by Andrew Stein June 26, 2013 vtdigger.org Blue Cross Blue Shield of Vermont wants to increase rates by an average of 24.4 percent for the last six months of the state-subsidized Catamount health plan. If approved, it would be the largest rate increase in the seven-year history of the Catamount program.
Blue Cross Blue Shield of Vermont headquarters in Berlin. Photo by Andrew Stein/VTDigger
The plan and the state’s premium assistance program will cease to exist on Jan. 1, 2014, because they do not jibe with new federal laws under the Affordable Care Act, aka Obamacare.
Susan Donegan, commissioner of the Department of Financial Regulation, has proposed a much-reduced increase of 13.9 percent. Since Blue Cross increased its surplus cushion by $12 million in 2012, from $113.91 million to $125.95 million, Donegan wrote in her recommendation to the Green Mountain Care Board that reducing the contribution to that reserve would not threaten the company’s financial wherewithal. That was one of several measures she proposed to decrease rates.
Donegan did note, however, that the 15,000 lives covered under the Catamount plan represent more than 10 percent of Blue Cross subscribers, and an increase to premiums is appropriate.
‘Although the Department and BCBSVT disagree about the size of the needed rate increase, they both agree that one is necessary to meet the increasing claims costs of this population,’Donegan wrote. ‘For that reason, the Commissioner is not prepared to recommend that the filing be disapproved.’
The Green Mountain Care Board has less than 30 days to make a decision. The board has scheduled a public hearing at 1 p.m. on July 9 to discuss the matter.
Mark Larson, commissioner of the Department of Vermont Health Access
Mark Larson, commissioner of the Department of Vermont Health Access, which administers the subsidies for the Catamount plan, said low-income working Vermonters that receive subsidies would not bear the brunt of the cost hikes; the state would.
‘The premiums for Catamount are set and the state pays the difference between the premium and the full price of the plan, so Vermonters on Catamount through the end of the year would not see an increase in their cost,’he said.
Larson’s department estimates that a 24.4 percent increase would cost about $7 million, and a 13.9 percent increase would cost $4 million. The state would split the cost of the rate hike with the federal government, with the feds paying 55 percent of the amount. Those are the numbers for the bulk of Catamount enrollees who are subsidized; about 3,500 Catamount members are not.
Kevin Goddard, vice president of external affairs for Blue Cross, said the company hopes a 24.4 percent rate increase would raise $8 million ‘enough to cover the projected costs of the Catamount plan for the remainder of the year.
‘The Catamount population in the current calendar year of 2013 has already generated more than $3 million in expenses than the premium we collect,’he said. ‘We’ve lost more than $3 million already, and our forecast for the second half of this year suggests that this population, absent rate action, will generate another $8 million loss in the last six months in the year.’
The proposal for an increase comes after Blue Cross decreased Catamount rates in the third quarter of 2011 and after the company held rates steady for the past year. During that time, Goddard said Catamount beneficiaries used medical services and products with less frequency, and prices for care and pharmaceuticals stayed particularly level.
‘They were the lowest trends we’ve ever seen,’he said.
Meanwhile, health insurer MVP was increasing Catamount rates and had significantly lower enrollment than Blue Cross. When the Green Mountain Care Board denied MVP’s 12.8 percent increase for its 600 Catamount members last year, the company requested to leave the market, making Blue Cross the only company to provide this coverage.
These new members, Goddard speculates, could be driving up the cost of the Blue Cross plan.
‘MVP withdrew from the Catamount program because of its financial losses,’he said. ‘It stands to reason that the folks who came over were a more expensive population.’
Goddard says that Blue Cross’request for a high rate hike is necessary; it’s not just a bargaining chip.
‘We believe at the levels that are recommended by the department, Blue Cross will lose money in the last six months on the program,’he said. ‘Obviously we’d rather not lose money on it because those losses have to be made up somewhere.’
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