The Green Mountain Care Board has 30 days to set health insurance rates for a new marketplace that hasn’t yet been created.
A tall task?
Anya Rader Wallack, who chairs the board, said the process of determining health insurance rates for a new marketplace isn’t just difficult for everyday people to wrap their heads around; it’s also presenting many challenges for state authorities.
“This is a process we’ve found to be very opaque and very frustrating,” she said. “Part of the reason we’re bringing in our own independent actuary is to get someone who can break down these filings in a way that ordinary mortals can understand and make judgments as to whether they’re reasonable.”
The Department of Financial Regulation made its recommendations Friday to the Green Mountain Care Board for setting new health insurance rates.
None of the proposed rates were found to be “excessive or unfairly discriminatory,” Susan Donegan, commissioner of the department, wrote to the board. But she also noted in her recommendations to the board that there is no “reference point of previous filings against which to measure the proposed rates.”
When Donegan sent her recommendations to the board, she flicked on a clock that is ticking down to the end of the day July 6. By that time, the Green Mountain Care Board must authorize the rates for the new health insurance marketplace, called Vermont Health Connect.
These are the health insurance rates that an estimated 118,000 Vermonters will choose from beginning Oct. 1. When Jan. 1, 2014, rolls around, Vermont Health Connect will then become the sole health insurance marketplace for Vermonters buying insurance individually or for businesses comprised of 50 or fewer employees.
“The idea is to have these out as early as possible for people to see because, ultimately, these will be the rates people will face when they go shopping on the exchange,” said Anya Rader Wallack, chair of the Green Mountain Care Board.
In early April, the Shumlin administration unveiled the proposed premium rates that were submitted for the exchange. As it stands now, Blue Cross Blue Shield of Vermont and MVP Health Care are the only two companies that will offer insurance on the exchange. A proposed member-owned cooperative, called the Vermont Health CO-OP, was denied licensure last month (“Rejection leaves health co-op confused and with few options”).
The average monthly costs of the Blue Cross and MVP plans, which were proposed 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, 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.
The Department of Financial Regulation spent the past two months reviewing the plans with its contracted actuary, Oliver Wyman. The bulk of Donegan’s recommendations were based on Wyman’s findings.
In MVP’s filing, “The most significant issue identified” was that “its proposed rates would be roughly 5% to 8% too low,” as Donegan’s memorandum to the Green Mountain Care Board reads.
With health care costs growing at a steady rate, how can health insurance rates be “too low?”
While Donegan was out of the office Friday and did not immediately return a request for comment, Wallack explained. She said it’s a matter of balancing affordable rates with ensuring that the rates cover a health insurer’s costs.
“This isn’t the first time we’ve heard that concern around MVP filings,” Wallack said. “Nobody wants their insurance company to go under. If you’ve been paying premiums to them and suddenly they can’t pay claims, or you’re a provider and suddenly an insurance company can’t pay claims, that’s not good for anyone.
“We try to make sure there are adequate premiums, so that a company can pay its bills for consumers, but not so much that it’s inefficient and trying to keep money in the bank,” she added.
Donegan did write that making such a determination is no easy task.
“Since it is extremely difficult to predict the composition of the insured market on the exchange, there are plausible scenarios — that would result in lower morbidity on the exchange and rates that are not too low to cover expected claims,” she wrote.
The thinking is that the lower the morbidity, or poor health conditions, the lower the rates can be and still cover an insurers’ costs.
None of Donegan’s recommendations specifically said that a given plan ought to be reduced by a given amount. Most of her recommendations pointed out computational and technical errors that should be addressed.
June 18, the board will hold a hearing on the MVP rates, and the board will do the same June 21 for Blue Cross.
