Health Care

Health insurance premium rates for teachers to increase by 14 percent

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.

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Anne Galloway

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  • Dave Bellini

    State employees are currently enjoying a 3 pay period premium holiday in 2012. Both the state and the employees are paying LESS premiums in 2012 than in 2011. A quick estimate is over 8% less than last year. Also, our premiums are not increasing for 2013. This is the advantage of a self insured, union negotiated, plan. A 14% increase seems higher than the norm. School districts should consider banding together in one pool and self-insuring. Hire an ASO and buy some stop loss insurance. State employees stopped buying insurance company products long ago and never looked back.

  • Bob Zeliff

    are you saying that private for profit insurance companies are taking advantage of our teachers? the teachers buy their insurance in a competative free market….how can it not give the best price?

  • Ruth Gaillard

    That’s a really good idea. Save money with a self insured, negotiated plan. Band together in one pool and self-insure, as state employees did and they never looked back. Better yet, as well as teachers and state employees, let’s include everyone in the state for an even bigger pool. And then save even more by including everyone in the country. Other advanced countries already do this, its called single payer. Maybe eventually the US can catch up with the rest of the developed world and save money for our school districts, businesses and individuals.

  • Anna Carey MD

    School districts should band together and support a universal single payer health care system for Vermont that ‘bands’ every Vermonter together in one risk pool. The savings would be impressive.

  • Jeff Briggs

    Dave and the others have this right. Our state self insured plan is essentially a single payer plan which squeezes the profits out of administration and keeps costs down compared to any private for profit insurer offered plan. There is no way that those plans can come close even in a competitive marketplace such as the exchange. This is why we need to move forward on single payer statewide. Our plan, which is well run with benefits jointly negotiated should serve as the model for Green Mountain Care

  • Jim Barrett

    The legislature and governor wants to be the good guys so they mandate all sorts of new coverage by insurance companies and then complain about the higher costs by those big, bad insurance companies! You haven’t seen anything yet and many of you voted for these wonderful leaders….ENJOY!

    • Bob Zeliff

      Mr. barrett are you implying the state employees insurance which has not gone up is some how exempt or different rules that that the teacher’s insurance.

      If not I do not follow your logic

    • Arthur Hamlin

      I do not believe the claim that new mandates have caused any of the increase. If that was true the State employees’ plan would also go up. Besides that many studies were done before the autism coverage bill passed and the impact was found to be minimal. Coverage for people with autism spectrum disabilities should be expanded!

  • Ron Pulcer

    Based on what I heard from our local school board, I was under the impression that teachers in our local school district are already pooled together with the rest of K12 teachers in the state. That is based on answer I got from our school board at a prior Town Meeting Q&A. We have a school district that comprises only one (1) K-8 school (the high school students are tuitioned to nearby districts. Apparently, we don’t have a tiny premium pool of only local teachers. It sounds to me like the teachers are already in a state-wide pool (correct me if I’m wrong, any teachers out there).

    The same approach applies to municipal employees, as they are in a state-wide pool for VLCT insurance plan.

    So why is the percent increase so high this plan year, if the teachers are apparently already in one pool?

    • Dave Bellini

      Ron, I think teachers are still buying an insurance product rather than self-insuring. One quick example why buying traditional insurance is so expensive: A few years ago the CEO of Blue Cross retired, walking out the door with millions of dollars! Guess who pays for these lavish executive perks? What are the top salaries and perks at these “non-profits”? What are the top salaries and perks at BCBS?

      It makes no sense that the GMCB would build a model based on BCBS and their whopping increases and reject the state employees plan(with decreases) as a model.

  • Kathy Callaghan

    Answers to some of the questions above:

    VSBIT (Vermont School Boards Insurance trust) deals only with Blue Cross Blue Shield. Several years ago as Director of the State Employees’ Health Plan, I asked VSBIT about their experiences with another carrier, and was told that they deal only with the Blues. One reason given was that the Blues offer a variety of plans for the various jurisdictions to choose from. However, as there are basically only a few variations of health plans, CIGNA or MVP could do the same. In addition I am fairly sure that these are fully insured plans, not ASO. VSBIT absolutely should switch to an ASO-type arrangement, have the Blues administer the claims, and purchase some stop loss for protection. The savings would be significant. The reason that their increases are so high is that they are paying a lot of unnecessary overhead. This in turn, shows up in our prooerty tasxes.

    To another question: The State Employees Health Plan has always included every state mandated benefit because it is exempt from ERISA protection. ERISA plans do not have to comply with state laws.

  • Jeff Percut

    …perhaps, I am misreading. But the mandated costs make up 1.2% of the 14% increase which leaves the driver of the remaining 12.8% increase to either cost and/or utilization. With 24% of claims being canceer related, it could very well be a combination of both drivers.

    It might be prudent for districts to shop on their own so that they can better inform their stakeholders regarding the costs rather than rolling over and accepting the increase. Another option would be for VEHI to shop the stop-loss in the event they are already self-funded.