It’s a first: Health insurance costs for some Vermont small businesses could go down in 2022.
Blue Cross Blue Shield of Vermont has requested a whopping 8% decrease in health insurance rates for small businesses and nonprofits — a first for the company, spokesperson Sara Teachout said.
MVP Health Care, by contrast, filed for a 5% increase.
The future is less rosy for those who buy insurance on Vermont Health Connect.
The companies have filed for massive hikes — MVP Health Care asked regulators for a 17% rate hike in 2022. Blue Cross requested a 8% increase. Both insurers are banking on new federal money to pick up the tab for the higher prices.
“There’s good news and bad news,” said Kevin Mullin, chair of the Green Mountain Care Board. “Some people will see a reduction in insurance costs. We’d like everyone to see lower costs.”
Health insurers filed the proposed rates with the Green Mountain Care Board on Friday afternoon. The board will hold hearings in late July before a final vote later this summer.
Who exactly will be affected, and how much, remains to be seen: The uncertainty of the health care landscape as Covid-19 cases decline, a glut of federal money to offset insurance costs and a policy shifts on the state level will all play a role in determining who bears the brunt of the increased costs.
Differing assumptions and projections for 2022 also appear to have contributed to the vast disparities in the rates the two largest health insurance companies are requesting.
Health care advocate Mike Fisher said the roughly 10% difference between the carriers in each market was the largest he has ever seen. “It does beg the question what drives it,” he said and his office plans to dig into the filings in the coming weeks.
Separate markets
It’s the first time since 2013 the companies have filed two separate rates for businesses and individuals. The Legislature passed a bill, S.88, to split the combined market to take advantage of federal subsidies available to individuals through the American Rescue Act Plan.
The federal stimulus bill provided hefty tax credits to individuals who buy insurance on the state exchange. The law capped the cost of health insurance at 8.5% of household income, making all but the wealthiest Vermonters eligible for the discount. A family of four with up to $265,000 in annual income can qualify for some discount, as can an individual making as much as $95,000.
Dividing the market was meant to help save money for the small-group market — any business, nonprofit or municipality with fewer than 100 individuals. The group, which tends to have a healthier, younger population than other groups, historically subsidized the individual market, which has a less healthy population with higher medical costs.
The divided markets will be in place for one year but could be extended if the federal government extends the subsidies.
Teachout, the Blue Cross Blue Shield spokesperson, said the lower rates will provide much-needed relief to businesses. “We know that small businesses and nonprofits are hurting right now,” she said.
Spokespeople for MVP Health Care and Blue Cross Blue Shield both said they were betting on the federal subsidies to mitigate — or erase — the effects of the rate increases on Vermonters.
The stimulus money will mean Vermonters won’t necessarily foot the bill for the proposed 17% rate increase, MVP spokesperson Michelle Golden said. “The requested rate increase will not impact most of MVP’s individual members,” Kelly Smith, the company’s chief of sales, said in a statement. She attributed the hike to higher costs of pharmaceutical drugs, medical care and hospital budgets.
Indeed, the federal government will likely cover the “lion’s share” of the increases, Fisher said — though exactly how much would depend on the income of the individual buying the policy.
Go shopping
MVP Health Care has been adding members in the past few years and historically has asked for lower rate increases than Blue Cross. But the divergence may cause Vermonters who have made the switch away from the state’s largest insurer to move back.
Teachout attributed the lower Blue Cross rates to internal efforts to cut costs. The company signed a contract with a new pharmacy benefit manager, Optum Rx, which buys drugs in bulk from pharmaceutical companies and manages relationships with pharmacies on behalf of the insurer. The bidding process led to better deals for Blue Cross, she said.
The people Blue Cross is insuring are also healthier on average than in past years, Teachout said. Less risk for the company means lower costs for customers. Teachout said company analysts didn’t know why the risk was lower but said that fewer people had chronic conditions, which are expensive to treat.
Covid-19 did not affect insurance costs, she said. Levels of care are expected to return to normal in 2022, and the company is paying for testing and vaccination costs out of its reserves.
The lower rates “demonstrate our commitment to doing everything possible to help our customers, especially this year when so many are in need,” Blue Cross Blue Shield CEO Don George said in a statement.
The rates apply to only about 72,000 Vermonters. About 31,000 buy insurance individually through the exchange, and roughly 41,000 receive insurance through their employers in the small-group market.
Even though they make up less than 15% of the population, they’re the people who are often saddled with the highest insurance costs, Mullin said. He vowed to be aggressive in regulating the insurance companies and encouraged Vermonters to shop for the best deal.
Even with the current cost of health care, “Vermonters are having a tough time paying these prices,” he said.