Re-printed with the permission of The Columbia Journalism Review
Last week, Vermont's Green Mountain Care Board , an independent body created by the legislature to approve benefit plans and rates in the state shopping exchange, announced rates that will be charged by insurers selling through Vermont Health Connect in the fall. And guess what? Board chair Anya Rader Wallack said there wouldn't be much difference in the rates consumers with individual policies pay now. Kevin Goddard, a spokesman for Blue Cross Blue Shield of Vermont, told the Associated Press that the rates Blue Cross would charge through Health Connect would be "comparable" to what they would pay if the exchange did not exist. The AP was the major outlet to pick up the story--but, it did not report that what's happening with rates in Vermont is likely to be replicated in other states when the new rules take effect in January.
Maybe because Vermont is, well, Vermont--you know, a bit quirky, marches to a different drummer--its rate announcement did not attract the media hype that rate revelations in California and Ohio did. Recall that in California, the announcement produced a slew of stories reporting that California rates showed there was no "rate shock" after all. In Ohio, a slew of stories passed along the insurance department's spin that rates could go up as high as 88 percent.
Or, maybe the lack of media attention stems from the fact that Vermont has had tighter insurance regulation and provisions already in place that mirror what other states have to follow in January, and so the state's rates are a reasonably accurate portrayal of what shoppers in an exchange will face. And, who wants to report that story? Vermont, for instance, does not allow medical underwriting in the individual market. That means insurers all along have not been able to reject shoppers who had medical conditions that would cost them a bundle. And Vermont requires an insurance community rating technique, which means that insurance companies charge the same rates to older and younger people. In other words, younger people who don't use many health services subsidize older people who do. Vermont has used "pure" community rating for many years for non-profit insurers selling in the small group and individual markets. For-profit carriers in the individual market have been able to use "adjusted" community rating that allows them to charge more for age and other factors. In January, insurers selling through exchanges in other states will not be able to reject people with pre-existing conditions and will be able to use only geography, age, and smoking status to adjust rates. Shoppers who live in high-cost areas of a state, smoke, and who are older will pay more. Obamacare prohibits insurance companies from charging an older person more than three times what it charges a younger one.
What does all this have to do with Vermont? It means that its rates may well reflect what will happen in other states when carriers must change the way they do business--in particular, when they have to insure all comers no matter how sick they are. This is basically what actuarial consultants have been predicting . The media, though, ignored their predictions in favor of the more dramatic "rate shock" or "lack of rate shock" meme.
The AP didn't connect these dots in its recent piece about Vermont's rates. That's too bad, since the AP has a long reach and ordinary readers have little understanding of all this insurance inside baseball stuff--stuff that affects what readers actually pay. It seems like the basic question from reporters should have been, What does Vermont do differently and what might it mean for other states?
It would have been good for the AP to scrutinize the rates listed on Vermont's Department of Financial Regulation website. The preliminary rates show fairly high premiums, especially for the better plans that offer much more comprehensive coverage than the bronze policy often used to make the claim for low rates. Take Blue Cross Blue Shield plans, for example. The standard gold plan, which would cover 80 percent of the costs of medical care, would cost a family $1,048 a month; the standard silver plan covering 70 percent would cost them $907. A single person would pay $524 for a gold plan and $454 for a silver. The standard plan contains all the essential minimum benefits set out in Obamacare. These rates will be somewhat lower when they are finalized. The Green Mountain Care Board ordered a 4.3 percent reduction from the rates for Blue Cross and a 5.3 percent reduction for MVP, the other carrier selling on the exchange. Of course, for the 60 percent of those who buy in the individual market, tax subsidies will further reduce their premiums.
Some plans came with an asterisk. They were either consumer-driven health plans or high deductible plans. But, what does that mean? Not finding an explanation, I consulted Vermont Health Connect, which has a glossary , but no definition for either term. (The glossary links to two government websites , one of which offers a bit more information). Consumer-driven plans , narrowly defined, refer to one tier of health insurance coverage that uses tax-favored health savings accounts or health reimbursement accounts. Policyholders use these accounts to pay medical expenses. High deductible plans come with high deductibles which policyholders use to pay expenses before insurance pays.
Shoppers shouldn't have to consult a zillion websites to understand what these are. Seems to me that reporters could help their readers out by looking for clarity of information and calling out the gaps. Good advice for those on the exchange watch beat.