This is a variation on an earlier post that appeared as an opinion piece in the Burlington Free Press. The Governor and Legislative leaders are turning their scalpels to services to low and moderate income Vermonters, while ignoring the dramatic bloated costs in the health insurance industry which are by far the greatest threats to Vermont’s financial well-being, not to mention that of individuals and families. If we’re going to cut funds to poor elderly people, let’s be fair and turn our attention to health care board rooms as well…

My Turn: Lax rules drive up health care costs

by Tim Ashe – Wednesday, January 20, 2010

The Free Press may be correct that the Legislature will be hard-pressed to pursue significant health care reform this year (Premature to take up health care in Vermont, Dec. 20) at the same time Congress debates a national plan.

But there is no excuse for the Legislature to stand by in the meantime while Vermont throws away millions each year on existing mismanaged programs.

Take, for example, Catamount Health, which the Free Press editorial declares “has proven to be unsustainable with the economic downturn.” Is the economic downturn really the only issue? Might poor regulation of the private insurers who provide Catamount plans be part of the sustainability problem? Let’s consider Vermont’s experience since Catamount’s adoption.

In 2006 the Legislature’s health care consultant, Dr. Ken Thorpe, projected the unsubsidized premium for Catamount coverage would be $305 per month. Because reimbursements would be tied to Medicare rates, he projected an annual growth rate in premiums in the 3.5% to 4.5% range.

Unfortunately for Vermont taxpayers, since Catamount began in 2007, we’ve had a very different experience. The initial premium awarded to Blue Cross/Blue Shield and MVP in October 2007 was $393/month, a whopping 29% more than worst-case projections at Catamount’s inception. That rate is in place today. And just three months ago, MVP announced it was requesting a shocking 31% increase for 2009-10.

After having the gall to request a 31% increase in our current deflationary economy, MVP lowered their requested increase to 12.4%. Blue Cross/Blue Shield has also asked the State for a – you guessed it – 12.4% rate increase. That’s some coincidence.

Bill Little, president of MVP in Vermont, has said of their rate request: “It’s definitely a sustainable rate, it is an appropriate rate.” I hope the Free Press joins me in affirming that this is not an appropriate rate – not from MVP, and most definitely not from BC/BS in the same year it sent its CEO off with a $6.3 million golden parachute. (It’s worth noting that a year’s worth of proposed premium increases for all 9,300 Catamount enrollees could be more than covered for much less than $6.3 million).

Vermont’s regulatory record with Catamount looks still more troubling when viewed in the context of trends in health care spending:

• BISHCA’s January 2009 health expenditure survey pegged Vermont’s 2007 growth in health care spending at only 4.5%.

• A June 2008 article in the New England Journal of Medicine reported the per person cost of Massachusetts’ Commonwealth Care was $352.43 a month, compared to the $393.11 allowed for Catamount, despite the fact Massachusetts’ per capita health costs are above the national average, while Vermont’s are 90% of national.

• A study of President Obama’s original health care proposal conducted just months ago by the Lewin Group put the 2009 cost of an unsubsidized single premium for a policy comparable to Catamount at $298/month – a level comparable to Dr. Thorpe’s estimate.

At present, there are 1,339 Vermonters who pay full cost for their Catamount enrollment. Taxpayers pay a share of the burden, however, for the remaining 7,988 enrollees. Every inflated dollar of premium for those subsidized Vermonters is another dollar burned by taxpayers. Unfortunately we’re burning millions.

Catamount is not unsustainable, but it will quickly become so if BC/BS and MVP continue to have their way with Vermont regulators.

Rather than merely opine about Catamount’s sustainability, or to blame its challenges solely on the economy, the Free Press would serve its readers well to dedicate investigative staff time to exploring in detail why BC/BS and MVP are being allowed to charge Vermont taxpayers so much more than had been anticipated.

Then the Free Press can move on to challenge the hospitals for their combined requested $112 million budget increase (excepting the frugal folks at Springfield Hospital, who came in with a $1.7 million decrease).