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Vermont school employee health insurance rates set for hike of up to 14.7%

Published: 10/18/2019 10:22:07 PM
Modified: 10/18/2019 10:21:52 PM

Vermont school districts are bracing for double-digit health insurance premium increases as they begin to budget for next school year.

The Vermont Education Health Initiative, a nonprofit group that provides health insurance to school employees, has filed proposed premium rate increases ranging from 12.9% to 14.7% with the state. The Vermont Department of Financial Regulation must review the rates before they are finalized in January.

In a memo explaining the rate hikes, VEHI officials say the price jumps are a result of familiar trends in health insurance markets — namely, the rising cost of medical care and pharmaceuticals — as well as a need to replenish the nonprofit’s reserves.

The group transitioned to a set of plans with higher out-of-pocket costs in fiscal year 2018 in an effort to reduce the cost of premiums. But that has impacted the rates at which participants file claims in unexpected ways and made it difficult to price premiums appropriately, VEHI officials say.

The group dipped into its reserves to the tune of $6.8 million in fiscal year 2018 and another $5.9 million the following year, VEHI president Laura Soares said Thursday. This year, with the new health insurance plans, the insurer is on track to spend about $4 million out of its reserves.

“This is part of the challenge of transition,” she said.

The rate increases also come as representatives for school employee unions and school boards enter the end stages of bargaining for Vermont’s first statewide health insurance contract. School districts have long picked from the same set of plans when bargaining with employees at the local level, but a new law now requires one contract to govern how districts and employees share the cost of those plans.

Negotiations have been testy from the start. But Will Adams, a spokesperson for the VT-NEA’s team in health care bargaining, said he didn’t expect the hikes to change the tenor of the conversation one way or another.

“I think everyone going into this has become pretty used to double-digit increases,” he said.

State regulators this August approved rate hikes as high as 12.4% for plans on the state’s health exchange.

Another bargaining meeting in the teachers’ health insurance contract negotiations is scheduled for Oct. 22. If the two sides can’t hammer out a deal, arbitration hearings are set to begin Nov. 1.

Adams said he remains hopeful the two sides can come to an agreement without the arbitrator having to make the final call. But he acknowledged there’s still a ways to go.

“The outstanding issues are, candidly, the hard ones,” he said.

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