2-6-14 – Here’s Why Health Insurance Premiums Keep Increasing

by John McClaughry

If you’ve ever wondered why taxes keep creeping up in this state, you’ll be interested in the story of the health insurance claims tax.

In 2008 the legislature passed a bill to authorize a Health Information Technology plan.

Somebody asked, so how are we going to pay for this? The answer was to invent a new tax of one fifth of one percent of all health insurance claims. Three years into this program the plan required even more money, so in 2011 the legislature -many of whose members regularly intone that “health insurance is not affordable” – quadrupled the tax rate on claims, which Gov. Shumlin signed into law.

Vermont Digger reported last Wednesday that the governor has proposed essentially to double that health claims tax rate,  not to again expand the Health Information Technology Plan, but to fill the hole left by paying to maintain Vermont’s health insurance exchange – the one that doesn’t work.

The state’s two large insurance carriers told the legislators that this will hit them up for around $10 million a year, that they’ll have to eat this year, and then increase premiums to cover the new tax’s cost next year.

So to finance his health insurance exchange that has already eaten up $170 million dollars, Gov. Shumlin wants to double the tax on health insurance claims that he quadrupled just three years ago. And most of us will wonder why health insurance premiums keep going up.

John McClaughry is the founder and current vice-president of the Ethan Allen Institute.

{ 2 comments… read them below or add one }

Bob Frenier February 7, 2014 at 6:07 pm

In addition to what John wrote, a key element in the rise of health care costs is our insulation from any costs we incur individually. How many of us who are insured ask the cost of whatever procedure or test our doctors recommend? Hey, we’re insured, right? We paid our premium, so it’s time to get some value out of that monthly payment! When few of the customers of a service care about the cost, and the suppliers of that service don’t know either because each insurer pays a different rate, then the only mystery is why we’re mystified about the rise in prices.

It will be interesting to see if the increase in high deductible policies under Obamacare creates more cost awareness on the part of consumers, leading (hopefully) to published prices and some healthcare shopping.


paul hudson February 8, 2014 at 9:57 pm

Dear EAI, The health care claims tax and all the other pick-pocket schemes of the VT Legislator and governor are exactly why my wife and I are now Floridians. My family has had its roots in VT for over 200 years, but enough is enough. There is no plan of government for this year, the next 5 years or 10 years. Those of us who live a fiscally responsible life are laughed out of the room by the dreamers. Well, it’s all yours, good-bye,


Leave a Comment

Previous post:

Next post:

About Us

The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.

Latest News

VT Left Wing Media Bias Unmasks Itself

July 24, 2020 By Rob Roper Dave Gram was a long time reporter for the Associated Press, is currently the host of what’s billed on WDEV as a...

Using Guns for Self Defense – 3 Recent Examples

July 24, 2020 By John McClaughry  The Heritage Foundation’s Daily Signal last week published eleven news stories about citizens using a firearm to stop a crime. Here are...

FERC ruling on solar subsidies could help Vermont ratepayers

July 21, 2020 By John McClaughry Last Thursday, the Federal Energy Regulatory Commission finalized its updates to the Public Utility Regulatory Policies Act (PURPA), in what the majority...

The Moderate Left’s Stand for Free Speech

July 17, 2020 By David Flemming Harper’s Magazine, a long-running monthly magazine of literature, politics, culture, finance, and the arts, is hardly what you would call a ‘politically...

Trump’s Regulatory Bill of Rights

July 16, 2020 by John McClaughry “President Trump [last May] issued an executive order entitled  ‘Regulatory Relief to Support Economic Recovery.’ The executive order includes a regulatory bill...