By PATRICK ADRIAN
[email protected]
SPRINGFIELD, Vt. — Potential rate increases to private health insurance in Vermont will impact businesses and individuals, but hospitals will feel the effect as those increases cause Vermonters to drop coverage.
According to Anna Smith, chief of marketing and development at Springfield Medical Care Systems, Blue Cross Blue Shield Vermont’s request to increase average rates by 14-to 15% in 2020 would not directly impact Vermont hospitals and care providers, but those effects to insurance enrollment could affect health systems greatly.
“Our ideal as a hospital is for all people to be insured and to keep health care costs low,” said Smith.
Vermont currently has a high percentage of residents with insurance, Smith said. But should insurance ever become so unaffordable that people start to drop their coverage, the system will suffer the costs. Higher populations of uninsured citizens increases the use of emergency rooms and unrecovered bills for costly services, which cause health care providers to increase their rates and insurers to increase their rates in response.
Higher uninsured populations also receive minimal to no primary care, which prevent the need to make expensive emergency room visits later.
Vermont board considers rate increases
Last week, the Green Mountain Care Board, which oversees health care cost and accessibility in Vermont, held a two-day public hearing for requests by Blue Cross Blue Shield and MVP Health Care, two prominent insurers in Vermont’s network, to increase their rates by over 10% in 2020. MVP is asking for an 11% increase to its plans offered on the state health insurance exchange, and Blue Cross Blue Shield is requesting an average rate increase of 14.5%.
On Tuesday, July 23 the GMCB heard witnesses speaking on behalf of Blue Cross Blue Shield, including the company’s actuary Paul Schultz.
Schultz explained how the company estimates its rates for 2020, telling the board that they study trend costs to project how membership enrollment, health trends and services will change from 2018 to 2020. Important figures include the cost of claims, trends in hospital budgets and projected changes in population.
“We look at data among the people who left our coverage, new members and continuing members,” Schultz said.
According to Schultz, their company has to factor the continual changeability of their insurance pool, as customers who leave the pool are often slightly healthier than when they entered, and continuing members will be two years older and potentially carry a higher health risk.
Blue Cross Blue Shield also projected a 4% cost increase due to the Medicare Advantage health insurance tax going into effect next year. Congress is currently considering delaying the tax’s implementation until at least 2021, though that decision may not happen before Vermont decides its insurance rates.
The GMCB is expected to decide on the requested increases next month. It is not unusual for the board to reduce the requested rate of increase. Last year, the care board reduced Blue Cross Blue Shield’s requested increase of 9.6% to 5.8% and MVP’s request of 10.9% to 6.6%. However, representatives of Blue Cross Blue Shield said on Tuesday that their rates in past years have not been adequate and forced the company to cover the shortfall from their reserves. Schultz also said that the insurer projects a 15% increase in the cost of prescription drugs as a major driver in the rate requested for 2020.
Vermont enrollment remains high
The Vermont Department of Health reported that 604,800 Vermonters, or 97% of the state population, claimed to have health insurance in 2018, according to a department study of households.
Despite cost increases to insurance rates, the report found that the number of Vermonters with insurance remained unchanged between 2014 and 2018. Though the number of people with private insurance has decreased since 2000, from 60% to 53%, the number of uninsured decreased during that period from 8% to 3%. The proportion of Vermonters with Medicare increased between 2000 and 2018 from 14% to 19% and Vermonters with Medicaid increased from 16% to 22%.
The continual change in the insurance pool, plus a multitude of variables to consider, makes it hard for an insurer to accurately project how changes will impact their future costs, said Dave Dillon, actuary for consulting firm Lewis and Ellis, at the Tuesday hearing.
According to Dillon, Blue Cross Blue Shield may have overestimated the cost difference in enrollment makeup between 2018 and 2020. Even if the insurance company’s data is correct regarding members leaving, joining or continuing, one must know additional information — such as how members are continuing their enrollment because of a serious diagnosis — to determine the actual cost impact.
While Blue Cross Blue Shield reports an overall decline in enrollment, Dillon said that when looking at Vermont’s overall market, the number of uninsured remains the same. Other insurance providers in Vermont report little change in membership entering next year, whereas MVA Health Care reports an increase in enrollment.
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