The Vermont Education Health Initiative, or VEHI, has notified school leaders that health insurance premiums for teachers will increase by 14 percent this year. VEHI had originally announced a 12.8 percent rise, but recently asked districts to play to pay 14 percent — 1.2 percent of which is attributable to new state mandates.
It is the first time VEHI has announced a double-digit increase since 2006.
Over the last seven years, the average increase has been 7.3 percent. In four of those years, the increase was 3.5 percent or less each year. VEHI officials attribute the single-digit rate increases to lower than anticipated utilization rates. These rates stand in stark contrast to year after year double digit increases in the early 2000s.
Though wellness and chronic care initiatives have been successful in recent years, officials say, a “fair portion” of VEHI’s current claims, are for “high-end specialized treatment.” Twenty-four percent of the claims are for cancer diagnoses.
VEHI blames new state mandates for cost increases. Insurance must now cover early childhood autism treatments and vaccines. In addition, the state has added fees to insurance coverage for claims assessments, information technology projects, the blueprint expansion and various insurance levies. The costs for these mandates were unknown at the time VEHI developed its prices.
These new costs make up 1.2 percent of the 14 percent premium increases VEHI is passing on to local school districts.
Steve Dale, executive director of the Vermont School Boards Association, says the higher insurance premiums will put pressure on school district budgets at a time when the Shumlin administration has asked school board members to constrain increases in spending to levels not to exceed inflation.
Dale anticipates that the 14 percent increase will pose “a significant challenge” to school boards. If there were no other increases in costs, for fuel, bus service, etc., the health insurance premium hike would absorb the inflationary margin of 2.2 percent, according to Joint Fiscal office.
VEHI is also cutting cash incentives for wellness programs and will redesign its insurance plans with slightly higher out-of-pocket costs for deductibles, co-pays and office visit fees.
Blue Cross Blue Shield of Vermont is the insurer for the state’s teachers. The Vermont School Boards Insurance Trust and the Vermont NEA oversee VEHI.
Correction: VSBIT, not VSBA, oversees VEHI.