New Report Says Private Health Care Costs To Increase By 7 Percent

11/29/12 7:34AM By Bob Kinzel
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According to a new report, private health insurance premiums are increasing, on average, by roughly 7 percent this year and state officials say it's unlikely that this rate will go down unless comprehensive payment reform plans are put into place.

Two years ago, lawmakers consolidated virtually every aspect of health care in Vermont to the Green Mountain Care Board as part of an effort to help slow down the state's health care growth rate. And as part of its authority, the Board has been reviewing private health insurance rate hike requests since the beginning of the year.

Board chair Anya Rader Wallack says her panel has reviewed more than a dozen requests and she says the average increase is roughly 7 percent. She acknowledges that part of the increase is because state government doesn't pay its full share of health care expenses.

"The premiums that are paid by commercial insurers includes some cost shift from the public sector," said Rader Wallack. "So there's a 5 percent increase in hospital costs the private side pays more than the 5 percent and the public side generally pays less than the 5 percent. That's a problem we're working on." 

Mark Larson is the commissioner of the Department of Vermont Health Access. He says the key to slowing down the growth rate of health care expenses is to develop new payment reform models that move away from the traditional fee for service system.

"This notion of changing how we deliver service is really fundamental under any system that we have," said Larson. " That whatever future we have if we don't change how we deliver care and change the way we reimburse folks for care, it's unlikely that we can make the progress that we need to make."

The region's two largest hospitals, Fletcher Allen in Burlington and Dartmouth Hitchcock in Hanover, New Hampshire, are working with most of Vermont's other hospitals to create a new payment system for Medicare patients. That application is now being reviewed by federal officials.

Rader Wallack has high hopes for this collaboration which she says could initially affect the state's 50,000 Medicare recipients.

"So that will be a big deal if that gets underway and we are looking at ways in which we could pilot that through other payers," said Rader Wallack. "The application that's under is just for Medicare but we're looking at that model as a potential pilot for others.

Rader Wallack says it will probably take between 18 and 24 months for the initiatives developed by her Board to have an impact on the state's growth rate of health care spending.

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