Public advocates are bracing for a decision next week by the Green Mountain Care Board on 2024 health insurance premium rates for state marketplace individual and small group plans.
Even if the board trims requests by the marketplace’s two health insurance providers, premium costs would still go up significantly.
“For regular Vermonters, the cost of health care was already verging on unaffordable,” said Charles Becker, an attorney with Vermont Legal Aid’s Office of the Health Care Advocate, during a board hearing on the rates last month. He warned of a “catastrophic affordability crisis on the near horizon” that would cause more people to go without insurance coverage.
Citing rising hospital charges, pharmaceutical prices and ongoing losses, Blue Cross Blue Shield of Vermont filed for an average rate increase of 18.1 percent for plans sold on the marketplace to individuals and families and 17.6 percent for plans sold to small groups, which include businesses, nonprofit organizations and municipalities with 100 or fewer employees.
MVP Health Care asked for parallel rate increases of 13.8 and 14.3 percent respectively in its filings using similar projections of future costs and losses.
For both companies, these are among the highest annual increases sought in the public marketplace’s 10-year history. MVP’s increase is smaller and BCBS’s increase is greater in size to 2023 requests.
Those plans currently serve around 68,000 Vermonters, roughly 11 percent of the state’s population. The number of people enrolled is expected to increase somewhat over the coming year due to the Department of Vermont Health Access restarting its annual process of Medicaid eligibility checks and renewals, which was paused during the Covid-19 pandemic public health emergency.
Individual purchasers are able to receive federal subsidies based on their income for certain marketplace plans purchased through 2025, but those purchasing through a small group plan are not eligible.
The board received more than 200 public comments on the 2024 rates the two companies proposed.
Among them were dozens of business owners who said a large increase in health care costs would be a blow to their operations. Another increase in premiums would force them to reduce the percentage that they contribute to their employees’ health care premiums, they said.
“Whenever I receive a cost of living increase in my salary, it just gets swallowed up by the increase in health insurance contributions,” wrote Lincoln Town Clerk Sally Ober, who called her current premium costs “astounding.” She also said that “property taxes soar because of this tremendous impact of health insurance on local school and municipal budgets.”
Interconnected and Expensive
In separate daylong hearings last month, representatives of each insurance company acknowledged the jump was large and would prove challenging to Vermonters and small business owners. However, they said, the increase reflects the amount the companies anticipate having to pay out in claims next year.
“These rates don’t exist in a vacuum,” said Mike Donofrio, a lawyer representing Blue Cross Blue Shield, during the company’s hearing. “They are part of a complicated, expensive and interconnected system.”
The Green Mountain Care Board has approved rate changes for health insurance plans sold through the state marketplace, created by the federal Affordable Care Act, since 2014. Small group and individual plans are revisited every year through a quasi-judicial process, while large group plans are reviewed on a rolling basis throughout the year.
The board is tasked with balancing affordability, promoting quality and access to health care and protecting insurer solvency. (An opinion on the latter is provided by the Vermont Department of Financial Regulation.) But over the last 10 years, premiums have steadily increased.
The price for an individual standard Silver plan for a single person has almost doubled since 2014 to around $850 per month for both carriers this year. Small group prices went down for the first time in 2022 when that market was decoupled from the more volatile and expensive individual market, but are now back up to previous highs of around $670 per month.
The companies both say that without higher premiums they would be unable to continue serving those markets.
MVP has lost more than $20 million per year over the last two years and expects to lose well over $14 million in the current year on these Vermont marketplace plans, said Christopher Pontiff, the company’s lead actuary, in the hearing.
For its part, representatives of Blue Cross, also a nonprofit, told the board that its losses over the length of its participation in the marketplace were approaching $10 million, and that only in one of the 10 years did it not lose money.
“As a regional not-for-profit plan we are not out for making our income as high as possible or having as much money in the bank as possible,” Pontiff said. “Ultimately we are here to serve our members and want to do that in the most efficient way possible.”
Both insurers said that projected jumps in the cost of paying claims are responsible for 90 percent of the requested increases.
In testimony, representatives of both Blue Cross and MVP said that hospital budgets submitted to the care board last month led them to revise cost estimates up even higher and to seek larger premium increases. In those budgets, University of Vermont Medical Center and Central Vermont Medical Center requested a commercial insurance rate increase of 13.45 and 10.95 percent respectively, for example.
Blue Cross senior medical director Tom Weigel told the board that the insurer has had no success negotiating hospital prices down from what had been approved by the board in previous years.
“Hospitals often refuse to negotiate with us and they treat the board’s budget allotment as a minimum rather than as a cap,” Weigel said.
Increases in pharmaceutical prices are also a factor, particularly the specialty drugs often administered in hospitals, company representatives said. Hospitals are increasingly filling those prescriptions through in-house pharmacies, a process that blocks insurers from seeking discounts from the manufacturers, they said.
Reviews of the filings by an actuarial firm hired by the Green Mountain Care Board largely confirmed the insurance companies’ projections, with some slight disagreements. The independent actuary also found that both companies spent less than most health insurers on administrative costs.
Comments by both the public advocates and by members of the public emphasized that the sharp upward trend in prices for health care and health insurance were unsustainable and are indicative of systemic failures by policymakers and regulators alike.
“Reform is not happening. It’s pretty much the continuation of how health care has been,” said Sharon Gutwin, a physical therapist who owns a Williston practice. She said that insurers were squeezing her both as an employer with ever-increasing premium rates, and by not paying her the same amount as they do hospital-based providers for the same service.
“It is actually getting worse because, as anything that is broken that isn’t fixed, (it) will continue to break down even more,” she said.
