[B]lue Cross Blue Shield of Vermont will be allowed to raise what it charges customers who use Vermont Health Connect by an average of 7.3 percent starting Jan. 1.
The Green Mountain Care Board issued a 3-2 decision Aug. 9 directing the company to lower its price increase from its requested 8.2 percent but saying that lowering the increase further would sacrifice Vermonters’ access to insurance.
To bring the increase down to 7.3 percent, the board disregarded much of the testimony from its own actuaries, which largely agreed with Blue Cross’ request to raise prices 8.2 percent.
The board also told the company to expect hospitals’ prices to go up only 2.2 percent in 2017, instead of 2.9 percent, and to adjust two other numbers that would lead to lower prices than requested.
Blue Cross is Vermont’s largest insurer and covers about 70,000 people through its Vermont Health Connect plans; it expects that number to reach 77,000 in 2017. The customers either work for companies with 100 or fewer employees or have no other option than the exchange to buy health insurance.
The board decides annually whether Blue Cross and MVP Health Care can increase prices for Vermont Health Connect customers. For the 2016 plan year, Blue Cross received a 5.9 percent increase in a 4-1 decision, and for the 2015 plan year it received a 7.7 percent increase in a 5-0 decision.
In a separate decision for MVP, also released Aug. 9, the board decided unanimously to follow advice from its actuaries and lower MVP’s requested price increase from 8.8 percent to 3.7 percent. This is the third year in a row the board has decided unanimously in an MVP case.
But this year’s Blue Cross decision was the most contentious split since Vermont Health Connect started: Board members Con Hogan and Allan Ramsay wrote dissents questioning whether the insurance company and the board were doing enough to rein in health care costs.
“The board’s decision does not adequately consider affordability of the rate request, which is paramount to our charge under Act 48,” Hogan wrote, referencing the 2011 law that created the Green Mountain Care Board.
Hogan wrote that the board’s actuary looks at the insurance company only on a year-over-year basis; he said the company should be regulated based on a thorough review of its balance sheets, which are financial documents that compare a company’s assets versus liabilities.
“On the whole, (Blue Cross) is a healthy, well-managed company that I believe has remained isolated from much of the stress experienced through the rest of the health care world, and by the people who are served by it,” Hogan wrote.
He said Blue Cross was budgeting too much for administrative costs associated with managing the problem-plagued Vermont Health Connect website and was requesting to put too much money into its cash reserves.
“I believe that the company must actively pursue administrative cost savings to ensure that other Vermonters do not experience negative wage growth as they struggle to pay for the ever-rising costs of health care coverage and services,” Hogan wrote.
Ramsay wrote: “Nonprofit insurers should not be retaining excessive reserves simply to cover administrative costs, pay unreasonably high salaries, or provide other forms of compensation to their management.”
He also took issue with the amount of money Blue Cross was putting into its cash reserves. “There is no credible evidence that higher reserves lead to rate stabilization in the commercial health insurance market,” he said.
Ramsay referenced a 2014 report from Consumers Union analyzing how different branches of the national Blue Cross Blue Shield Association have increased their assets and advocating for greater public scrutiny. (Blue Cross Blue Shield of Vermont was not mentioned in the report.)
“Some nonprofit health insurance companies continue to stockpile large amounts of surplus, funded by premium dollars,” the report said. It recommended that policymakers “revisit surplus definitions and practices with an eye toward fundamental modernization.”
Al Gobeille, the chair of the Green Mountain Care Board, declined to comment on the case. He said the decision could still be appealed.
The majority responded to affordability issues in the decision. It addressed both Hogan’s dissent and members of the public who said they can’t afford to have their insurance premiums go up.
“Similar to Mr. Hogan’s position, many of the comments we received from members of the public challenge us to deny the carrier any rate increase at all in this filing,” the majority wrote.
Neither Hogan nor Ramsay argued for no premium increase.
The majority wrote that “cutting or denying a rate increase as suggested would be unreasonable and contrary to our statutory obligation as a regulator of insurance rates” and that denying any premium increase would “do nothing to promote quality health care in Vermont.”
The board said denying any increase would require Blue Cross to take a $32 million shortfall in 2017 and to request increases of 19 percent to 22 percent in 2018 to compensate.
“We see no wisdom in sacrificing Vermonters’ access to health insurance coverage, the company’s solvency, or its continued ability and willingness to offer plans on the exchange, by making unfounded cuts to rates that meet actuarial standards, in favor of short term gains in affordability,” the decision said.
Copies of the board’s decisions are available below.
