Health Care

Health care group opposes Blue Cross rate increase

Members of the Healthcare as a Human Right campaign attend a meeting of the Green Mountain Care Board on Wednesday in Montpelier. Photo by Sarah Olsen/VTDigger
Members of the Healthcare as a Human Right campaign attend a meeting of the Green Mountain Care Board on Wednesday in Montpelier. Photo by Sarah Olsen/VTDigger
About two dozen supporters of the Healthcare is a Human Right campaign Wednesday urged the Green Mountain Care Board to reject Blue Cross and Blue Shield of Vermont’s request for a rate increase.

The board held a public hearing Wednesday as it considers BCBSVT’s request for an average 8.6 percent increase in premiums for policies sold on the Vermont Health Connect exchange next year.

After hearing an actuarial report prepared for the board, Blue Cross agreed to adjust its request down to 7.2 percent, but that did not appease opponents who say the policies are still too expensive.

Bekah Mandell of Burlington, a member of the Vermont Workers’ Center, told the board she has a 9-month-old baby and her health insurance rates are more expensive than her mortgage.

“I want Vermont to be a place where I can stay and raise my family and not have to move somewhere else so I can live cheaper,” Mandell said.

Jess Fuller, another member of the Vermont Workers’ Center and a recent graduate of UVM, told the board she was hit by a car this summer and was struggling with her health insurance rates and student loan debt.

“I can’t afford this,” she said.

The actuarial firm Lewis and Ellis reviewed the proposed rates filed by MVP Health Care and Blue Cross. After their recommendations, Blue Cross Blue Shield’s requested rate increase was lowered to an average of 7.2 percent. Because pharmacy costs were higher than expected the adjusted rate increase was set at 7.5 percent.

“It’s a good start, but 7.5 is still — I don’t know many people who are getting a 7.5 percent increase in their wages next year,” Brunner said.

The board will decide on the BCBSVT request and MVP’s request for a 2.4 percent average increase in August.

The numbers

Cynthia Stuart, deputy commissioner of the Department of Financial Regulation, said in the department’s solvency analysis that, unless the Green Mountain Care Board explicitly says the filing will produce inadequate or excessive rates, the filed rates will sustain the solvency of Blue Cross Blue Shield.

Paul Schultz, chief actuary at Blue Cross Blue Shield, said the company had to make a number of assumptions as part of the rate adjustment. One of the main factors in predicting trends is the demographic profile of customers. If the average age were to go from 42 to 44, for example, Schultz said the rate would go up accordingly.

Though generic brand drug utilization in Vermont is well above 80 percent, Schultz said the Vermont law regarding the maximum out-of-pocket prescription expenses has resulted in customers buying more expensive brands.

Another factor is the federal subsidy amount available the next year. As federal premium subsidies go away, the cost shifts over to the members through the premium, Schultz said.

“This year, we’ve requested the amount we think is necessary to maintain a certain level of reserves,” Schultz said.

Reserves are required to pay for unforeseen claims, such as those resulting from an epidemic, said Judy Daye, executive assistant of Blue Cross Blue Shield. Contributions to reserves were something that Novarest, an actuarial consulting firm, suggested could be reduced without threat to their solvency.

Schultz said he disagreed with this.

“If we only covered trend, ultimately we wouldn’t have the money to pay for advance events,” Schultz said.

Reserves can only be used for claims, not for infrastructure or administrative costs, Schultz said.

A public trust

In a statement issued Tuesday, Keith Brunner, communications director for the Vermont Workers’ Center, proposed that Blue Cross be dissolved and its assets turned over to a new public corporation that can operate Green Mountain Care “as a true public good that belongs to all of us.”

The Vermont Workers’ Center seeks to establish a health care system that treats health care as a human right, according to its website.

Only seven or so people spoke at Wednesday’s hearing, and 20 to 25 supporters attended the hearing.

“A lot of people weren’t able to come out because it’s the middle of the day, so I think a lot of people submitted testimony online,” Brunner said.

Brunner said Blue Cross is a nonprofit company set up under Vermont law with the purpose of decreasing the cost of health services for the people of Vermont. It is exempt from paying taxes. The Vermont Workers’ Center says if the company wasn’t a nonprofit, it would pay $15 million in taxes this year.

“Yet BCBS is unable and unwilling to ensure that all Vermont residents can get the health care they need,” Brunner said in the statement.

Brunner also said in the statement that it is unfair that one in five people are struggling with medical costs when 10 Blue Cross executives are paid up to a half million dollars each. There are actually only seven executives at BCBSVT, according to its 2014 annual report. The chief executive officer is also the only executive paid $500,000 or more, while the other six executives earn $350,000 or less, according to the report.

For 2015, Blue Cross requested a rate increase of 9.8 percent. The board approved 7.7 percent.

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Sarah Olsen

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  • Eric Davis

    Is another issue here that BCBS of VT is so big it in effect has become a monopoly? BCBS covers a much larger share of VT Health Connect participants than MVP. BCBS is also the administrator for almost all the ERISA plans offered by large multi-state employers in Vermont. Putting together VT Health Connect and the ERISA plans, BCBS is the insurer for the overwhelming majority of Vermonters whose primary coverage is not Medicare or Medicaid.

    Does BCBS have such a large share of the market in VT that it cannot be effectively regulated by the Green Mountain Care Board? There is some evidence in the academic literature that state-based ACA exchanges in states where there is considerable competition among insurers – e.g. California and Massachusetts – have lower rates than states where only one or two insurers dominate the exchange.

    Is this another reason for Vermont to seriously consider joining Connecticut and Rhode Island in a multi-state exchange? Doing so would mean Vermonters would have a choice of more providers than just BCBS and MVP, and would also mean the administrative costs of running the exchange would be spread over a much larger group of beneficiaries than is the case with VT Health Connect?

    • Kathy Callaghan

      Excellent questions and observations.

  • Randy Jorgensen

    “Brunner also said in the statement that it is unfair that one in five people are struggling with medical costs when 10 Blue Cross executives are paid up to a half of a million dollars each. ”

    At least those folks have a job to be at 2,000+ hours a year. I would be more concerned about the lobbyist making a 150k for ONE legislative session. A total of $157,758. Right there one page 8 of the linked PDF.

    Paid to do nothing more then PERSUADE your elected officials…

  • Walter Maxwell

    So the kiddie poos say. Have any one of them EVER PAID TAXES? no.

    • Walter Carpenter

      “So the kiddie poos say. Have any one of them EVER PAID TAXES? no.”

      How do you know? And did you ever think that when bcbs, mvp, or any other insurer jumps their rates up, taxes go up as well to meet these raises?

  • Tom Pelham

    Sarah Olsen…it might help your readers if you dig a little more to provide a bit of background, when available, on some of those you quote. For example, you can see from the below link that Bekah Mandell holds a BA from Vassar College and a law degree from Boston College.

    Maybe she can’t afford to live in Vermont but it appears that may be by choice, rather than necessity.

    • Your point being that she should become a corporate lawyer, move out of state, and make a lot of money? Many would say she’s putting her educational degrees to the best possible use as an advocate for a non-profit such as VWC. Some people have a social conscience, appearances aside.

      • Craig Powers

        Here is the point…

        Why should anyone have to subsidize her lifestyle choice? If she has chosen this path in her life, instead of fully earning her own way, it should not be my responsibility to provide what she construes as her basic needs and human rights. She should provide for herself and her family instead of masquerading her choices as a “social injustice”.

        • Walter Carpenter

          “She should provide for herself and her family instead of masquerading her choices as a “social injustice”.”

          The point is that this “social injustice,” makes it so much harder and harder for her, and so many others, to provide for themselves and their families.

          • Craig Powers

            It’s always been hard, Walter. You just want guarantees that life will no longer have hardships. That is impossible.

      • Glenn Thompson

        And many would say…anyone who has the educational background and/or skills to become financially successful shouldn’t be squawking due to their own lifestyle choices?

  • Craig Powers

    Same group that had their infantile “tantrum” at the State House last winter by disrupting Shumlin’s inauguration. They also staged a sit-in where multiple participants were arrested.

    Tells you great deal about their methods.

    • Besides being redundant, “infantile tantrum” or not, the last time I checked we still had First Amendment rights. Although it offended some sensibilities, it was non-violent method of what they felt was a betrayal of a promise.

      • Craig Powers

        The VWC should have known better than to cast their votes for Shumlin and to trust his empty promises. They were duped and too gullible. When the false promise was not realized, they acted with poor decorum and damaged their brand.

        I guess when you tie up police resources, and court resources, costing us all money and taking time away from other more pressing issues, that’s ok…

    • Walter Carpenter

      “Tells you great deal about their methods.”

      That they are not afraid to make a point”)

  • Dave Bellini

    “I can’t afford this,” she said.

    Stop voting for the people that created this. Soon all Vermonters will have “health insurance” yet few will be able to afford medical care. This is the outcome of the current leadership. Did people really believe the Governor and his ilk were going to create a single payer ?? C’mon…. And that it would save $590 million dollars? Really?
    Do people think Vermonters on Medicare will be better off if these same people get an “all payer waiver” ?? It’s the exact same people who have proven to be untrustworthy and deceitful. They will make worse everything they touch.

  • fred moss

    Do these same people support Obama on the ACA and immigration? Because if they do they are acting like children. You can’t continue to have an open border policy while stating “everyone” gets healthcare and think the cost are going to stay the same. What don’t they get?

  • Bonnie H MacBrien

    Mr. Maxwell – and you would know who is paying taxes and who isn’t, how? You have access to official tax records? Some other method perhaps? You can disagree with someone’s position without resorting to snark and character assassination – that only demeans you and whatever arguments you might be espousing (although that is certainly impossible to tell what that might be from your comment).

  • Ed Letourneau

    Seems like Vermont could solve the problem by letting any insurance company anywhere sell insurance here.

  • J. Scott Cameron

    There is no such thing as health insurance. There are only the claims, the cost of paying those claims, and the administrative overhead of getting the claims processed and paid. If the premium amounts are inadequate to cover those three things the system fails. Setting premium rates should not be a political decision.

    • Kathy Callaghan

      True Scott, but you forgot the CEO salaries and all that…..

      • Walter Carpenter

        True Scott, but you forgot the CEO salaries and all that….

        Right on, Kathy. Here’s an earlier piece from the digger on these CEO salaries. They make many times more than the guv of Vt or any department head in the state. And these pale in comparison to CEO salaries in other states.

        Some highlights:

        “MVP paid $1,250,000 for the CEO position, which Denise Gonick took over from David Oliker in December. Of that amount, $704,000 went to MVP’s CEO salary, $241,324 went to CEO bonuses and $305,176 went to the CEO in “other compensation.”

        Blue Cross CEO Don George, by comparison, earned a total $587,184 last year — $574,913 went to George’s salary and $12,271 was paid to George in bonuses.”

        • Randy Jorgensen

          Those are right on par with the Nonprofit United Way CEO salaries…

          Seems to be a common theme with Non Profits, that for the most part don’t pay their “fair share”.

  • Our health care system or industry has evolved to primarily benefit the providers, such as hospital administrators, the payers, (insurance companies) and IT vendors(C.G.I). As increasingly higher premiums will force many to choose higher deductibles, accessible health care will become less of a reality for most and force others into bankruptcy . This will eventually reach a tipping point where a national plan such as “medicare for all” will be an imperative.
    This is one reason why Bernie resonates with so many. And is also a reason why some of our politicians who were born to wealth and privilege don’t have a clue!

    • Moshe Braner

      Well the good news is that health care spending will never be more than 100% of the GDP. The bad news is that the system, as you say, will collapse long before that.

      The hard truth that many of the advocates don’t want to see, or say, is that the only way in the short term to spend less on health care is to make do with less health care. To say “no” to $1000 pills, for example. It is only through such pressure that eventually, hopefully, those who now garner excessive profits will be forced to offer some of the same products and services for a more reasonable price. But even then we will never be able to afford all the health care that can be imagined.

      • Walter Carpenter

        “The hard truth that many of the advocates don’t want to see, or say, is that the only way in the short term to spend less on health care is to make do with less health care.”

        This is an interesting argument. Does it include the people priced out of health insurance, who get no care at all or very little of it? Does it include those with such high deductibles that they cannot afford to use their health insurance? And why is it that in nations with single-payer type systems, citizens get better and more care at less cost?

        I do agree with you on saying no to the $1,000 pills. The problem here is that no pill, or precious few pills anyway, should be $1,000 in the first place. But in our medical-industrial complex, this is not uncommon.

  • Kathy Callaghan

    Tom, although I generally agree with you, those credentials still may not provide a person with a livable wage in Vermont. Vermont is awash in lawyers already.

  • Lee Russ

    “There are actually only seven executives at BCBSVT”

    You mean seven executives whose compensation has to be reported to the state. The common meaning of “executive” would likely include more than the president and six vice presidents (6? Really?).

    And why do you make it sound like Brunner is wrong when he says they are “paid up to” half a million. That means half a million is the top, which is, in fact, the case.

    Worth noting, also that the BC/BS actuary says the rate request includes reserve funding. Reasonable reserves are completely understandable, but keep in mind what went on in California recently, where :

    “In a scathing audit, state tax officials slammed nonprofit health insurer Blue Shield of California for stockpiling “extraordinarily high surpluses” — more than $4 billion — and for failing to offer more affordable coverage or other public benefits.

    “The California Franchise Tax Board cited those reasons, among others, for revoking Blue Shield’s state tax exemption last year, according to documents related to the audit that were reviewed by The Times. These details have remained secret until now because the insurer and tax board have refused to make public the audit and related records.”

  • Dan Carver

    Should the Health Care is a Human Rights advocacy group shift their tactics to achieve their goal? The current tactic addresses the symptom: blaming insurance companies for the cost shift (government driven problem) and system utilization (personal choice driven problem).

    Vermont’s aggregate average population is the second oldest in the county; lagging behind Florida, which Jerry Seinfeld called, “God’s waiting room.” The elderly are covered by Medicare, which only partially pays for the cost of services rendered; the rest of the cost is shifted to Vermonters covered by private health insurance.

    Vermont has a higher-than-average percentage of its population covered by state and federal Medicaid. As with Medicare, these programs partially reimburses providers for the cost of their care; the remainder of the cost is shifted to private health insurance plans.

    Excluding government employees, the medical industry has the largest private cost structure in the state. It costs millions to construct the buildings, obtain the correct equipment and secure highly trained specialists. In regards to the employees, although it is nice to think all medical professionals will donate their time for free, or work for $15/hour; that’s a pipe dream. There is a demand for their knowledge and skills and they’ve worked hard to accumulate them, so they should be well paid. Also many of our medical facilities are in low density areas. Therefore, they are underutilized and ripe for internal referrals for unneeded tests to generate billing to help pay their costs.

    Policy changes:
    Instead of advocating a policy of paying physicians for patient outcomes, shouldn’t patients pay premiums based on the outcomes of their personal life style choices?

    Instead of whining about young people leaving the state, let’s question our policy of taxing the healthy to pay for those who abuse their bodies; the majority of our healthiest people are our youngest.

    Shouldn’t our wellness goal be to keep the healthy, healthy, and work to motivate the unhealthy to improve their health? The reward of lower premiums can serve as a personal choice motivator. Currently, the only choices for insurance shoppers are (a.) to have insurance or not, or (b.) choose high deductible or low/no deductible plans. Get folks involved where their actions can improve what they pay. This path would give the GMC Board something to really work with versus assessing hospital and insurance company budgets.

    Without understanding the true cost drivers, the actions of the Health Care is a Human Rights advocacy group come across as uneducated white noise blaming symptoms versus problems. Creating a grass roots movement to address the true drivers—government policy and personal choice apathy—is the only way to drive meaningful change to our health care crisis.

  • Steve McKenzie

    On 7/09, the head of BCBSVT was on the Mark Johnson show. He stated that $0.94 of every $1.00 of premium was paid out on claims, vs $0.90 a few years earlier.
    1. I think most any business owner would say 6% overhead as a % of revenues is pretty good.
    2. There is demonstrated, measurable improvement in operational efficiency.
    3. Can anyone quantify the commensurate rate for the proposed single payer system: what would the administrative efficiency be? What is the rate for AHS, or any other state department?

    • Dan Carver


      Excellent points.
      Looking forward to our civic leadership’s quantitatively support examples of success to question #3.