Health Insurance Cost Pressures Rising

In the February Economic Survey of Vermont businesses, rising health insurance costs was listed in the top three concerns for small businesses. Pressures on the health care system will likely result in higher premiums as the pandemic continues. This was on display as three hospitals asked the Green Mountain Care Board for a rare mid-year rate increase this week. During the process, businesses expressed concern that they could not afford an unplanned insurance premium hike as they continue to feel the impact of workforce shortages, supply chain disruptions, and rising inflation.

Meanwhile, Blue Cross Blue Shield of Vermont (BCBS-VT) brought forth a proposal that could benefit individuals and small businesses that purchase health care in the Exchange. Currently, those markets are set to revert to the pre-2022 configuration which would continue the long-time practice of having businesses subsidize the individuals, increasing premiums for employees to reduce premiums for individuals purchasing their own insurance. Last year, the Legislature approved a one-time reprieve due to federal subsidies that allowed the unmerging of these markets without negatively impacting individuals and simultaneously saving small businesses $17.7 million. The hope is that the federal government will continue those subsidies, but that has yet to happened, which means the rates for small businesses for 2023 could increase again. However, the BCBS-VT proposal could keep the markets permanently unmerged, mostly impacting the individuals in that pool with incomes above $159,000. There would be some impact on other individuals, but the Legislature could choose to spend $1.9 million to mitigate it. This change would result in saving businesses in this market from feeling the return of the $17.7 million cost-shift. This important effort is especially timely as provider rates are likely to increase, whether that is mid-year as currently under discussion by the Green Mountain Care Board or as they review next year’s budgets.