Is Medicare Spending Low in Vermont – or Do We Just Cost Too Much?
VHC911 – Stat v.17
The VHC911 Coalition has shown that Vermonters pay the highest commercial insurance premiums in the US, and that more of their monthly income goes to pay for healthcare than citizens in any other state in the country. While we pay more, the quality of care we receive is largely average, with important deficiencies in measures of safety and mortality at two of our largest hospitals (Does Top Dollar Equal Top Quality in VT Healthcare?). Right next door, citizens in New Hampshire pay the lowest portion of their monthly income for healthcare out of all 50 states, even though we share a border and many Vermonters get their healthcare at Dartmouth.
The largest driver of healthcare costs in the state is hospitals, especially the University of Vermont Medical Center (UVMMC). Many hospital leaders argue that they have to charge high rates to commercial insurers because payments from public insurers such as Medicare and Medicaid are too low. Some even assert that Medicare payments to Vermont hospitals are the lowest in the country, so they have no choice but to charge high rates to commercial insurers to cover their costs.
For example, in a June 12, 2025 email from Jason Williams, the head of UVMHN’s public relations, he explained why they charged so much for drugs under the 340b program this way: “Commercial insurers are charged more by hospitals to cover losses from Medicaid and Medicare patients—especially in Vermont, where Medicaid reimbursements in their totality are among the nation’s lowest.” (emphasis added)
Relying on the excuse of low reimbursement rates from Medicare has helped Vermont’s hospitals avoid the critical discussion of whether their operating costs are simply too high.
What the Data Shows
Publicly available data from the Centers for Medicare & Medicaid Services (CMS) shows that Vermont does not have the lowest Medicare spending in the country (Medicare Spending Per Beneficiary - State | Provider Data Catalog). CMS presents this standardized data as a ratio showing how spending per beneficiary in each state compares to the national average, shown as a median of 1.0. If a state receives lower than average payment, then their ratio will be less than 1.0. States that receive higher than average payment will have a ratio greater than 1.0. Medicare spending per beneficiary is ranked for all 50 states (Figure 1).
Figure 1. Medicare spending per beneficiary (MSPB) at the state level CY 2023
VT is ranked #33 out of 50 states and is similar to NH (#31), meaning that Medicare spending per beneficiary is similar in VT and NH. Medicare spending per beneficiary is even lower in ME (#42) than either VT and NH, which further erodes the excuse that loss from Medicare payments is compounded by Vermont having so many senior citizens (Maine has even more). The bottom line is that Vermont’s high costs for commercial health insurance cannot be justified by low Medicare reimbursement.
We gain more insight when we look at Medicare spending per beneficiary for each of VT’s six largest hospitals compared to 2,918 hospitals across the nation, using the most recent data released by CMS (CY 2023). As with the state comparison in Figure 1 above, CMS compares each hospital to the national median of 1.0 to show whether Medicare spends more, less, or about the same for an episode of care (episode) at a specific hospital compared to all hospitals nationally. An episode of care includes Medicare Part A and Part B payments for services provided by hospitals and other healthcare providers the 3 days prior to, during, and 30 days following a patient's inpatient stay. The payments included in this measure are price-standardized and risk-adjusted. Price standardization removes sources of variation that are due to geographic payment differences, such as wage index and geographic practice cost differences, as well as indirect medical education (IME) or disproportionate share hospital (DSH) payments. Risk adjustment accounts for variation due to patient age and health status (Medicare Spending Per Beneficiary - Hospital | Provider Data Catalog).
Figure 2. Medicare spending per beneficiary (MSPB) at the hospital level CY 2023
These results show variation among VT hospitals with respect to what Medicare pays for patient care. Medicare payments for Rutland Regional Medical Center (RRMC), Southwestern Vermont Medical Center (SVMC), and UVMMC are similar to the national average. Northwestern Vermont Medical Center, Brattleboro Memorial Hospital, and Central Vermont Medical Center are in the lower 15th percentile for the level of payment they receive from Medicare.
What is also clear from both the state and hospital level Medicare data is that VT hospitals are not the lowest paid hospitals in the U.S. The results also highlight that UVMMC, the largest driver of healthcare costs in the state, receives average Medicare reimbursement. The high rates they charge to commercial insurers (and the high commercial profits they make) cannot be justified by the claim of low Medicare reimbursement.
Instead of blaming Vermont’s high health insurance costs on low Medicare reimbursement, hospital leadership should ask why their costs are so high. Afterall, in 2023, over 75% of 106 academic medical centers in the country reported breaking even or a financial gain caring for Medicare patients (UVMMC Benchmark to Medicare — VT Healthcare 911). Vermont’s hospitals need to look closely at their cost structures and strive to come closer to breaking even on Medicare reimbursement instead of continuing down the road of making significant profits and driving double-digit increases to commercial insurance each year.
In Case You Missed It
As hospital budget season heats up the Vermont media keeps turning to VHC911 for comment:
WCAX’s 802 News podcast hosted by Mark Johnson – Culture Shift at UVM Health Network? (no subscription needed)
Burlington Free Press – UVM Health Network CEO grapples with how to make health care affordable in Vermont (subscribers only)