[S]tate regulators have significantly reduced a proposed 2019 rate hike for one of the two insurers on Vermont Health Connect.
The Green Mountain Care Board has ordered that MVP Health Care must cut its average rate increase for individual and small-group plans on the exchange from 10.9 percent to 6.6 percent. When available subsidies are figured in, officials said the actual rate increase for many policyholders drops to 1.9 percent.
The care board praised work that MVP has done to make health care more affordable. But regulators said the New York-based insurer needs to pursue “operational and systemic improvements that will benefit its members.”
“We are convinced that MVP has the ability to become more efficient in its operations and innovative in its policies, with the goal of improving care delivery, health outcomes and reducing health care costs,” the board wrote in its decision, dated Thursday.
In a statement issued Friday, MVP President Chris Del Vecchio said the company needs “some time to determine the impact of the lower increases that were just approved.”
“The disparity among requested increases and approved rates reflects that everyone in health care is struggling to make sense of an environment of rising costs and great uncertainty,” Del Vecchio said. “MVP Health Care takes seriously our responsibility to control cost increases to the best of our ability while improving health care quality and access, and we will continue to work with our members, providers and others to do so.”
The care board regulates insurance rates as part of its mission to control health care costs, boost access and ensure quality of care. Since May, the board has been considering proposed 2019 Vermont Health Connect rate increases requested by MVP Health Care and Blue Cross and Blue Shield of Vermont.
The board has not yet decided on a rate for Blue Cross, which is the larger of the two insurers. Blue Cross’ proposed average rate hike for next year is 9.6 percent without available governmental subsidies figured in.
The care board’s deliberations have included input from the insurers, actuaries and the state’s health care advocate for consumers. Board members also heard impassioned opposition to insurance-rate hikes at a public hearing last month.
In their MVP ruling, board members said the public comments they received could be summed up this way: “For many Vermont individuals, families and businesses, health care remains unaffordable under any reasonable standard.”
At the same time, the board is obligated to consider other factors including insurers’ financial health. That requires a “balancing of statutory considerations,” the board wrote, since “unaffordable rates will hamper Vermonters’ ability to access quality care, while affordable rates that imperil an insurer’s solvency will likewise threaten Vermonters’ access to care.”
Within that context, the board agreed with some aspects of MVP’s proposed rate increases but reined in others.
For example, the board acknowledges that insurers will see some impact due to next year’s elimination of a financial penalty for the federal individual mandate. Officials expect that some healthier Vermonters will drop their insurance because of that policy change, thus increasing premiums for the rest of the population.
Vermont has enacted its own mandatory health insurance law, but that won’t take effect until 2020.
The care board is allowing MVP to increase its rates by 1.6 percent to account for the federal individual mandate change. But that’s lower than the insurer’s 2 percent proposed hike.
Similarly, the board ordered lower-than-requested rate hikes in connection with such issues as unpaid consumer premiums, contributions to reserve funds and expected hospital budget increases.
On that latter topic, board members noted that hospitals’ proposed budgets for next fiscal year are still “preliminary and untested,” and the board “has actively sought to control the growth in hospital spending by consistently ordering reductions to initial budget submissions.”
The care board also cut MVP’s rate increase by 1 percent on the basis of consumer affordability and accessibility.
The board said MVP, which covers about 25,000 Vermonters by way of the health exchange, has “priced its plans competitively, grown its Vermont membership and sought to increase price transparency.” But given the high cost of health care, those measures “are only a starting point,” the board wrote.
Board members said they want MVP to get involved with the state’s fledgling all-payer model of health care payment, which emphasizes preventive care and shifts away from the fee-for-service method. The insurer has been in talks to do so but has not yet made a commitment, state documents show.
In a statement accompanying the care board’s ruling, board Chair Kevin Mullin said he hopes MVP “will continue to pursue cost-containment initiatives and achieve additional operational efficiencies, especially moving from a fee-for-service payment methodology to reimbursement that is value-based.”
MVP also should negotiate “favorable pricing” with hospitals; reduce administrative costs; cut down on fraud and waste; and emphasize primary care, the board said.
Care board member Tom Pelham added his own note at the end of the board’s MVP decision, expressing “deep concern” about health care affordability.
Even with state and federal subsidies factored in, Pelham said premiums for Vermont Health Connect plans are still “hefty.” For example, he wrote that a couple at 400 percent of the federal poverty level would hand over 15.6 percent of their income for a standard bronze plan on the exchange.
With the state moving toward mandatory health insurance in 2020, officials must control insurers’ rates “so as to not force Vermonters into unacceptable financial and/or health-deprivation corners,” Pelham wrote.
Pelham also advocated a mid-year funding increase for the Department of Vermont Health Access to help “cushion the impact” of recent federal changes by increasing health care subsidies for consumers.
