Vermont Business Magazine On Friday, May 10, the Green Mountain Care Board (GMCB) received and began its review of the proposed 2020 health insurance rates for plans offered to individuals, families and small businesses through Vermont Health Connect. Blue Cross Blue Shield of Vermont (BCBSVT) is requesting an average annual rate increase of 15.6 percent over 2019 rates, while MVP Health Care is requesting a 9.4 percent average annual rate increase.
BCBSVT is basing its rate hike largely on utilization and pharmaceutical costs, with changes in tax law also adding upward pressure on rates. They also found that the 2019 rates underestimated utilization, which, looking back on 2018 rates, would have added another 4 percent to the 2019 rates.
MVP also cited utilization and pharma as drivers of cost. They both mentioned the uncertain affect of Association Health Plans, which are again allowed by the federal government. MVP noted that costs will increase as healthier members migrate from the single risk pool to the association plans. To what extent that will happen is uncertain.
BCBSVT says in its filing:
- There are 26,981 contracts (43,939 members) currently enrolled in a BCBSVT Individual or Small Group plan impacted by this filing.
- The average increase requested in this rate filing is 15.6 percent.
- Increases for specific plans range from 9.1 percent to 18.5 percent.
"The cost of medical and pharmacy benefits continues to be the largest driver of premium increases. Specifically, our 2018 experience reflects substantial increases in specialty medications (7.8 percent) and increased utilization of preventive care (1.9 percent).
"Increased use of these goods and services are improving the health outcomes and quality of life for Vermonters, but the cost increase of just these two categories accounts for greater than half of the requested premium increase. Altogether, projected increases in spending on health care services account for a rate increase of 13.8 percent.
"Federal and state taxes and fees are expected to increase substantially in 2020, driven largely by the return of the federal insurer fee after a one-year hiatus. These increased fees and taxes increase premiums by 3.2 percent.
"BCBSVT always strives to mitigate premium increases to the greatest extent possible. As reflected in this year’s filing, BCBSVT has continued to work closely with its pharmacy benefit manager to improve network pricing and maximize rebates. These pharmacy initiatives total a 0.9 percent decrease in premium. Additionally, BCBSVT continues to be a driver of health care reform efforts. Our work in conjunction with OneCare Vermont has further reduced the requested rate increase by 0.4 percent. Finally, BCBSVT has implemented additional cost-saving initiatives, including system enhancements and establishing a contract with a lab benefit manager, that save a further 1.2 percent of premium.
"Altogether, these rate mitigation measures result in a reduction of 2.5 percent, or a projected $8.3 million.
"Increases in administrative charges needed to fund these efforts increase the premium by 1.0 percent.
"The Tax Reform legislation passed in late 2017 eliminated the federal income tax requirement for the BCBSVT legal entity starting with the 2018 tax year, and also resulted in the expected return of certain tax credits to BCBSVT over the next four years. These savings have been fully passed through to customers via a reduction in premium rates. In other words, BCBSVT has used the entirety of these tax savings to “buy down” this rate increase. In the absence of these tax savings, rates would have been significantly higher. Because the tax benefits have been fully used for the benefit of policyholders, there is no net impact to the 2020 rate increase relative to 2019 rates.
"In sum, the average rate increase of 15.6 percent would have been well over 20 percent without BCBSVT’s above-described mitigation efforts."
BCBSVT started selling plans in the Vermont Individual and Small Group Merged Market in January 2014. In its first five years, higher-than-expected costs have led to a cumulative loss of over $30 million on this line of business. BCBSVT has not included any additional contribution to member reserves to offset this loss.
"BCBSVT understands the importance of adequately funding our health care system to keep it strong and accessible. Since the factors driving this rate increase are largely driven by the cost and utilization of health care in Vermont, we believe that there is no way to further reduce these rates without underfunding the health care coverage on which Vermonters rely," BCBSVT said in its filing.
For MVP, the "book of business" affected by this rate filing is 11,696 policyholders, 20,156 subscribers and 30,887 members based on February 2019 membership.
MVP's proposed premium rates reflect an increase over the prior rates due to single risk pool experience which is more adverse than assumed in the current rates, medical and pharmacy cost and utilization inflation, the removal of healthier members from the single risk pool due to Association Health Plans, the re‐introduction of the federal Health Insurer Tax, and an increase to the administrative expense assumption, MVP said in its filing. Premium rate increases are varying by plan due to benefit modifications of a number of benefits being offered as well as the impact of fixed PMPM (per member per month) non‐claim costs on premiums that vary based on benefit level.
The insurers are required to offer rates within strict GMCB requirements (standard plans, which allows for true apples-apples comparisons), while they are also allowed to offer non-standard plans under certain conditions set by the GMCB.
The standard rate for the BCBSVT Platinum family plan is $2,594.39 per month premium. This is an increase of 17.3 percent over current 2019 rates. The rate for the Silver standard family plan is $2,089.74, an increase of 15.2 percent. The Silver CDHP (health savings account) version is $2,100.76, an increase of 15 percent. While the cheapest of the plans, with the highest deductible, the standard Bronze plan is $1,593.13, an increase of 14.2 percent.
The MVP plans in these proposals are generally lower cost because the increases are smaller and they're starting from a lower position.
The standard MVP Platinum family plan is $2,185.48 per month premium. This is an increase of 8.5 percent over the current 2019 rates. The rate for the Silver standard family plan is $1,883.96, an increase of 5 percent. The Silver CDHP (health savings account) version is $1,846.39, an increase of 5.7 percent. While the cheapest of the plans, with the highest deductible, the standard Bronze plan is $1,327.44, an increase of 10.9 percent.
The rate filings were posted online Monday, May 13 at ratereview.vermont.gov.
The Board will hold hearings on the proposed rates on July 22nd (MVP) and 23th (BCBSVT) beginning at 8:00 a.m. in Room 11 of the Vermont State House. At the hearings, the Board will take testimony from its contract actuaries, from the insurers, from the Office of the Health Care Advocate, and from the Department of Financial Regulation.
The Board encourages the public to attend the hearings and will take public comment at the close of each day’s testimony.
Additionally, the Board has scheduled a public comment forum in the Council Chambers and Memorial Room in Montpelier City Hall on July 23rd starting at 4:30 p.m., and is accepting public comment on an ongoing basis beginning Monday, May 13th and running through July 24th, 2019. Comments may be submitted electronically through the rate review website, by email to email@example.com, by US Mail to the GMCB at 144 State Street, Montpelier, Vermont 05602, or by phone at (802) 828-2177.
The Board expects to issue decisions on the proposed rates by August 8, 2019.
For questions about your health insurance, health care access, or about how you can give a public comment, contact the Office of the Health Care Advocate at 1-800-917-7787.
Source: GMCB 5.13.2019