by Auditor of Accounts Doug Hoffer In November 2021 we issued a report laying out a strategy to save substantial taxpayer money by implementing something called “reference-based pricing” for the State employee health care plan. Each year since, we have testified before legislative committees to encourage them to consider this strategy which would save millions annually and spur cost-saving health care reform more broadly.
The most comprehensive analysis completed to date found that the state employee health care plan would have saved $48 million in 2022 alone using the least aggressive reference-based pricing approach.
We are encouraged that the Governor signed Act 68 into law. It includes a requirement that the Green Mountain Care Board implement reference-based pricing for Vermont hospitals by late 2026. The legislation provides little guidance regarding how the new pricing system will be implemented, but the intent is clearly to reduce excessive prices some hospitals charge Vermonters. See Joint Fiscal Office analysis HERE.
We commend the Legislature for advancing reference-based pricing and the Governor for signing the bill. That said, we believe the Scott Administration should proceed with reference-based pricing on a smaller scale now, applying it to the State employee health plan and also possibly the public educators’ health plan.
There are two benefits of moving forward with this limited pool of Vermonters rather than waiting for the larger reform:
- Vermont taxpayers can begin to enjoy tens of millions in savings now; and
- Implementing reference-based pricing for the State employees will give the Green Mountain Care Board a real-world experience to learn from. Any lessons learned can be applied to the statewide program they have been tasked to create. Government frequently bypasses opportunities to test out new concepts before going “all in.” This doesn’t need to be one of those cases!
We look forward to monitoring Vermont’s progress on this issue, and we’ll keep you informed.
6.25.2025.
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