Vt. Premiums Likely to Rise

Burlington — The process for determining Vermont Health Connect premium rates starts today. State officials say rates next year will likely go up because of a variety of factors.

In its first year, the state’s federally mandated online insurance marketplace enrolled 60,835 people in small group and individual market health plans.

The rates approved by the Green Mountain Care Board will determine what those people pay in premiums and out-of-pocket costs in 2015.

The two carriers participating in the state’s health insurance exchange must submit their rate requests to the board today.

The board will have 90 days to evaluate the assumptions underlying the rate requests from Blue Cross Blue Shield of Vermont and MVP Health Care and to then approve a new set of rates.

“My guess is that rates will go up,” said Al Gobeille, chair of the Green Mountain Care Board.

That is likely to be unwelcome news for Vermonters and Vermont businesses when many are already struggling to afford the commercial insurance from the exchange — in some cases even with the government subsidies meant to make insurance more affordable.

If health insurance rates are rising at a higher percentage than people’s income, it becomes increasingly unaffordable, said Lila Richardson, an attorney with the Office of the Health Care Advocate, a Legal Aid project.

“Our office gets a lot of calls where people aren’t really saying, ‘I’m calling about insurance rate reviews,’ but they’re talking about the fact that they’re very stressed to pay for insurance products, especially in the individual market,” Richardson said at a public forum on the rate review process hosted by the Green Mountain Care Board in Burlington Thursday night.

She said businesses also are having difficulty affording the rising cost of coverage for their employees.

A report from the federal Department of Health and Human Services showed that plans offered through Vermont Health Connect had the fifth-highest rates of any exchange.

“We’re the second-smallest state in the country, so our fixed costs are very high,” said Con Hogan, former head of the Agency of Human Services and a member of the board.

Insurers finance much of health care, and in Vermont the cost of care is driven partly by the need to maintain the health delivery infrastructure for providing services to a small population.

The federal report drew a strong connection between competition and rates, noting that states with more carriers participating had lower rates.

“We only had two qualified health plans providing products in the exchange because years ago Vermonters made the moral and societal decision to get rid of community rating and make sure we had guaranteed issue of the products provided to Vermonters,” said Dr. Alan Ramsay, a longtime family medicine doctor and member of the board.

Vermont’s guaranteed issue policy ensures that people receive health insurance for pre-existing conditions, and its community rating policy requires that all insurers charge patients the same rate for the same policies.

That means insurers can’t offer different rates to different age groups or different rates based on health indicators, such as if someone is a smoker. Older and sicker people require more health care, and providing coverage to those groups drives up prices for everyone.

The trend is exacerbated by Vermont’s having the second-oldest population of any state.

Nationally, much of the conversation about whether exchange premiums and out-of-pocket costs will rise in 2015 is dominated by speculation about whether — and how many — new insurers will jump into the online marketplaces.

But that’s not likely to happen in Vermont for the reasons stated above, and because of the governor’s stated intent to bring a publicly financed health care system to Vermont.