On Monday, the Shumlin administration unveiled proposed premium rates for Vermont Health Connect — the web-based exchange that is set to become Vermont’s sole health insurance marketplace for individuals and small business employees in 2014.
Blue Cross Blue Shield of Vermont and MVP Health Care are the only two insurers that have proposed premium rates for the exchange, which is set to open on Oct. 1. The average monthly costs for individuals range from $374.18 for a “Bronze” plan with less coverage to $609.47 for a “Platinum” plan with more coverage. For couples those rates are double.
These figures, which are available here, represent health insurers’ suggested price tags for the six main plans that the Green Mountain Care Board approved last year. The insurance providers also submitted “choice plans” that would offer more options on the exchange.
While Cigna will continue providing insurance to large businesses, it has not proposed any plans for the exchange. The member-owned Vermont Health Co-op, on the other hand, would sell insurance on the exchange, if the state approves its application for a license. The co-op has already received its federal health insurers’ license and has filed proposed rates with the Department of Vermont Health Access, but it cannot propose rates to the Department of Financial Regulation until it obtains a state license.
The state estimates that 110,000 Vermonters will purchase insurance on the exchange. That number is comprised of Vermonters who obtain health insurance individually and through businesses with fewer than 50 employees.
Vermonters earning between 133 and 400 percent of the federal poverty line — $15,282 to $45,960 a year for individuals — will receive federal subsidies that are scaled to their incomes. Vermonters earning between 133 and 300 percent of that line — up to $34,470 annually — will receive an additional state subsidy.
The feds will limit premiums on a linear scale in accordance with the Affordable Care Act, or Obamacare. For example, Vermonters earning 150 percent of the federal poverty line would pay 4 percent of their income on premiums. Vermonters earning 200 percent of the poverty line would pay 6.3 percent of their income. And residents earning 300 percent to 400 percent would pay 9.5 percent of their income.
The Shumlin administration and the Vermont House are proposing a subsidy based on the same linear calculation that the feds use, but with a cap 1.5 percent lower — 2.5 percent of an individual’s income at 150 percent of the federal poverty line, 4.8 percent at 200 percent and 8 percent at 300 percent.
While the administration boasts that Vermont is the first state to reveal proposed insurance rates for the exchange, top health officials point to the long regulatory road ahead.
Anya Rader Wallack, chair of the Green Mountain Care Board, said that the Department of Financial Regulation would analyze plans from a solvency perspective, and the board would take a consumer approach. The department will bring in a contracted actuary to evaluate the plans, and the board plans to do the same.
“I think the fact that (the rates) came in at what appears to be a fairly reasonable level is encouraging, but they will be subject to a lot of scrutiny over the next several months,” she said.
Robin Lunge, director of health care reform for the Shumlin administration, also looked favorably upon the proposed premium prices.
“These are proposed rates, and at first blush the rates are comparable to current insurance rates,” she said. “There has been a lot of speculation previously that rates in the exchange would be significantly higher, and we’re not seeing that in the initial filing.”
The administration also provided the press with examples of rosy outcomes on the exchange, where lower income individuals and families save on their premium payments under the proposed state subsidy system.
Peter Sterling, director of the Vermont Campaign for Health Care Security, pointed out that the premium rates don’t tell the whole story.
The annual amount many middle- and low-income Vermonters will be responsible for paying for direct health care will more than double in many instances. In the case of a couple earning $46,548 a year, their annual out of pocket maximum will more than triple.
“These people are trading a lower premium for significantly higher out-of-pocket costs,” Sterling said. “The administration is lowering someone’s premium by about $60 a month and raising their out-of-pocket costs by about 2.5 times (from $1,050 to $2,500). That to me is not a great deal.”