[T]he state’s largest insurer must reduce its proposed rate hike for Vermont Health Connect customers, state regulators have decided.
The Green Mountain Care Board on Tuesday ruled that Blue Cross and Blue Shield of Vermont can enact an average 5.8 percent premium increase for 2019. The company had asked for a 9.6 percent increase.
The availability of additional government subsidies due to a legislative change further lowers the actual average rate hike for Blue Cross customers to 3.2 percent, officials said.
The care board agreed with some of the insurer’s rationale for raising premiums next year. But the board also said the company overestimated the impact of federal regulatory changes and must do more to reduce costs.
“We are not persuaded that (Blue Cross) is without any reasonable levers to constrain costs and premium growth while maintaining its financial solvency,” board members wrote in their decision.
Blue Cross issued a statement that didn’t directly address the care board’s rate reduction.
“We are pleased that the Green Mountain Care Board recognized Blue Cross and Blue Shield of Vermont’s unique contributions to the Vermont health care system and the communities we serve,” spokesperson Andrew Garland said. “As Vermont’s only local, nonprofit health plan, we work hard to make healthcare more affordable for all Vermonters and to help our members get the preventive care they need and pursue lifelong health and wellness.”
The Green Mountain Care Board regulates insurance rates by weighing factors including health care affordability, quality and access. The board also must consider insurers’ financial needs and solvency.
A list of insurance decisions and pending cases is available at the care board’s rate-review website.
The board last week decided to cut the proposed 2019 rates of MVP Health Care – the other insurer on the state’s health care exchange – from an average 10.9 percent to 6.6 percent.
In terms of percentages, this week’s action on Blue Cross’ rate is nearly identical: The board cut both insurers’ requested rates by about 39 percent.
There are some other common factors. For example, the care board decided that each insurer had budgeted for too much of a premium increase due to the fact that, as of next year, there will be no federal financial penalty for those who don’t buy health insurance.
The state’s individual health insurance mandate won’t take effect until 2020. So experts expect that, with the federal penalty lapsing in 2019, some people will drop their health insurance – which will drive up premiums for those who retain coverage.
The board is allowing Blue Cross to raise premiums by 1.6 percent due to that change. But the insurer had wanted 2 percent.
The board took a bigger bite out of Blue Cross’ rates in connection with another federal policy shift – the expansion of association health plans.
President Donald Trump’s administration has loosened rules on association plans, which allow small employers to band together to offer health coverage. Proponents say that change will make health coverage more affordable for small businesses and their employees.
But the state has imposed new rules on association plans in part due to concerns that those plans will drive younger, healthier people away from Vermont Health Connect, thereby increasing the insurance exchange’s prices.
Blue Cross had anticipated that effect and, in an amended rate filing last month, the insurer asked the care board for a 2.3 percent rate hike because of it.
The board, however, says it won’t allow any rate increase due to association health plans.
Board members noted that Blue Cross didn’t include any association health plan impact in its initial rate hike request in May, despite the fact that the Trump administration signaled its intent to expand those plans last fall.
Blue Cross’ “explanation as to why it made its late request for an additional rate increase casts doubt on its necessity,” the board wrote.
Also, the board said the supposed impact of association health plans is “speculative and uncertain” and does not pose any “threat to the company’s solvency.”
Federal issues aside, affordability was another reason the board lowered Blue Cross’ rate request.
The board heard emotional public comment opposing any rate hikes during a public hearing last month. In the Blue Cross decision, board members said they agree that “rising health care costs are unsustainable,” and insurers must be required “to help move the needle and keep health care costs as low as is feasible.”
To that end, the board ordered Blue Cross to reduce its proposed rates by 1 percent. Board members suggested several cost-cutting measures, including Blue Cross using “its significant bargaining power to negotiate lower prices with hospitals both in and outside of the state.”
The board also says Blue Cross must continue its participation in Vermont’s all-payer model of health care payment reform via the insurer’s partnership with OneCare Vermont, the state’s accountable care organization.
That partnership was one of the recent initiatives for which the care board praised the insurer.
“Blue Cross’ efforts to help meet the goals of the All-Payer Model Agreement and its participation in state health care reform efforts benefit all of its members,” board Chair Kevin Mullin said.
Blue Cross has complained that the care board’s annual reductions in proposed rate increases have resulted in “systematic underfunding” that has “serious, negative consequences” for the insurer’s bottom line.
Care board members, in their ruling issued Tuesday, said they are “not unmindful” of Blue Cross’ need to maintain adequate reserve funding. The board also said it has considered federal changes that have both a positive and negative effect on the company.
“We find that, on balance, the carrier has the far greater ability to effect changes that will produce lower rates and tightened spending, while the Vermont consumer has less influence, and fewer options,” board members wrote.
