Vermont Sees One Of The Lowest Insurance Rate Increases Under Obamacare

Nov 22, 2016

Vermont has one of the lowest increases in premium rates for policies sold under the Affordable Care Act, according to a new study from Kaiser Health News.

The report comes at a time when the future of this federal health care program is very much in doubt.

In Vermont, the average premium is increasing by 5 percent. In comparison, rates in Arizona are going up by 145 percent; in Minnesota, the increase is 55 percent and in New York State the rate hike is 24 percent.

The study also shows that Vermont has one of highest premium levels in the country, in large part because of state regulations known as community rating that prohibit insurance companies from basing rates on a person's gender, age or health history.

Steve Constantino, the commissioner of the Department of Health Access, says there are several reasons why this year's rate increase is small.

First, he says Vermont had a relatively low uninsured population when the Affordable Care Act was put into place. This allowed insurance companies to make some solid predictions about how the health care system will be used.

“A lot of states had to predict on a population that was never insured, so [at] their starting point [they were] trying to predict two years out — it's a very hard science,” he says. “If you're a state that had a lot of experience with this population before ACA, you were kind of ahead of the game." 

Constantino also says Vermont has a regulatory review panel, known as the Green Mountain Care Board, that oversees virtually all aspects of health care in the state.

“They regulate the insurers, and their premium increases … and they also regulate hospital budgets,” he says. “So I think it's a very unique regulatory system which I think has been able to add a lot of predictability in the rates." 

Al Gobeille, the chairman of the Green Mountain Care Board, thinks some states offered lower rates at the outset of the Affordable Care Act to attract more consumers. He says the reality of providing this care is now hitting home in some of these states.

“We might have started with a higher dollar amount per month, and some of these places started low,” Gobeill says. “But what I've wanted to do is not have rate shock where we suppress rates for political reasons and then watch them bounce way back up high, and I think that has happened in some of these states."

Gobeille also notes that the board has been able to keep the growth rate of hospital budgets under control.

“This year it went up about 1.8  percent, which is the lowest amount in 40 years,” he says. “And we've been tracking lower over the last few years — those price increases to the insurers reflect directly into Vermonters' bills.”

Both President-elect Donald Trump and Republican leaders in Congress have vowed to repeal and replace the Affordable Care Act during 2017.

Governor-elect Phil Scott says it's not clear what's going to happen at the federal level — and that's one of the reasons why he wants to build a coalition of northeast governors. One option might be a regional approach to providing health coverage.

“Whether Obamacare is abandoned, then what next?” he told VPR on Nov. 16. “And we need to be prepared for that, and that's why I believe having a coalition of other governors in the northeast could be the answer for all of us."

Outgoing Gov. Peter Shumlin thinks Republicans in Washington are going to face some difficult challenges if they move forward with repealing Obamacare.

He notes that GOP leaders want to keep several parts of the law, including a provision that guarantees a person access to care regardless of a pre-existing condition.

At the same time, Shumlin says the Republicans want to drop the individual mandate in the law. He says insurance companies will go bankrupt under this approach.

“The reason that Obamacare has the mandate [that] you must buy insurance is to keep the insurers able to pay their bills, so that when you really get sick they've got the money to pay the bill,” Shumlin says. “My point is simple: You can't cherry pick Obamacare." 

The open enrollment period for Vermont Health Connect will continue until the end of January. State officials say they're pleased with how smoothly enrollment has gone over the past three weeks.