Health insurance rate filings don’t customarily generate the kind of intense media interest that accompanied submissions from Blue Cross Blue Shield and MVP on Monday. But it was the first such filing since the advent of the state’s new online health insurance marketplace, and an early indicator in how well it’s managing costs.
The rate increases projected by the insurers – 9.8 percent on average for Blue Cross, and more than 15 percent for MVP – aren’t out of line with what Vermonters have experienced historically. But it’s a somewhat inauspicious start for a program designed to mitigate the kind of double-digit percent increases that have driven up the cost of insurance over the past decade.
“We do recognize that a nearly 10 percent increase in health care costs will be difficult and disappointing for businesses and families who need to purchase it,” says Kevin Goddard, vice-president of external communication for Blue Cross, which insures more than three-quarters of the approximately 70,000 Vermonters now getting coverage through the exchange.
Goddard says the factors responsible for the increase have less to do with what’s going on inside Vermont and more with changes associated with the federal Affordable Care Act. A reduction in federal subsidies, along with an increase in federal insurer fees, accounts for fully one half of Blue Cross’ proposed increase, according to its filing.
But what the new numbers say about the future of health care reform in Vermont depends on who you ask. To opponents of Gov. Peter Shumlin’s plan to replace the private insurance market with a publicly financed system, the rate increases prove the folly of government intervention in the health care market.
“I don’t believe that single-payer is the way to go… I believe that if we would see a robust marketplace and competition in Vermont, that we would see prices stabilize or at least be more competitive,” says House Minority Leader Don Turner.
Supporters of single-payer, like Donna Sutton Fay, the policy director at the Vermont Campaign for Health Care Security, say the latest projections illustrate some of the problems with the private insurance system.
“Increases of this magnitude are just not sustainable, and certainly they point to the need to have a system of publicly financed health care where all Vermonters can access affordable coverage,” Sutton Fay says.
Al Gobeille is chairman of the Green Mountain Care Board, the independent regulatory agency that will review the insurance filings, and approve or deny the rate increase requests. Gobeille says that the size of the rate increases obscures some positive news hiding inside the filings: the relatively modest increase in the cost of actual medical services. Gobeille says increases in medical costs are beginning to hew closer to inflation than they have historically. And he says that means that many of the cost-containment reforms undertaken in recent years are beginning to yield results.
Betsy Bishop, head of the Vermont Chamber of Commerce, says it’s the size of the increase, not the reasons for it, that will be of primary concern to her organization’s members.
“It’s a disturbing trend to see that continue to rise to 10 to 15 percent,” Bishop says. “I know that a lot of small businesses have been struggling to pay for health care for their employees, and this type of premium increase is going to be difficult to absorb.”
The rates for 2015 won't be finalized until fall.
MVP already has higher prices for most plans sold on the exchange – the website was designed to offer an “apples-to-apples” price comparison between similar insurance policies. And the disparity between rate increases sought by the two insurers might serve to exacerbate MVP’s competitive disadvantage when it comes to cost.
In response to media inquiries, an MVP spokesperson emailed a written statement from its interim CFO, Karla Austen, who was less sanguine than Gobeille about how successful Vermont has been in managing the cost of medical services.
“We understand that a premium is more than a number, and that any increase will directly affect individuals who purchased coverage on Vermont’s health insurance exchange. Sadly, the rapidly rising price of health care services in Vermont, coupled with a sharp hike in prescription drug costs, federal taxes, and an enormous slash in federal reimbursement rates, make the economics of providing coverage unsustainable in 2015 without premium increases,” Austen said.
Goddard said that but for changes related to the Affordable Care Act, and new state benefits requirements – like a mandate on pediatric dental coverage – Blue Cross would have been able to keep its premium increase to only 3.3 percent.
Gobeille said the rate filings submitted Monday don’t necessarily reflect the increases consumers will absorb next year. The Green Mountain Care Board, a five-person panel with a staff to help it execute a range of statutory duties, will run its own actuarial analyses, and could require insurers to lower their proposed rate increases.
Under legislation passed in 2011, the rate review process is subject to considerable public scrutiny. Vermont Legal Aid, the organization contracted to administer services delivered at the Office of the Health Care Advocate, is encouraging Vermonters to become involved in the rate setting process.
For information on how the rate review process works, visit http://www.vtlawhelp.org/health-insurance-rate-reviews; for information on how to participate in it, visit http://www.vtlawhelp.org/how-public-can-participate-0