Vermont House approves expansion of access to Medicaid, Medicare

The Vermont House voted Tuesday to give preliminary approval to a bill that would expand access to federal health insurance programs for Vermonters up to age 21, pregnant residents and older Vermonters.

The bill, H.721, also directs state officials to examine the possibility of a more ambitious expansion of its Medicaid program, one that would make thousands more Vermont residents eligible for publicly funded insurance programs. 

“The cost of health care impacts all Vermonters, leading to delayed care, stressing people’s livelihoods and increasing personal debt,” Rep. Lori Houghton, D-Essex Junction, the bill’s primary sponsor, said on the House floor Tuesday night. “H.721 builds on a successful insurance program — Vermont Medicaid — so our most vulnerable young adults, pregnant individuals and older Vermonters can receive the care they need.”

Most significantly, the bill would expand the state’s Medicare Savings Programs, initiatives that offer subsidies to help older Vermonters pay for Medicare, the federal program that offers health insurance to Americans 65 and up.

When low-income Vermonters on Medicaid turn 65, they become covered by Medicare. But once on Medicare, the subsidies available to pay for health insurance have much stricter income limits.

Many low-income Vermonters are eligible under the income thresholds for Medicaid, a state-run program partially funded through federal dollars, but find that, when they turn 65, they earn too much to be eligible for subsidies to pay for Medicare. Those residents face what’s called the “Medicare cliff” — meaning they find themselves suddenly on the hook for higher health care costs.

H.721 would increase the income limits for Medicare payment subsidies, called Medicare Savings Programs, in an effort to eliminate the sudden increase in costs for older Vermonters. That provision would cost the state an estimated $15 million in state funds annually and is expected to lower health care costs for over 19,000 Vermonters. 

Multiple states, including New York, Massachusetts and Maine, have increased income limits for Medicare Savings Programs. Vermont’s expansion would take effect in January 2026, or upon federal approval, whichever comes later.

Mike Fisher, Vermont’s health care advocate, who testified in favor of the legislation, hailed the bill’s progress. 

“I think it’s a really important bill,” Fisher said. “I would call it the largest expansion of full coverage for Vermonters that has happened since, I think, 2010 or 11 when we complied with the Affordable Care Act.”

For Fisher, the most important piece of the bill is its investment in expanded Medicare Savings Plans. That investment will make a tangible difference in the lives of thousands of Vermonters and help draw down millions in federal funds, he said. 

But expanding care access for young and pregnant residents is also “good policy,” he said.

The bill would expand the age limit for Dr. Dynasaur, a Medicaid-funded health insurance program for children, to 21 — up from the current age limit of 19. 

Dr. Dynasaur is available to Vermonters whose family income is up to 317% of the federal poverty level, which currently works out to $7,925 monthly for a family of four. (The poverty level currently used to calculate eligibility is $2,500 per month for a family of four.) Increasing the age limit would mean that roughly 1,800 Vermonters aged 19 and 20 would become newly eligible for the program.

The bill would also expand the income threshold for Medicaid for pregnant Vermonters, from 213% to 317% of the federal poverty level. That new eligibility is expected to cover roughly 660 Vermonters. 

The two Medicaid provisions would cost an estimated $6.9 million in state money per year and would begin in January 2026.

If passed, the legislation would also direct the state Agency of Human Services to study a much broader expansion of the state’s adult Medicaid program. That expansion, if implemented, would increase the current income limit of adult Medicaid from 138% of the federal poverty level to 317% of the federal poverty level by 2030. 

If enacted today, that change would raise the income threshold for Medicaid from $3,450 a month to $7,925 a month for a family of four.

House lawmakers gave initial approval to the bill Tuesday night with a 92 to 39 vote. 

When introduced in January, the bill included an ambitious expansion of Medicaid that would have made thousands of Vermonters up to the age of 65 newly eligible for the program. 

By the end of February, that Medicaid expansion had been trimmed and replaced with the Agency of Human Services study, although the Medicare Savings Programs remained intact. 

But by mid-March, lawmakers had returned some pieces of the Medicaid expansion relating to pregnant Vermonters and 19- and 20-year-olds. Then last week, the House Ways and Means committee added an amendment raising corporate taxes and securities registration fees to help pay for the new expenditures. 

The legislation still needs the approval of the Senate before heading to the governor’s desk, and Gov. Phil Scott has not weighed in on this specific bill.

Asked Wednesday at his weekly press conference whether he would veto a trio of bills, including H.721, that include recent tax increases, Scott declined to give a hard answer.

“We’ll see what they look like,” he said. “But I’ve said I’m not in favor of raising taxes and fees.”