State health care regulators will allow Vermont’s private insurers to raise premium rates again next year, though far less than they’d hoped. Blue Cross Blue Shield of Vermont, the state’s largest insurer, received permission to raise premium rates for individual and small group plans by about 9.5 percent and 4.5 percent, respectively. That’s far less than the 24 percent and 13.5 percent hikes the insurer originally sought.
The Green Mountain Care Board similarly reduced increases sought by MVP, from about 6 percent to a little over 1 percent for individual plans and from 7.5 percent to 2.5 percent for the group plans.
The decisions come as regulators strive to balance two competing priorities: keeping Vermont’s nation-leading premium rates in check, and making sure private insurance companies raise enough money to cover claims.
“I am proud of our work to take a bite out of our soaring healthcare costs this year,” said Owen Foster, chair of the care board, in a press release last week. “At the same time, our decisions protect insurer solvency so they can meet the needs of their members.”
Blue Cross Blue Shield of Vermont has posted substantial losses in recent years, endangering its immediate future. In May, the insurer said needed substantial hikes to cover next year’s anticipated claims and to begin building back its reserves.
A few recent developments have given regulators reason to believe that the insurer can get by on a smaller increase.
Gov. Phil Scott signed into law a bill this June that will cap how much some hospitals can charge for certain specialty drugs. Blue Cross says the change, which goes into effect next year, will save it “many millions of dollars.”
Regulators also made clear during this summer’s hospital budget cycle that they will not entertain any any major increases to charges, which insurers say are the driving force behind rising premium rates.
But uncertainty remains, led by the anticipated expiration of tens of millions of dollars in federal subsidies that have lessened the impact of recent rate hikes. Blue Cross estimates that thousands of people on the individual marketplace could drop coverage once the subsidies expire — likely younger, healthy people — which could result in higher costs for those still insured.
Andrew Garland, vice president of client relations and external affairs at Blue Cross Blue Shield of Vermont, said in a statement that while the insurer was “very supportive” of attempts to rein in health care costs, hospitals will also need to play their part.
“Our members are using a lot of expensive healthcare, and we know from looking at national data that the cost of that care here in VT is quite high,” Garland wrote. “As a community, we have to pull together and address the cost of care at our local hospitals.”
It’s a message state regulators have voiced for years, and one that hospitals seem to be receiving. Most have announced recent cost-cutting measures and proposed budgets this summer that reflect relatively modest increase compared to previous years.
The care board will issue its final decisions next month, after which hospitals can begin negotiating with insurers for next year. Only then, Garland said, will Blue Cross know whether it can sustain itself on the recently-approved rates.
