Vermont regulators trim health insurance premium increases

The two insurance companies that offer health care plans through Vermont Health Connect to individuals and small employers will be able to increase premiums by double digits in 2024.

However, regulators significantly cut back the rates that insurers had requested, based largely on the expectation of regulatory cuts in 2024 hospital budgets, for which hearings begin this week.

The Green Mountain Care Board, which oversees changes in the cost of and benefits provided by plans sold on the state’s health insurance marketplace, set premium rate increases for Blue Cross Blue Shield of Vermont and MVP Health Care in decisions released late Monday. Despite the scaling back, the increases will be among the highest annually since the first full year of the state marketplace in 2014.

Vermont Legal Aid’s Office of the Health Care Advocate represents the state’s ratepayers in the quasi-judicial rate proceedings, which took place in July. Chief Advocate Mike Fisher said Tuesday that he appreciates the reductions forced by the Green Mountain Care Board, calling the avoided costs to consumers “real money.”

But the increases will still make it harder for individuals and small businesses, nonprofits and municipalities to afford the plans they purchase on the exchange, he said.

“Before this double-digit rate increase that the board agreed to, Vermonters already were priced out of the ability to get the care they need,” Fisher said.

Those plans currently serve just over 68,000 Vermonters, roughly 11% of the state’s population. The number of people enrolled is expected to increase by several thousand over the coming year because the Department of Vermont Health Access is restarting its annual process of Medicaid eligibility checks and renewals, which was paused during the Covid-19 pandemic.

Individual purchasers are able to receive federal subsidies based on their income for certain marketplace plans at least through 2025, when the expansion of subsidies that occurred during the pandemic would need to be renewed by Congress. Generally, people purchasing through a small group plan and those individuals purchasing directly from the insurer are not eligible for federal subsidies.

The 2024 increases in premium prices will vary across the range of plans each insurer offers. On average, Blue Cross Blue Shield individual plan premiums will be allowed to increase by 14% and the small group plans by 13.3%, the board concluded. In a parallel decision, the board allowed MVP Health plans to increase the cost of its plans by 11.4% for individuals and 11.5% for small groups. These increases are higher than those approved last year for Blue Cross Blue Shield, but lower than last year’s increase approved for MVP.

The approved rate increases “reflect the reality of providing high-quality care in the face of increasing costs in the healthcare industry,” said Everett Patterson, MVP Health Care’s head of commercial sales, in response to the board’s decision, in a written statement. “Factors such as rising pharmaceutical prices, hospital budgets and a surge in health care utilization rates contribute to these challenges.”

The care board estimated in a press release that the decisions will result in average premium increases in 2024 of around $105 per month for an individual plan with Blue Cross Blue Shield and around $90 per month for one with MVP Health. For small group plan purchases, the average cost increase per member per month is estimated to be around $89 per month for Blue Cross Blue Shield and around $78 per month for MVP.

“While we were able to reduce these rate requests, we know that Vermonters will still struggle to pay for their health care,” said Owen Foster, the Green Mountain Care Board chair, in a written statement. He said the board would continue to “use every tool we have” to improve affordability and access to high-quality care. He pointed specifically to hospital budgets, calling them a “key driver in health care cost increases.”

The Green Mountain Care Board focused on drawing the connection between the recent growth in the state’s hospital budgets and the increases in insurance premiums.

Using the same wording in both decisions, the board made clear that the commercial rate increases approved as part of the hospitals’ annual budget review are “a ceiling, not a floor,” and are “a cap, not a sword to be wielded in negotiations with insurers.”

“We do not condone any effort by Board-regulated entities to utilize approved rates as entitlement,” the decisions read.

The board urged the two insurance companies to consider affordability, quality and access when negotiating rates on behalf of their members.

The board’s decisions scaled back the average premium increases by around four percentage points, roughly one-quarter of the request. The legal opinions cited a variety of factors for that decision, but the largest is that regulators said insurers should assume health care costs in 2024 will be lower than the companies had projected.

The board lowered expectations related to the usage of healthcare for Covid-19 infections, and reduced the anticipated growth in the cost of specialty pharmaceuticals. But the largest change in premium increases in both decisions came from reducing insurers’ projections related to 2024 Vermont hospital budgets and what hospitals would charge commercial insurance carriers for services as a result.

The Green Mountain Care Board also regulates the annual budgets for Vermont’s 14 non-federal hospitals, which range in size from the University of Vermont Medical Center, with more than 450 licensed patient beds, to Grace Cottage Hospital in Townshend, with 19 licensed beds. Hearings related to the hospitals’ 2024 budget requests will begin Wednesday morning and run through Aug. 25.

“The Board promised increased scrutiny of hospital budgets, which will impact affordability for all Vermonters,” said Sara Teachout, who directs government and media relations for Blue Cross Blue Shield of Vermont, in a written statement.

In earlier guidance, Green Mountain Care Board staff suggested to insurance companies that, in developing premiums, they should assume that the board will cut down whatever charges hospitals propose by 17%, which is a historic average.

But, in the decisions, the board stated that percentage cut was too conservative an assumption, given that many hospitals requested increases in patient revenue of more than 20% over the 2022 fiscal year. Because the prices paid by Medicare and Medicaid, federal and state public insurers, are already fixed, the large majority of any increase in patient revenue is borne by commercial insurers.

Noting that the Vermont hospitals’ proposed price increases exceeded growth seen for similar services nationally, the board said in its decision, “we conclude that a 50 percent reduction is a more reasonable and appropriate assumption than 17 percent.”

Hospital representatives responded to the board’s conclusion around cuts during a press event Tuesday morning scheduled to precede the hospital budget review hearings.

Mike Del Trecco, president of the Vermont Association of Hospitals and Health Systems, said a 50 percent cut would be “absolutely catastrophic to the care we deliver to our communities.”

Hospital leaders echoed his statement.

“The budgets that every CEO submitted are the budgets that we really think we need to provide the health care that our communities deserve,” said Anna Tempesta Noonan, who heads Central Vermont Medical Center in Berlin, part of the University of Vermont Health Network .

Trey Dobson, chief medical officer at Southwestern Vermont Medical Center based in Bennington, which recently completed its previously announced integration with the region’s other large health network, Dartmouth Health, was more blunt.

“I don’t think you can reduce expenses any more without cutting services, point blank,” he said.

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VTDigger's health reporter. More by Kristen Fountain