BlueCross BlueShield seeks bigger rate hikes

MONTPELIER — BlueCross BlueShield of Vermont is seeking to raise health insurance premiums by an additional 4.3% next year, further increasing a request for already near-record-high rate hikes.

The proposed increase would increase premiums for individual BlueCross BlueShield health plans by an average of 21% and small group plans — plans for companies that employ up to 100 employees — by an average of 24% in 2025. (Because the insurer offers a variety of different plans, the actual increases would vary.)

If approved, the rates would amount to the "highest premium rate increase for our 2025 Qualified Health Plans since the inception of Vermont Health Connect," the state's health insurance marketplace, BlueCross BlueShield President and CEO Don George said in a letter to community members Monday.

"Unfortunately, the high demand for medical services, increasing prices at hospitals, exponential growth in drug prices, and new state laws are all forcing higher premiums to pay for the cost of caring for Vermonters," George said.

BlueCross BlueShield insures roughly a third of Vermonters. About 45,000 residents are insured on its small group and individual plans, which would be affected by the increases. The insurer also sells other plans for larger employers, which are not available on the state's health insurance marketplace.

The requested rate hikes must still be approved by the Green Mountain Care Board, which will issue a decision next month. Owen Foster, the chair of the board, declined to comment, saying that its rate review was still in process.

The board is holding a public hearing to discuss insurance rates at 4 p.m. Thursday.

The request for additional funding is necessary to replenish BlueCross BlueShield's cash reserves, administrators at the nonprofit insurer said.

Under Vermont law, BlueCross BlueShield is required to maintain a certain amount of money in reserve to cover potential risks — such as paying higher-than-expected claims for its members.

The actual amount of reserves required is pegged to the amount of risk the insurer takes on. As of December, according to the state Department of Financial Regulation, BlueCross BlueShield was supposed to have at least $154 million in reserve to cover potential risks. The insurer, however, had only about $88 million as of December.

That shortfall triggered a "company action level event," a circumstance spelled out in state law that requires the insurer to come up with a plan to stabilize its reserves.

"As a result of the inadequacy, an increase to the contribution to reserves is necessary to increase the Company's surplus toward acceptable levels for the protection of policyholders," Kevin Gaffney, the commissioner of the Vermont Department of Financial Regulation, wrote in a July 12 letter to the Green Mountain Care Board.

BlueCross BlueShield administrators said that claims for health care this year have been significantly higher than expected. In March, for example, BlueCross BlueShield expected that medical claims would amount to $590 per member per month, according to testimony from Ruth Greene, the insurer's treasurer and chief financial officer.

In reality, member claims added up to $653 per member per month, with similar figures in April and May.

It was unclear whether MVP, the other commercial insurance company that sells plans on Vermont's marketplace, would also seek to amend its rate request. MVP previously requested average increases of 11.7% for individual plans and 9.3% for small group plans.

"We cannot comment on our filings at this time," Michelle Golden, a spokesperson for MVP, said in an email.

The increased volume of claims led to "extraordinary cost pressures" for health care organizations, George, of BlueCross BlueShield, said in his letter.

"I share the frustration that all Vermonter's feel about rising costs, difficulty accessing services, and the challenges to staying well," he added. "I invite you to join me in an open dialog with our state regulators and policy makers about the cost pressures impacting the commercial health insurance marketplace and the choices that have led to this unprecedented situation."

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