Vermont Business Magazine Expenses related to federal health policy changes and increases in the prices for medical care and prescription drugs in Vermont require a 9.8 percent increase in premiums for Exchange-related qualified health plans, according to a rate filing prepared by the state’s largest health insurer. Blue Cross and Blue Shield of Vermont filed with Vermont’s Green Mountain Care Board proposed rates for 2015 coverage through Vermont’s health benefits exchange, Vermont Health Connect. The rates filed by the company would increase premiums for individuals and small businesses by an average of 9.8 percent. MVP Health Care, the only other carrier on the Exchange, has requested a 15.4 percent average annual increase compared with 2014 rates.
Blue Cross said in its filing that significant medical price increases were partially offset by favorable membership assumptions and reductions in BCBSVT administrative expenses. Combined, these factors produced a 3.3 percent increase in rates. The remainder of the 9.8 percent increase was driven by changes related to federal and state health care reforms, including an increase in the federal fee that is included in Exchange pricing, a reduction in federal subsidies of the premiums on Vermont’s new Exchange, and a modest expansion of dental benefits for children.
Blue Cross and Blue Shield of Vermont said it achieved operating efficiencies that allowed it to reduce its own administrative fees, which were filed at 6.2 percent of overall premiums.
BCBSVT said that most out-of-pocket costs (deductible maximums, co-pays) will remain unchanged.
“We recognize that this increase is likely to be difficult to absorb for many members who receive their coverage through Vermont’s new exchange products, and we have done everything we can to reduce it,” said Don George, president and CEO of Blue Cross and Blue Shield of Vermont.
“We also understand the importance of adequately funding our health care system, to keep it strong and accessible. And since the factors driving this rate increase are almost entirely related to federal policy changes and increases in prices paid to medical providers in Vermont, there is no way to further reduce these rates without under-funding the health care coverage on which Vermonters rely.”
Blue Cross and Blue Shield of Vermont explained that there is no proposal in its filing to recoup unexpected expenses that the company absorbed in 2013 and 2014 as a result of its work to assist businesses and members through the troubled rollout of Vermont Health Connect. The rate filing also did not include any projection of increased utilization of medical services by the Exchange population: the rates are based on 2013 medical utilization. And, the company said there is no recoupment of any medical costs in 2014 that may exceed the assumptions used in the initial rate filing, which was approved last year.
Following its review, the Green Mountain Care Board is expected to issue a final decision on Exchange rates in early September. The new rates would then become effective beginning January 2, 2015.
BCBSVT is the state’s only locally based health plan. The independent, non-profit company also is the largest health insurer in the state, covering more than 220,000 Vermonters from its headquarters in the central Vermont community of Berlin.
In 2013 and 2014 the company and its about-350 employees conducted an extraordinary outreach and support initiative to assist tens of thousands of Vermonters whose coverage was jeopardized by the troubled rollout of Vermont Health Connect, the state’s new exchange. Currently there are 57,867 Vermonters enrolled through BCBSVT’s exchange-related qualified health plans.
Blue Cross and Blue Shield of Vermont is the state’s oldest and largest health insurer, providing coverage for about 200,000 Vermonters. It employs about 340 Vermonters at its headquarters in Berlin, a branch office in South Burlington and its Information and Wellness Center in South Burlington’s Blue Mall, and offers group and individual health plans to Vermonters. More information about Blue Cross and Blue Shield of Vermont is available on the Internet at www.bcbsvt.com Blue Cross and Blue Shield of Vermont is an independent corporation operating under a license with the Blue Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield Plans.
MVP, based in New York, did not offer as much detail in its filing. It stated that it has 4,798 Exchange members. It's rates range from an increase of 10.7 percent to 18.3 percent depending on the plan. It did not address out-of-pocket costs.
In making their requests, according to the Green Mountain Care Board, the insurance carriers cited upward pressures on rates that are the direct result of federally mandated changes. These factors include an increase in the federal annual assessment on health insurers and a reduction in the amount of transitional reinsurance – a federal program that provides the insurers some protection against unusually high cost claims. The carriers have worked to develop rates that include difficult assumptions about medical inflation, changes to Federal policy and the health of the insured population. It is the role of the GMCB to analyze and vet these rates against the often competing and distinct priorities of solvency, adequacy, affordability, and quality.
The GMCB now has 90 days in which to approve, modify, or disapprove the proposed rates. During this period, the filings will be reviewed by the GMCB’s contracted actuaries. In addition, the Vermont
Department of Financial Regulation will evaluate the impact of requested rate changes on the insurers’ solvency. Written actuarial and solvency opinions will be posted to Vermont’s rate review website, http://ratereview.vermont.gov/, by August 1st.
The rate filings and other documents will be posted on the rate review website. The GMCB invites the public to comment on the proposed rates through August 18, 2014. Public comment can be made via the website, by email to GMCB.Board@state.vt.us, or by calling GMCB at 802-828-2177.
Public hearings on the proposed rates are scheduled for August 12th and 13th in Room 11 of the State House. The GMCB will issue the final rates no later than September 2, 2014.
Source: Blue Cross and Blue Shield of Vermont 6.2.2014. Green Mountain Care Board, 6.3.2014.