Vermont is facing challenges in its health insurance market, with rising premiums despite the state’s high rate of health coverage and reputation for healthy residents. The National Federation of Independent Business (NFIB) Vermont has been examining the issues affecting individual and small group health insurance markets, exploring potential policy solutions to improve options for small businesses and workers.
A recent discussion focuses on Idaho’s “Enhanced Short-Term Plans” (ESTPs), introduced as a response to sharp premium increases in that state’s individual market between 2014 and 2018. After attempts to implement “state-based” plans that did not meet all federal requirements failed, Idaho turned to short-term limited duration plans as an interim solution. With relaxed federal regulations taking effect in 2018, Idaho allowed insurers to offer ESTPs—plans designed to balance comprehensive coverage with affordability.
These ESTPs were established by legislation in 2019 and could last up to 364 days, renewable for up to three years under previous federal rules. However, those rules were repealed in 2024, capping short-term plan durations at three months plus one month renewal. The federal government has indicated it may relax these restrictions again by late 2025 or early 2026.
Idaho’s Enhanced Short-Term Plans differ from traditional catastrophic short-term coverage by including features such as mandatory issuance regardless of health risk, non-gender-based premiums, and requirements for insurers offering ESTPs also to sell fully regulated individual market plans. Coverage under ESTPs must include outpatient services, emergency care, hospitalization, maternity and newborn care, mental health services, prescription drugs, rehabilitation treatment, laboratory services, and preventative care.
A key difference is that ESTP premiums can be set based on health risk—a factor that makes them more affordable for many people. To protect those who experience serious health issues during their plan period from steep price hikes upon reapplication, Idaho limits premium increases due to adverse claims history to no more than 15%.
The requirement that insurers selling ESTPs also offer fully regulated plans ensures comprehensive options remain available.
For Vermont lawmakers considering similar reforms: current law limits short-term coverage terms to three months with no renewals. Adopting a model like Idaho’s would require new legislation or modifications empowering the Insurance Commissioner to regulate such plans.
Supporters argue that lifting certain regulatory restrictions could attract younger and healthier individuals back into the commercial insurance pool—potentially reducing costs across age groups due to improved risk distribution.
Concerns about ESTPs include their suitability for people with chronic conditions. Policies such as Guaranteed Issue (requiring insurers accept all applicants), Guaranteed Renewal (allowing renewals regardless of claims history), and Modified Community Rating (limiting how much premiums can vary based on risk) can drive up premium costs significantly; academic research suggests Guaranteed Issue can double premiums while Community Rating adds another increase of around 20%. Idaho’s approach includes guaranteed issue and renewal but only a limited form of community rating—premiums may vary by health status but are capped on reapplication increases.
Critics also worry low-cost short-term plans could draw healthier individuals away from comprehensive coverage pools in the individual market; however, studies—including a 2024 report from Paragon Health Institute—have found little impact on overall premium levels when states maintain favorable regulations for these types of plans.
Vermont continues facing some of the highest sticker prices nationwide for fully regulated individual market coverage. Insurers and hospitals are under financial pressure resulting in long wait times and high out-of-pocket costs even for those with insurance.
NFIB Vermont concludes: “Vermont badly needs more affordable options and Idaho’s ESTPs offer one road map for providing them.”
