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The home for VPR's coverage of health and health industry issues affecting the state of Vermont.

Proposed Health Insurance Rates Mean Sticker Shock To Consumers, Regulators

Demonstrators picketed outside Montpelier City Hall last week to protest proposed premium increases in insurance plans sold on Vermont Health Connect.
Peter Hirschfeld
Demonstrators picketed outside Montpelier City Hall last week to protest proposed premium increases in insurance plans sold on Vermont Health Connect.

One of Vermont’s top health regulators says proposed premium increases from the state’s two main health insurers could compel some residents to drop their coverage.

Blue Cross and Blue Shield of Vermont and MVP say they’ll need to increase premiums significantly next year, and proposed rate hikes for some Blue Cross plans exceed 18%.

On Tuesday, in a cramped conference room in Montpelier City Hall, state regulators held a public hearing on those proposed rate increases.

It was not the first time Kevin Wagner had attended one of these events.

“We keep having to come tell these stories year after year,” Wagner told the five members of the Green Mountain Care Board.

Wagner, a Bradford resident, is one of the 80,000 or so Vermonters who buys health insurance through Vermont Health Connect.  

“We basically have to plead for our lives,” Wagner said. “But … the end result is the same, that people just shrug their shoulders and say, ‘Well, we’d like to help you but I guess there’s nothing we can do about it.’”

The room at the public hearing last week was filled with people like Wagner - people who say the price of health insurance has exceeded what they’re able to afford.

"The younger population is going to take a look and they're going to do an analysis and say, 'This is what it's going to cost me for my insurance - should I gamble?'" — Kevin Mullin, Green Mountain Care Board

Kevin Mullin, who chairs the Green Mountain Care Board, says he shares their frustration.

“The reality is that Vermonters are not seeing income raises anywhere close to what’s being proposed for the increases in these plans,” Mullin says.

The Green Mountain Care Board will decide later this year whether or not to approve the proposed rate increases.

The average proposed rate hike across all of Blue Cross’ plans is 15.6%. MVP, which has about 40% of the private health insurance market in Vermont, is seeking an average rate increase of 11%.

With numbers like that, Mullin says he fears Vermont, which has long had one of the lowest rates of uninsured residents in the nation, will see an increase in the number of people who decide to go without.

“The younger population is going to take a look and they’re going to do an analysis and say, ‘This is what it’s going to cost me for my insurance - should I gamble?’” Mullin says.

Mullin isn’t the only one who’s worried about it. Even the company that’s proposing the rate hikes says they could price some Vermonters out of the system.

“I think we heard that at the [public hearing] … that some consumers believe that they’ll be priced out of the market place, and they may take the risk to not have health insurance,” says Sara Teachout, director of government and public relations at Blue Cross Blue Shield of Vermont.

At that hearing, Erika Dodge, of Morrisville, told regulators that rising health insurance premiums are pricing her family out of Vermont.

"Our rates and the rate increases reflect the cost of health care that our members are consuming." — Sara Teachout, Blue Cross Blue Shield of Vermont

“We are faced with daycare, health care, our mortgage. Just the cost of living on the rise cannot be sustained here,” Dodge said.

Dodge, an architect, said she and her husband, a builder, both have good jobs. But even with two solid incomes, she said they already face tough health care decisions - like the one she had to make three weeks ago, when her daughter spiked a 105-degree fever.

“And in the back of my mind, I didn’t want to take her to the emergency room because I didn’t want to be faced with a multiple thousand dollar bill. I wasn’t even sure how much it would be. And I shouldn’t have to make those decisions,” Dodge said.

Teachout says Blue Cross understands why consumers like Dodge are frustrated. But she says there isn’t a whole lot Blue Cross can do to blunt the financial pain.

“Our rates and the rate increases reflect the cost of health care that our members are consuming,” Teachout says.

Teachout says prescription drug costs account for more than half of the proposed rate hike for 2020.

“When I say prescription drugs, I mean specialty drugs are really the driver behind this,” Teachout says. “And those are drugs that are used to treat chronic conditions and rare diseases.”

Blue Cross has identified other reasons for the proposed premium spikes: The return of the federal insurer tax, for example; and the rising cost of medical care; and increases in medical “utilization,” which it says is the result of Vermont's aging demographics.

Insurance premiums, however, are rising faster than the overall rate of growth in medical costs in Vermont. In 2017, the most recent year for which state data are available, medical costs grew by 1.7%, according to Mullin. And regulators have generally sought to keep growth in hospital budgets near the rate of inflation.

Mullin says a big reason for the disproportionate increases in private health insurance premiums is something he calls the “Medicaid cost shift.”

Mullin says government-funded insurance programs for low-income Vermonters are a good thing in concept. But he says the state and federal government underfunded Medicaid for years.

“To make up for the underfunding by government, commercial payers are paying what I would call a hidden tax on their premiums,” Mullin says.

Mullin says his board would love nothing more than to reject the proposed rate increases - to tell Blue Cross and MVP that premium hikes can’t, for example, exceed the rate of inflation.

But he says rates need to cover the insurance claims that Blue Cross and MVP will incur next year, or neither company will have the resources to continue operating.

“By statute, we have to make sure that we’re not endangering the insurers by endangering their solvency,” Mullin says.

Vermonters like Kevin Wagner and Erika Dodge say they hope their solvency will count for something too.

The Vermont Statehouse is often called the people’s house. I am your eyes and ears there. I keep a close eye on how legislation could affect your life; I also regularly speak to the people who write that legislation.
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