Editor’s note: This commentary is by Laura Soares, who is president of Vermont Education Health Initiative.
[P]resident of the Vermont-NEA Martha Allen submitted to news outlets a commentary regarding VEHI that is misleading. It is important that the record be set straight. Understanding the factors driving health plan rate increases are essential to finding solutions that enable VEHI to continue offering high-quality, affordable health plans that are of value to school districts, their employees and taxpayers.
In Ms. Allen’s commentary, she asserts the real cause of the rate of increase is medical inflation. In fact, medical and pharmacy inflation accounts for just over 3 percent of VEHI’s overall 10.2 percent increase in FY19. A full 7 percent of VEHI’s increase is attributed directly to the decisions local school boards and unions make at the bargaining table regarding how out-of-pocket costs are shared between the employer and employees. VEHI’s FY19 health plan rate increase announcement, distributed on Sept. 29, is here.
Local decisions about how employers and employees share the cost of health care have a direct impact on the amount of premium VEHI needs to raise to pay for medical and pharmacy claims incurred by the nearly 36,000 VEHI subscribers and their dependents across the state.
VEHI’s lower premiums for the 2018 health plans were based on an expected significant reduction in claims expenses from increased subscriber awareness and sensitivity to the costs of medical and pharmacy services based upon the design of the new plans. Agreements at the bargaining table regarding employer funding and design of health reimbursement accounts, while fully within the rights of local parties, serve to change the design of the VEHI health plans locally. These decisions require VEHI to recalculate anticipated claims expense before setting the FY19 rate increases, which apply to all members regardless of their local cost sharing agreements.
VEHI’s current health plans have very little incentive for subscribers to consider the cost of medical and pharmacy services. While in FY17 just 2 percent of VEHI’s subscribers contributed to 37 percent of total costs, even small changes in behavior by the other 98 percent of subscribers can add up to significant savings. It is in this area that there is a potential for millions of dollars in savings that, if achieved, could result in savings for our public schools, their employees, and local taxpayers without negatively impacting the health of our subscribers.
VEHI’s entire rating process is public information. The analysis underlying VEHI’s rate increases was conducted and confirmed by two sets of actuaries and will be assessed by a third actuary when the Vermont Department of Financial Regulation reviews VEHI’s rate filing. DFR has the authority to approve or modify the rates VEHI proposed. This level of analysis and review is in place to ensure the long-term financial solvency and stability of VEHI’s health program.
It is also important to note that the 10.2 percent overall rate of increase will not be sufficient to cover VEHI’s expected expenses in FY19. VEHI is planning to use some if its reserves from prior years to cover this gap.
Membership in VEHI is voluntary, and no public school is required to make VEHI plans available to their employees. For more information about VEHI, please visit our website at www.vehi.org and check out our annual report, located here. VEHI board meetings are open to the public. Dates, time and location of these meetings can be found on the website.
