Wasserman: Executive order pitfalls

Gov. Scott recently signed an executive order allowing the cost of health insurance premiums to be based on age and tobacco use. This order does not reduce the cost of health insurance as intended. It merely redistributes the overall cost of premiums to favor low-risk people while making it more expensive for the rest. Higher costs will reduce access to care for those who need it most.

Under the governor's order, older Vermonters and those who use tobacco products will pay more for health insurance. These changes are contrary to Vermont's long-held "community rating" which mandates all people in the same group pay the same amount. Prior to establishment of Vermont's community rating, insurers denied coverage to people, refused to cover current and pre-existing conditions, and charged women higher rates than men (given the possibility of pregnancy). Additionally, rapacious insurance companies offered alluringly inexpensive policies that provided woefully inadequate coverage.

Governor Scott's focus on the cost of health insurance fails to address the underlying drivers of high premiums which include skyrocketing hospital costs, over-utilization of Emergency Departments, scarcity of primary care physicians, over-reliance on expensive specialty care, underfunded community-based services, and Vermont's highest-in-the-nation hospital prices.

Yet, the governor recently vetoed legislation that would have fast-tracked implementation of a tool (reference-based pricing) to address Vermont's extraordinarily high hospital prices (S.190). Gov. Scott's order contains significant pitfalls and will result in many unintended consequences, as described below.

The order mandates higher cost "age-based" commercial insurance premiums. However, this mandate will not apply to older Vermonters, most of whom are covered by Medicare, our publicly financed national health insurance program for those age 65 and older.

What are the thresholds for these new "age-based" premiums: ages 40-49, 50-59, and 60-64? Will these higher-cost plans cause Vermonters to leave the state?

With regard to tobacco use, the majority of Vermonters who smoke cigarettes have a high school education or less, and live in lower-income households. Do we want them to pay more for health insurance when they can't afford current coverage?

The governor's order will likely result in increased costs for young Vermonters, the very group whose health insurance premiums he hopes to lower. Vermont's highest vaping use is among ages 18-24, followed by those ages 25-44. Moreover, nicotine pouches (lip pillows) are popular among young Vermonters.

How will the state implement its tobacco use policy? Will there be a different rate for people who occasionally use tobacco versus pack-a-day smokers? Will the policy distinguish between smoking, vaping, and nicotine pouches? And how will the state and insurers determine whether those who deny tobacco use, actually refrain from it? Administrative costs could grow along with the loss of privacy. Do we want to give insurance companies even more access into our personal lives?

Comprehensive health coverage is a societal necessity because all of us are at risk of an accident or an illness.

The purpose of insurance is to distribute financial burdens across a large group of people, ensuring no one person is devastated by high costs. Pooling as many people as possible into one large group (aka "spreading the risk") lowers insurance costs for everyone.

Governor Scott's initiative does the exact opposite by segmenting the market into many small groups, each striving to enroll the healthiest people.

Will this unraveling of community rating usher in untoward practices where employers screen out age 40+ applicants and those who use tobacco? Will the governor employ higher rates for age and tobacco use with state employees, leading to greater costs for both employees and the state who pays their premiums? Will this order undermine the state's health insurance marketplace, turning it into an unaffordable high-risk pool due to the departure of healthy people? Will insurance companies promote seemingly attractive low-cost policies that provide insufficient coverage paired with crushing deductibles?

Simply stated, age-based and tobacco-based insurance policies are discriminatory and inequitable. They are also divisive and adversarial, pitting one group against another.

Vermonters tend to be fair-minded and emboldened with a strong sense of social justice. Gov. Scott's order squanders this goodwill and egalitarian spirit.

Julie Wasserman lives in Burlington.