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Vt. Board Mulls Insurance Rates



Valley News Staff Writer
Thursday, July 21, 2016

Montpelier — Concern about the rising costs of health care in Vermont united dozens of people who filled a hearing room of the Green Mountain Care Board on Wednesday.

Health care costs are “spiraling out of control siphoning money out of our economy,” said Matt Birong, a cafe owner from Vergennes.

The monthly premium for health insurance for his family had risen to $925 from $500 since the passage of the Affordable Care Act, he said.

But those in attendance differed sharply on the issue before the five-member regulatory panel: a request from Blue Cross Blue Shield of Vermont for approval of an average 8.2 percent increase in premiums paid for the nonprofit’s health insurance plans sold over the Vermont Health Exchange.

The voices on one side included 11 activists, including Birong, who urged the board to reject the proposed rate hike, and more than 50 others who sent messages of opposition.

“The majority of people in the state can’t afford another 8 to 10 percent increase in their health care,” said Daniel Quipp, a private school teacher from Brattleboro.

The proposed rate hike would add, on average, about $38 a month, or $450 a year, to premiums on Vermont Health Exchange policies.

On the other side of the rate divide were lawyers representing Blue Cross, a company actuary, its chief financial officer and an actuary hired by the Green Mountain Care Board to review the information and calculations filed by Blue Cross to support its rate request.

“These rates are adequate,” said Paul Schultz, the company’s chief actuary. “These rates are not excessive.”

Rising costs and utilization rates for medical services, including jumps of 10.2 percent in the tab for prescription drugs and of 4.3 percent in the spending on medical services, are the main sources of upward pressures on 2017 rates, according to the board’s actuarial study.

Even Donna Novak, an Arizona actuary engaged by the Vermont Health Care Advocate, the state’s official voice for consumers on medical care and health insurance issues, found Blue Cross’ case persuasive — mostly. 

Novak’s review differed from the conclusions of the company and board actuaries in its conclusion that Blue Cross could safely reduce below the requested 2 percent the portion of its premium revenue that it would add to its reserve. Yet even that cut would shave less than 1 percent from the size of the requested rate hike, she said.

Company representatives challenged Novak’s reasoning and said that it had relied on some incorrect assumptions, in some cases because information supplied by the company had been unclear.

But aside from that relatively minor divergence, the state’s largest health insurer, its main health care regulators and its official consumer advocate found themselves in the awkward position of raising no serious challenge to the company’s rate request but embracing critics’ cost concerns.

“The cost of health care comprises 90 percent of (Blue Cross) rates,” said Schultz, the company’s chief actuary. “They can only be considered unaffordable (if) the underlying cost of health care is unaffordable.”

In response to a question from Al Gobeille, the board chairman, Schultz estimated that only about 44 percent of Blue Cross’ health care claims were paid to Vermont hospitals. Those hospital budgets are subject to review by the Green Mountain Care Board, but the balance of claims paid to out-of-state hospitals and other providers are not, he said.

Allan Ramsay, a board member and family medicine doctor, argued that the focus of efforts to reduce health care costs should be on “not only paying primary care doctors better, but making the quality of their lives better.” Reducing the administrative burden of measuring health outcomes, easing the adoption of electronic health records and reducing the need for prior authorizations of some prescriptions and procedures would help, he said.

The Vermont Health Exchange was set up to meet a requirement of the ACA that each state provide its residents with access to a market where those not covered by employer-based, government-operated or other health insurance could shop for and enroll in individual plans. That met a need created by the law’s requirement that everyone be covered by health insurance.

This year, about 70,000 Vermonters are covered by BCBS-VT plans sold through Health Connect to individuals or small employers, and enrollment is projected to increase by about 7,000 in 2017.

Blue Cross policies comprise the bulk of insurance sold in the Vermont market. The 8.8 percent rate hike request by Blue Cross’ much smaller rival, MVP Health Plan Inc., will be the subject of a hearing today.

Policies sold through Vermont Health Connect vary widely in coverage. This year, a low-end “bronze” plan for an individual had an average monthly premium of about $363, a $4,100 deductible and a $6,500 out-of-pocket maximum for individual, non-drug expenses, while a top-of-the-line “platinum” plan had an average premium of $574, a $250 deductible and a $1,250 out-of-pocket maximum. About 40 percent of the coverage in effect is in so-called silver plans, with an average premium of $437, a $1,550 deductible and a $5,750 out-of-pocket maximum. 

Vermont Health Connect’s technical and financial woes have made it the poster child for critics across the political spectrum who have resisted or been frustrated by the state’s faltering efforts to make health insurance coverage universal. But the state-run, federally mandated marketplace makes up only a portion of the state’s health insurance market.

A 2014 survey sponsored by the state Financial Regulation Department found that 340,000 Vermonters were covered by private health insurance — most through group plans provided by their employers.

In addition, just over one in five Vermonters got coverage through Medicaid, the state-federal insurance program for low-income individuals and families, the 2014 survey found. More than one in six Vermonters were covered by Medicare, the federal insurance program for seniors and some people with disabilities.

Rick Jurgens can be reached at rjurgens@vnews.com or 603-727-3229.