The state’s two main health insurance providers are seeking a more than 8-percent increase in rates next year, and state officials say the requests underscore the need for comprehensive health care reform.
The requests from Blue Cross Blue Shield and MVP will affect plans sold on Vermont Health Connect, and they’re significantly higher than the increases that policyholders experienced last year.
Blue Cross’ request is 40 percent higher than the hike that its policyholders were hit with last year; MVP’s proposal is triple the increase its customers saw between 2015 and 2016.
“I think this points out how important it is to stay on this long-term path that we know leads to cost containment,” says Lawrence Miller, chief of health care reform for the Shumlin administration.
Miller’s shop has spent the last few years pushing for an overhaul of a payment scheme that compensates doctors for the volume of the procedures they perform, as opposed to impact of that care on the health of their patients.
“The [Affordable Care Act] did a lot with coverage and making sure people were covered. That didn’t do a lot for costs,” Miller says.
If Vermont is going to tackle that cost problem, then Miller says it needs to eliminate the “perverse incentives” he says are driving up the cost of care.
Blue Cross officials say the rising cost of care is responsible for about half the proposed increase. They blame higher-than-expected claims from people getting policies on the exchange during the first two years of Vermont Health Connect for the remainder of the hike.
But the rate request from Blue Cross for plans sold on Vermont Health Connect might not be as bad as it sounds.
“That’s actually quite good, compared to what we’re expecting to see across the country,” says Cynthia Cox, associate director for health reform and private insurance at the Henry J. Kaiser Family Foundation, a health policy organization in Washington, D.C.
Plans in Oregon are slated for average increases of nearly 30 percent, for instance. Al Gobeille, chairman of the Green Mountain Care Board, and a business owner himself, says the proposed rate increase from Blue Cross isn’t sustainable in the long run. But he says rates are generally trending in the right direction.
“Ten years ago in my company I was seeing 15-percent rate increase. These are basically half that,” Gobeille says.
Gobeille and Miller stress that the rate requests will now undergo a review process; the Green Mountain Care Board, as it did last year, might end up reducing those rates if it determines they aren’t justified.
Gobeille says the state ultimately needs to bring rate increases in line with inflation. To get there, Gobeille says the state needs a successful payment reform initiative. He says the state also needs to do something about an underfunded Medicaid system. Every year, about $400 million in private insurance premiums are used to prop up government-subsidized insurance programs that don’t cover the cost of care for patients covered by them.
So long as private insurance holders’ premiums are used to subsidize government programs, Gobeille and Miller say it will be difficult to deliver rate relief.
Betsy Bishop, executive director of the Vermont Chamber of Commerce, says rate increases of the sort Blue Cross is proposing will hurt the business community.
“We need to understand what is driving the costs that are driving those premium rates for businesses. An 8-percent increase is not sustainable,” Bishop says.
Bishop says one of the surest ways to lower those costs is to give companies a wider range of insurance products to choose from.
“And Vermont has a pretty strong track record for narrowing those choices for businesses and individuals,” Bishop says.
The Green Mountain Care Board has 90 days to review Blue Cross’ rate request.