VT Digger | August 10, 2017

August 10, 2017

UPDATED: Blue Cross will get to raise premiums 9.2 percent

Health care regulators will let Blue Cross Blue Shield of Vermont raise insurance premiums on Vermont Health Connect by 9.2 percent.

The allowed increase is nearly a third less than the 12.7 percent the company originally requested in May. That was the most the company had asked to increase prices since Vermont Health Connect started offering plans in 2014.

The board said the company withheld important information during the regulatory process about the “financial stability” of the company. Once the board got a fuller picture, it said, there was room to cut back the increase for calendar year 2018.

The approved rate increase represents a balancing act, according to the board. “In issuing this decision and order, we first acknowledge the tension between two of our standards for review,” the board wrote in its unanimous decision issued Thursday.

“On the one hand, there is an undeniable need for health insurance coverage that is affordable for all Vermonters. On the other, we cannot reasonably expect our insurers to continue to voluntarily participate in the health benefit exchange if it imperils their financial stability.”

“If health insurance is not affordable, access to it will be restricted; if it is no longer financially viable for an insurer to remain in the marketplace, however, access will also be restricted,” the board wrote. “Our decision today seeks to strike a balance and achieve the leanest rates feasible, while protecting the insurer’s financial health.”

The board’s actuaries had said, upon review as part of the regulatory process, that the premiums should go up 12.6 percent — slightly less than the original request. Blue Cross then agreed with the board’s actuaries and reduced its request to 12.6 percent.

The Office of the Health Care Advocate brought in an actuary who argued that the company was using “conservatism” in its math, and that the increase should be just 8.7 percent.

In the end, the board largely went with the calculations by Blue Cross and its own actuaries. However, the board told the company to decrease the amount of premiums that go into its reserve funds to 0.5 percent, from 2 percent, because it has requested $10.3 million from the state to cover unpaid premiums in calendar year 2016. [...]

Mike Fisher, the chief health care advocate for Vermont Legal Aid, said he supports the reduction in how much Blue Cross can send to reserve funds. “I think that Blue Cross has a number of levers that they can use in the course of a year to manage expenditures,” he said.

The Office of the Health Care Advocate at Vermont Legal Aid had argued that Blue Cross should put 0.8 percent of premiums into reserves — which is slightly higher than what the board ordered.

Fisher said the board’s decision “definitely moved in the right direction, but, “at the same time, I can’t celebrate a 9.2 percent rate increase when I’m so aware that average-income Vermonters with real health care challenges have a real crisis in their ability to afford the care they need.” [...]