in members with complex care needs and catastrophic conditions. 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, supporting their care experience and offering them peace of mind. The high costs of these claims, however, requires a significant and steady draw on our finances.
Collectively, these factors led us to a precarious position. In 2024, our member reserves fell to $58.4 million or 213% risk-based capital (RBC) with the inclusion of a $30 million loan, triggering regulatory solvency oversight by the DFR. Our contribution to reserves (CTR), or the portion of member premiums placed into our reserve fund, is currently approved at 7% of premiums. The DFR will determine when we can return to normal funding levels.
While we’re confident in our disciplined financial management and our actions to stabilize our organization, recovery will be precarious and won’t happen quickly. It’s dependent not only on our efforts but changes across Vermont’s health care landscape, including significant payment and delivery system reform. Despite some positive developments in the first quarter of 2025, 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. The cost of healthcare is putting tremendous pressure on Vermonters – our people, our businesses and organizations that fund benefits, and our economy. It’s simply unsustainable.
Agreement Between the GMCB and UVMHN
The recent settlement between the UVM Health Network and the Green Mountain Care Board offered compromise and a chance to reset. However, the agreement does not change the 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. 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.
Prioritizing Vermonters
Vermont’s healthcare affordability crisis is far from over, and the escalating urgency and shared responsibility of cost containment remains. None of us can do it alone.
Together, we face a long road ahead – one that demands systemic transformation. We must be honest about the magnitude of our problems and the pressures they place on families, our health system, and our economy. We also must take responsibility for our individual roles in our state’s healthcare affordability crisis, as well as our obligation to address that issue, and to do so now. Vermonters and Vermont employers and organizations urgently need relief. Only through difficult decisions, meaningful change, and the unwavering commitment of all Vermont healthcare leaders can we ensure a future of reliable and affordable care for Vermonters.
Sincerely,
Don
Don George | President and CEO
Blue Cross and Blue Shield of Vermont
5.2.2025.