Our Rates Reflect the Actual Cost of Care – Not Profit Projections

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Navigating Health Care

Commentary: Don George

As the CEO and President of Blue Cross and Blue Shield of Vermont, Don George is a leader who cares deeply about the lifelong health and wellbeing of Vermonters and making the health care system work better for everyone. Born and raised in Barre, his commitment to achieving a transformed health care system in which every Vermonter has health care coverage and receives timely, effective, affordable care has been central to his tenure. Don holds a Master of Science degree from St. Michael’s College in Management and Administration as well as a Bachelor of Science degree from the University of Vermont in Business Administration.

Our rates reflect the actual cost of care – not profit projections

All of us Vermonters are worried right now.

There is a lot going on. Parents and teachers are struggling with the bleak reality of school during a pandemic. Our downtown businesses are battling to survive with fewer people walking through the door. We miss being surrounded by our friends and family. And health care costs continue to rise at an alarming pace.  

At Blue Cross and Blue Shield of Vermont, we have always worked diligently to keep our premiums as lean as possible. This year is no different. Unlike many insurers, BCBSVT is a non-profit company and therefore our rates reflect the actual cost of care, and do not have profit margins built in.

Unlike many other states, Vermont has stringent health insurance oversight and regulations. The Vermont Department of Financial Regulation and the Green Mountain Care Board monitor us regularly to understand how we are balancing affordability, solvency, and service. We work closely with our regulators to ensure that we never overcharge. Unlike the precipitous climbs and falls of health insurance rates in other states, our rate requests carefully reflect the cost of care.

In recent days you may have seen that insurers in some of our neighboring states have provided rebates on health insurance premiums. That’s because they are overcharging. Rebates make great headlines, but here at Blue Cross and Blue Shield of Vermont, we believe that Vermonters should keep their money in their pockets – not ours. The Affordable Care Act requires refunds only when premiums exceed the cost of care and reasonable administration, which ours do not.

This is true of our current rate request. We expect to pay $10 million or more in 2021 for COVID-19 care, testing, vaccine administration, and non-COVID services that will be postponed from 2020. None of that $10 million was factored into our filed rates. This is equivalent to nearly a 40% refund of a monthly premium, far higher than the refunds provided in other states. Again, our practices reflect our inherent belief in keeping rates as low and as steady as possible.

To that end, we consistently invest in making our health care system in Vermont more sustainable and innovative so that we can drive down rates to the best of our abilities.         

Pilot initiatives like the capitated payment program at Southwestern Vermont Medical Center incentivize providers to keep their patients well, rather than incentivizing volume of procedures. We have invested in the non-profit drug manufacturer Civica Rx to produce and deliver necessary medications at affordable prices. Similarly, the collaborative PATH Pain Program encourages Vermonters to develop sustainable strategies for living well with the pain that they have rather than being harmed by addictive painkillers.

With these initiatives in mind, it is important to understand that our proposed rate increase for individual and small group plans is the lowest requested rate increase possible. Without this increase — which is required for us to keep pace with rising medical costs and medications that have not paused during the pandemic, particularly those used to treat our chronically ill neighbors — we  would simply be shifting costs onto future rate payers.

For a Vermonter who needs a commonly-prescribed specialty drug that costs $24,000 a month, BCBSVT’s average $675 monthly premium is unquestionably affordable—it is far, far less expensive than the cost of their health care. But it requires 39 Vermonters who use no health care whatsoever to support their one neighbor with an expensive health care need. Those healthier Vermonters may view their premiums as unaffordable. But what they contribute is what it takes to pay for the cost of health care for the community of 40, and to pay for the assurance that they, too, will be covered if an accident or illness changes their circumstances.

Health care affordability is a serious concern. But until Vermont is able to get a handle on medical costs that continue to rise year over year, and Congress controls the astounding costs of pharmaceuticals, insurance rate increases are unfortunately going to follow. This is true with or without the pandemic.

As Vermont’s only local non-profit health plan, BCBSVT remains committed to standing with our members and ensuring that our rates reflect the actual cost of care – not profit projections. Unlike insurers in other states who overcharge then provide rebates, BCBSVT consistently keeps premiums as low as possible.