Vermont Education Health Initiative projects 11.9% increase in health plan rates

Vermont school districts can expect another year of fairly steep insurance increases, according to the Vermont Education Health Initiative's proposed rate increases for fiscal year 2026.

The VEHI board of directors authorized its management team to file FY26 rates for its health benefits program with the Vermont Department of Financial Regulation during its Oct. 22 meeting, citing a proposed average premium increase for active employees and their dependents of 11.9%.

The board also voted to hold the FY26 dental rates at FY25 levels, despite sharing an increase had been recommended by its actuary.

VEHI is a nonprofit organization that provides health insurance to current school district staff in Vermont, as well as retired teachers and their dependents, totaling over 34,000 members.

The estimated rates are lower than last year's 16.4% average increase, which VEHI board members Suzanne Dirmaier and Mike Fisher said in a Friday email statement was the result of a number of factors.

"(Those) include that Humira, a very expensive specialty drug, will go out of patent and thus be available in biosimilar form, and that hospital budgets were adjusted downward by the Green Mountain Care Board. VEHI has also seen some of its efforts to lower costs continue to be effective. Specifically, the use of Remedy Analytics returned a million dollars to offset costs," the two wrote.

VEHI announced the proposed rates in a Tuesday letter alongside an explanation of the increase, citing the inflationary impact of rising hospital budgets and prices, sharp increases in the cost of prescription medications and a higher rate of utilization of services post-COVID.

The letter noted that inpatient and outpatient hospital services account for 55% of VEHI's total spending and prescription medications account for about 20%.

"VEHI is not in the business — and never has been — of seeking or making a profit. Nearly 90% of every premium dollar is dedicated to paying medical and (prescription medication) claims. In FY25, VEHI projects to pay out, on average, $6.4 million a week in claims. The remaining 10% of revenue, roughly, is allocated to vital services, ... programs (like PATH), standard administrative expenses (for Blue Cross Blue Shield of Vermont and VEHI), and mandatory state and federal fees," the letter read.

Rutland City Public Schools Chief Financial Officer Ted Plemenos said he, like many others across the state, was expecting an average increase of closer to 15% or 16% based on assumptions made by the state.

Last month, Republican Gov. Phil Scott released a letter in which he noted the state may face a 7% increase in property tax rates in FY26 because of VEHI costs and other pressures, even if districts kept school funding flat.

"That number obviously will come down," Plemenos said. "That number was most likely contingent upon an assumption that was closer to a 15% or 16% increase (in VEHI premium increases.)"

Plemenos added that for a district like RCPS, which spends millions of dollars on its health care plans, a reduction of 3 to 4 percentage points will save the district a few hundred thousand dollars.

"When you look at the fact that our total budget is $64 million this year, you could say, 'Well, $200,000 or $300,000 is a small percentage overall,' but (that) typically represents two or three staff positions. That's a help that we welcome," Plemenos said.

The letter also identified that throughout the course of the next year, VEHI intends to reexamine its current plan designs and look for new opportunities to provide comprehensive coverage at more affordable prices.

It further outlined plans to look at how many plans VEHI should offer in the future, ways to reduce administrative complexity for subscribers and central offices and increased telehealth options and capacity, among a series of other cost-reduction topics.

"The board and VEHI leadership are always looking into ways to manage costs while providing the necessary services its members need," Plemenos said. "(But) this is the first time I've seen in memo form a more detailed description of some of those initiatives."

Proposed rate increases are dependent on available data on hospital budgets, utilization trends and more and are subject to change before finalization in the first quarter of the new year.

Decisions on the rate filings are expected from DFR in January.

sophia.buckley-clement

@rutlandherald.com