Vermont’s largest health insurer is asking state regulators to approve an average 9.8 percent increase in premiums for plans it offers through the state’s federally mandated exchange.
Blue Cross Blue Shield of Vermont said Monday the increase is needed to cover rising medical and pharmaceutical costs for their members and increased federal fees charged to insurers as part of the Affordable Care Act.
If the Green Mountain Care Board, which is responsible for reviewing and approving the exchange rates, signs off on Blue Cross’ request, monthly premiums for the six standard plans it offers on Vermont Health Connect would go up between $20 and $70 in 2015.
In last year’s rate review process Blue Cross’ requests for exchange plan prices were revised down an average of 4.2 percent by the board.
MVP Health Care, the other insurer offering coverage through the exchange, did not provide its rate request filings or return calls for comment by publication time Monday. The filings are public record and had to be submitted to the Green Mountain Care Board by Monday. The filings for both companies will be posted on the board’s website Tuesday, said Susan Barrett, the board’s executive director.
“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,” Blue Cross CEO Don George said in a statement released Monday.
“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 underfunding the health care coverage on which Vermonters rely.”
According to a breakdown of the rate request provided by Blue Cross, almost 5 percent of the overall 9.8 percent increase is to cover federal charges associated with the Affordable Care Act. Some of those charges are used to pay for the subsidies provided through the new law, which make exchange insurance products more affordable for low-income people.
Payments to providers are expected to increase 4.8 percent in 2015, according to Blue Cross, an increase that flows directly to premiums. That increase is regulated, in part, by the state because the Green Mountain Care Board must approve hospital budgets.
Another 1.3 percent of the requested increase is to cover additional child dental services required by the state and to keep other costs associated with a health plan from rising. The out-of-pocket costs, such as co-pays, coinsurance and deductibles associated with exchange plans will not go up, said Kevin Goddard, vice president of external relations for Blue Cross.
Goddard said that Blue Cross reduced its administrative fees as a percentage of premiums to keep the rates from going up further.
The company used “very aggressive assumptions” in compiling its rates, and went with the lower end of the acceptable rate increase range developed by its actuaries, Goddard said. The rates assume that people new to the individual and small group market will be healthier and use fewer health care services, he said.
The Green Mountain Care Board has 90 days to review, possibly adjust and then approve the rate requests of the two carriers. The new rates will take effect in January.
Blue Cross covers close to 200,000 Vermonters – almost one-third of the state’s population – and covers just over half the individual and small group market enrolled in private insurance through Vermont Health Connect exchange.
There are 35,037 people who bought exchange health plans from Blue Cross, covering 57,876 lives. The total number of commercial health plans purchased during the exchange’s first year of operation was 60,835.
The state does not report coverage through Vermont Health Connect in lives covered, so the total population covered through the exchange can’t be known without numbers from MVP.
Twenty percent of plans purchased on the exchange were bronze, making it the most popular after the silver, which accounted for 52 percent of purchased plans, according to figures from the state.
The standard plans are platinum, gold, silver and bronze, with two high-deductible plans at the silver and bronze levels. The platinum plans have the highest premiums and lower out-of-pocket costs, and scale down to bronze, with lower premiums and greater out-of-pocket expenses.
An earlier version of this story incorrectly characterized the relationship between the metal plans.