Blue Cross and Blue Shield of Vermont is seeking a nearly 13 percent increase in rates for people who get their coverage through Vermont Health Connect, the state's health care exchange.
At first glance, a double-digit increase in these Blue Cross premiums might lead one to think that medical costs are still spiraling out of control. But a closer look at the rate request reveals a number of factors are affecting the increase.
Don George, the president of Blue Cross, says the positive news of this rate case is that medical costs, utilization trends and drug expenses are all growing by roughly the rate of inflation.
"In many ways, our work to control the direct health care costs that we all consume is on the right track with payment reform and trying to advance primary prevention," said George.
But George says about half of the rate hike is due to non-health care costs, including a federal tax on insurance policies and the failure of Medicaid and Medicare to reimburse providers at a fair rate.
"There are policy issues at both the state and federal level that are driving the non-health care costs increases," said George. "And we need to approach and pursue those and confront those as policy issues."
George says about one quarter of the rate hike comes from a decision by Congress to re-impose a tax on many insurance policies. This money is then used to help make premiums more affordable on state exchanges.
"So there are Vermonters who are receiving subsidies as a result of this funding,” said George. “It's one of the largest factors in this increase."
George says another key factor is Vermont's aging population and the health care services that are needed to support this group.
"Each year we're seeing that Vermonters as a result of an aging demographic are using not only more health care services, but more expensive and more intensive health care services," said George.
Mike Fisher is the state's Health Care Advocate. His office helps people with their Vermont Health Connect coverage — and he's concerned about the size of the Blue Cross increase.
“We hear from a lot of Vermonters who have real challenges paying for the care that they need, and so those voices, we keep that in mind as we are evaluating any rate increase," said Fisher.
Fisher says his office will closely review the rate hike to see if there are any areas where savings can be achieved.
“We will pick it apart and do our best to understand the factors that lead to this, what Blue Cross argues are the reasons for the increase, and try and balance those arguments against the affordabilities of all Vermonters," said Fisher.
About 15 percent of the rate hike is something known as the cost-shift. It's a practice that's been going on for years. When government programs don't reimburse providers for the cost of their services, these costs are shifted over to people with private health insurance policies. Uncompensated care also contributes to the cost-shift.
Fisher says it's an issue that lawmakers seem reluctant to deal with.
“The Legislature has been unable to take steps, real steps, at bringing down the cost-shift, and it does leave those costs left with the ratepayer," said Fisher.
The Green Mountain Care Board has scheduled two days of hearings on the Blue Cross rate request in the middle of July.