Health Care

Blue Cross requests 12.7 percent premium increase

Vermont’s largest health insurer has asked state regulators to allow it to increase premiums for people using plans on Vermont Health Connect by an average of 12.7 percent starting Jan. 1.

That’s the most that Blue Cross Blue Shield of Vermont has requested to increase premiums since the insurer began offering exchange plans in 2014.

The plans cover about 70,000 people using Vermont Health Connect, whether they buy the insurance as an individual or through a small business. Depending on each person’s plan choice, the premium increases would range from 11.1 percent to 14.6 percent.

MVP Health Care, which covers the remaining 10,300 commercial customers using Vermont Health Connect, is requesting a 6.7 percent average premium increase. The increases for individual customers would range from 2.3 percent to 10.5 percent, depending on the plan they use.

Don George
Don George, chief executive officer of Blue Cross Blue Shield of Vermont. File photo by Erin Mansfield/VTDigger
“We fully appreciate the impact that this increase will have on our members, and we do take seriously the responsibility to explain these increases to our members,” said Don George, the chief executive officer of Blue Cross Blue Shield of Vermont.

George said about half of the average increase — 6 percentage points — is beyond the insurer’s control. Specifically, 3 percentage points come from a tax that the federal government uses to fund the Affordable Care Act, he said.

George attributed 2 percentage points to the so-called cost shift, the theory that commercial insurance must subsidize Medicaid and Medicare because those programs reimburse hospitals below their costs. An additional 1 percentage point of the increase is related to Vermont’s aging population using more expensive services more often, he said.

Of the remainder of the increase, he said 4.2 percentage points are related to increased health care costs. That includes increased prices for hospital visits, doctor visits and prescription drugs, combined with increased medical utilization.

“That is up from last year because for about the past year we have been noticing that the members that we have in (Vermont Health Connect plans) are using increased services at an increased rate,” George said. But he said hospitals and doctors are “doing a commendable job” controlling price increases.

The final 2.5 percentage points reflect smaller cost drivers, George said. They include a 0.9 percent surcharge to make up for what the Green Mountain Care Board cut from the insurer’s 2017 rates, plus fractions of a percentage point for administration and state-level regulatory fees.

George said the insurer, which is a not-for-profit, spends only 6.5 percent of the total premium amount on administration. He said that share is far lower than the maximum of 20 percent that the Affordable Care Act allows insurers to spend on administration.

The Green Mountain Care Board, which regulates insurance prices, will hold a hearing on the premium increase request July 20. In the meantime, the board’s actuaries will review the requests to determine whether the increases are justified.

Mike Fisher, the chief health care advocate for Vermont Legal Aid, said his staff would do the same. Vermont Legal Aid’s Office of the Health Care Advocate will testify on behalf of the public interest at the July 20 hearing.

“The advocate’s office has a serious job to do here in evaluating this rate proposal carefully, pulling it apart, understanding the cost drivers, and as we do that, keeping in mind the pressure that Vermonters feel around affordability,” Fisher said.

“The advocate’s office receives calls every day from people who feel like health care is not affordable today,” he said.

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  • Dave Bellini

    The federal government can bring down costs but will take on the drug companies and the insurance industry?
    Vermont could help slightly by approving the independent surgical center that has been mired in regulation for years.

    • J Scott Cameron

      Dave: Let’s see which one of us can old our breath longer. (I give up).

    • Dominic Cotignola

      Doesn’t happen because of the powerful lobbies the drug and insurance industry has to look out for themselves instead of the consumer. Maximum gain for maximum profit for Blue Cross Anthem shareholders.

      • Jim Manahan

        That’s no different than the NEA and other powerful union lobbies looking out for themselves instead of the taxpayer and then they have their enablers in the legislature.

  • J Scott Cameron

    The rates charged by the Vermont Education Health Initiative (VEHI) for the new plans which will be provided to teachers effective 1/1/18 are not affected by these rate increases. Neither are the rates which VEHI charges school districts and teachers now and through 1/1/18. Will that continue to be the case? Dunno.

  • Dominic Cotignola

    That’s because we don’t regulate prices of drugs, procedures, and or doctors.
    For profit is just what it means. Do you shop around for your medical needs? Your suppose to. One time I asked what it would cost for a blood test if I paid it myself. I received three prices ranging from $230 (without insurance) – $800 (with insurance). Who’s gouging who?

  • Jamie Carter

    This illustrates nicely the problem … and ultimately why it never gets solved. The public and politicians would like to take out their frustration with high costs on the Insurance companies… they must be making hand over fists money. And yet, we see BCBS spends 6% of their budget on administration. As a non-profit, that means by and large all of the premiums are going to pay actual for health CARE. The costs of CARE, always has and always will be the problem… and also why all of these various health INSURANCE issues haven’t done diddly squat. The cost of insurance isn’t the problem, the cost of the health CARE is the problem. It’s not BCBS that is charging you $15 for a tylenol pill. The Green Mountain Care Board needs to find some guts and start tackling health care costs. They have the authority to price set and judging by the increase in health CARE costs over the past several years that likely what is needed… a set price based on the actual reasonable costs of doing said procedure. Want to know why all of the hospitals are opposing the proposed surgical care… because they are greedy and they don’t want someone driving down costs.

    • walter carpenter

      “The costs of CARE, always has and always will be the problem… and also why all of these various health INSURANCE issues haven’t done diddly squat. ”

      If this is true, then why is it that in every democratic nation that has single-payer of some sort or another — all of them except this one — the costs of health care is lower than here and every citizen is covered at the same time? The various health insurance issues have not done diddly squat because we have not gone after the problem — that we treat health care as a commodity to be bought and sold on the stock exchange and not as a human right.

      • Jim Manahan

        Tort reform for one thing.

        • JohnGreenberg

          Here’s an estimate of the TOTAL costs (including defensive medicine) of medical liability in the US: “Overall annual medical
          liability system costs, including defensive medicine, are estimated to be $55.6
          billion in 2008 dollars, or 2.4 percent of total health care spending.” “National Costs Of The Medical Liability System,” Michelle M. Mello,
          Amitabh Chandra, Atul A. Gawande, and David M. Studdert. Quoted from the abstract:
          https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3048809/.

          The highest figure I can recall ever seeing was in the 4-5% range.

          That means that if there were NO costs for liability (which is clearly highly unjust to those harmed), costs would remain 95-97.5% of what
          they are today.

          Tort reform is a solution in search of a problem.

        • Gerry Silverstein

          To Jim, Wendy, and Jamie

          Vermont needs to get its financial house in order… the only question is when it chooses to do so.

          35% of Vermont’s budget is dependent on the federal government. According to CMS, Medicaid costs are currently growing at an annual rate of 5.7% while Medicare costs are growing at a 7% annual rate. Social security costs recently crossed the $1 Trillion dollar mark, with 10,000 citizens turning 65 ever day.

          Medicare, Medicaid, and SS, along with Safety Net programs (SNAP, EITC, housing assistance, etc) constitute 63% of the FY 2018 budget. Interest on the federal debt is another 7% (and the latter percent will increase with time), while military spending consumes 15% of the budget. That leaves 15% for everything else, and the latter percentage will shrink as time goes forward.

          If the Governor and the Legislature believe they can continue to count on the federal government for 35% of the Vermont budget, they are badly misinformed.

          The single most important question the State of Vermont faces is how do we get a sustainable spending plan in place before one is forced upon us.

          Controlling healthcare spending is required, and to do that the GMCB is going to have to acquire the courage and conviction to tell the UVMMC that the days of excessive charges for healthcare delivery are long past.

          • Jim Manahan

            That’s nice, and you provide some interesting information, but you provide absolutely nothing to support your claim that UVMMC has excessive charges for healthcare delivery.

          • Kai Mikkel Førlie

            Vermont’s finances are not “in order” owing to the corporate takeover of our federal government. When our federal government used to actually collect taxes from those that have the most there was more than enough to go around, relatively speaking. Therefore, Vermont, along with every other state in the Union, needs to pressure the federal government to prioritize the citizenry ahead of the interests of the rich and powerful.

            We are the wealthiest country on Earth and could easily afford to provide high quality public healthcare (like that which Senators, Reps and veterans currently receive) to all takers were the people to come first. Corruption and profiteering in the healthcare field would need to be eliminated and we’d need to stop dropping bombs, firing missiles, pulling triggers and allowing the corporate class to get away with murder in the tax department. Instituting a thirty hour workweek along with providing annual two months paid holiday, free education and childcare and acknowledging past wrongs (like slavery, redlining, violence against women and children, etc.) and working to rebuild individuals and communities negatively affected thereby (in short, correcting the massive inequalities and unjust conditions that we have in this country) wouldn’t hurt.

        • walter carpenter

          “Tort reform for one thing.”

          That will help, but how big of a problem is it in overall relation to how insurers keep wanting rate increases of 12.9% every year?

    • Jim Manahan

      That is not why their is opposition to the proposed surgical care center, but I’m sure it sounded cute at the time. The fact is the Medicaid cost shift continues to be an ongoing problem that the state has failed to address. It is most pronounced in the hospital setting, but it is a problem for any healthcare provider in Vermont.

      So, the cost of insurance is a big part of the problem in that Medicaid (which is an insurance) does not pay what it costs to provide the care. As a result of the state continually failing to cover their cost, the hospitals and other providers are forced to shift it to you and I through third party insurers like BCBS of VT. Think of it as another hidden tax on the working class. It would be interesting to know, in the aggregate, what percentage of the hospital’s utilization is covered by Medicaid.
      As more and more people are covered by Medicaid, as the Democratic led legislature dreams up more and more programs to underfund, attracting more and more people dependent on the state, then more and more costs will be shifted to you and I paying third party insurance premiums. This is not only unsustainable, it makes it less and less affordable for the working man or women in Vermont. It is another burden on the working class, yet one party would like you to believe they represent the working class, while they exacerbate this problem.
      The hospitals oppose the surgical center because it will draw off those third party insurance cases, where that surgical center doesn’t have to cover the unfunded costs of a massive underfunded Medicaid population. Since the surgical center doesn’t have that deficit to cover, it can charge the third party insurer a lot less. It is a very attractive proposition to an insurance company in Vermont to say, you won’t have to cover this part of the Medicaid cost shift. In the absence of that Medicaid cost shift, the hospitals could also be charging a lot less for the same procedures.

      Personally, I would want more information, ideally from an independent source, before I accept the CEO’s suggestion that their overhead is only at 6.5%.

      • wendywilton

        Jim, you are correct about the impact of increasing Medicaid on the cost of the state’s healthcare system. Vermont has increased participation in this program to a point where we are an outlier with over 30% of our population dependent on this program originally aimed to provide health care for the very poor. Other states are far below this percentage, and our legislature’s direction over many years to increase the reach of the program threatens the health care system in this state. Further, we aren’t sure that all participants are actually eligible.
        There are two ideas the state should pursue to bring down costs: first, establish a high risk pool, and second look at what Indiana did with Medicaid to make the program workable and lower cost for those who participate in Medicaid. I believe that Indiana changed the program so that converted coverage to a true insurance model rather than a 100% entitlement which is paid for by tax dollars and increased commercial insurance rates through the “cost shift”.
        If the state remains committed to very high levels of Medicaid participation the legislature owes it to the ratepayers to find ways to make this program as effective and cost-conscious as possible. They have failed thus far to do that and that’s one of the reasons our costs and taxes are out of sight.

        • Jim Manahan

          Well we know the “state” doesn’t have the appetite for anything other than the very high levels of Medicaid participation, because those who rule the roost think government handouts are more important that a thriving economy, since that is where they focus their efforts. One way to make Medicaid as effective and cost-conscious as possible would be to audit the eligibility roles as I believe Gov. Scott proposed during the campaign.

      • Glenn Thompson

        Jim states,

        “As more and more people are covered by Medicaid, as the Democratic led legislature dreams up more and more programs to underfund, attracting more and more people dependent on the state, then more and more costs will be shifted to you and I paying third party insurance premiums. This is not only unsustainable, it makes it less and less affordable for the working man or women in Vermont. It is another burden on the working class, yet one party would like you to believe they represent the working class, while they exacerbate this problem.”

        I give this, statement of the year award. Absolutely nails it. Now imagine for a minute as I constantly read comments “Medicare for everyone”. the same bunch who designed Obamacare and Vt health connect came up with a plan to take the current Medicare system specially designed for those over 65 and threw everyone into a system which even I admit works well currently……what the results would be?

        When it comes to healthcare, everything liberal Democrats and Progressives comes up with can be classified as “Social Experimentation gone bad”. Look no further than the current state of affairs of healthcare on the National and state levels.

        • walter carpenter

          “Social Experimentation gone bad”.

          LOL. It is strange that medicare-for-all or single-payer, however you want to phrase it, is a social experiment since it is alive and well in every other democratic nation except here. No other democratic nation has such things as “pre-existing condition,” or claim denials, or a sick person being a “medical loss.” It is only a social experiment here because the big insurers/pharma spend billions of our premium money on telling us that it is a social experiment.

    • Ben Throop

      I like this response. However it’s a two way street. Health Care providers will charge what insurers will pay for. As long as there is another insurer able and willing to pay $15 for that pill, the charge can remain and the other insurers can cry “costs are too high”, passing their bill onto the consumer.

      Available money is the oxygen that feeds the health care price explosion. To put out the fire, all sources of money that can be fed into the system must be contained. This means admitting up front that it is not a market and should not be a market. Single payer now!

  • Why doesn’t Phil send his crack shot executive ordered Government Modernization And Efficiency Team to show BCBS how to save money? Hasn’t GMET saved Vermonters tens of millions of dollars.. or are they still a committee trying to find their way?

  • Mary Alice Bisbee

    This is why we need to get rid of health care insurance companies and work for a strong single payer health care system for all Vermonters! Everybody in, nobody out!

    • Craig Powers

      Single payer, at the State level, was found (by an uber-liberal dominated VT legislature) to be completely financially unsustainable.

      • walter carpenter

        “Single payer, at the State level, was found (by an uber-liberal dominated VT legislature) to be completely financially unsustainable.”

        It’s still the only way to get our outrageous costs under control and stop these 12.9% increases every year. Considering that our health care tab is now about $6 billion a year, this for our small population, we could do a single-payer system if we wanted to.

  • James Rude

    For those of you who continually comment that ” all we need is single-payer” as the cure for all that ails the health care system you should research some of the fallacies of single payer including the most ofter quoted that; “all or most of the industrial national have single payer.” This is not true…actually most have hybrid systems and the trend is moving away from the true “single- payer” programs. For more: http://www.medscape.com/viewarticle/855271#vp_2

    • Kai Mikkel Førlie

      I would argue that the only places where the “trend” that you point out is occurring is in countries where the people’s will has been or is being usurped by the will of the wealthy elite. This isn’t an issue of public healthcare systems being financially untenable, it’s an issue of greed; those in power falling prey to it and it directing policy. In countries where the national priority places the well-being of the citizenry ahead of for-profit corporations and the rich, public healthcare systems are working just fine, all things being equal. Norway’s, Sweden’s and Switzerland’s systems come to mind in this regard.

      That said, a big problem in some public healthcare systems is corruption which drives up costs – like the all too frequent example of private contractors bilking governments for millions. The system in Australia is often a good example of this.

      Also, it’s bad form referencing what appears to be a single study and providing a link tot that study that directs one to a paid service that requires a membership. Are you able to provide a usable link to whatever it is that you were relying on for your argument?

  • Jason Brisson

    “Specifically, 3 percentage points come from a tax that the federal government uses to fund the Affordable Care Act, he said.”
    “Beyond their control” that they took a tax assessed to them, and passed that cost on to consumers. If that was the intent, seems like the gov’t would just tax us themselves.

  • Gary Dickinson

    Sending the guy who make $450k a year to ask for a price increase is bad optics.

  • Jennifer Stella

    “4.2 percentage points are related to increased health care costs. That includes increased prices for hospital visits, doctor visits and prescription drugs, combined with increased medical utilization.” One nation, under God, addicted to drugs. With liberty and justice and pharmaceuticals for all…including almost as many opioid Rx’s as there are inhabitants of this small state.

  • Daniel Carver

    With 70% of adults and 60% of children classified as over-weight or obese, let’s discuss the real driver of the costs of our health-care system. Whether your 6 or 106, are you doing the best you can to be a healthy you?
    In economic terms, each person (potential patients) controls Demand on the health care system. As individuals continue to make poor lifestyle choices, then the GMC Board has no choice but to increase Supply (the cost of delivering services) by passing budget increases of providers and insurers. Given VT’s population is declining in number and the cost of services keeps increasing, then the cost per person will continue to increase at an unsustainable level. Politicians will not address the root cause, because they are addicted to the votes of the Problem.
    Your assignment: Eat less junk, drink more water, increase your physical activity levels, and get proper rest. Result: You’ll take a load off yourself (particularly your knees!) and off the health care delivery system – a win-win scenario! If more of us did this, a tipping point would be reached and you’d get the revenge on the system your want.

  • Elise Eaton

    Ever wonder how much BCBS spends sponsoring events and advertising? I do. I’d like to see Digger do a in-depth current numbers article targeting medical industry muckety-mucks’ salaries, balances on-hand (so-called reserves) for starters. I know several people who can afford to pay more than they have to using Vermont Health Connect. Income drives pretty much every free-to-nearly free service in Vermont. The state’s mindset seems set on encouraging people to live off “the system” and pay as little as possible. Talk about unhealthy…

  • Bill Murray

    I have received good service from the employees of BCBS of VT, but I do find their billing practices and the amount of paperwork, even on a simple office visit redundant and often indecipherable. I have a high deductible health savings account for which I pay $518.00 per month.
    My biggest dissatisfaction came when a few years back, the former CEO, who had only been at BSBC for a relatively short time received an absurdly high retirement package. I cannot remember the figure, but I believe it was a multi-million dollars payout. It made me seriously question how the subscribers funds were being spent.

  • Kai Mikkel Førlie

    Sadly, this disgusting premium increase request is totally in-line with what it means to have a healthcare delivery system that is operated not with the interests of the citizenry in mind but, instead, the interests of out-of-control for-profit corporations (as enabled by bought-and-paid for legislators). Meanwhile, in countries with effective public healthcare systems, like all those that spend less for better outcomes, there’s plenty of government revenue to go around. That we’re led to believe that healthcare costs are unsustainable says as much about our corrupt delivery system as it does about our corrupt political class. Eliminate the corruption and the insane profit-motive (like has been done in a whole bunch of countries) and, what do you know, we’d be well on the way to a system that takes care of us rather than just corporations. Oh, and it wouldn’t hurt to put an end to U.S. imperialism as well as update our labor laws (in favor of quality of life) and to start taxing the rich their fair share. Problem solved! 🙂