There’s been a significant decline in the growth of health care costs in Vermont over the past few years. But there are several factors that could reverse this trend.
Five years ago, health care costs were increasing at more than 10 percent a year – a situation that caused big rate hikes for private health insurance premiums. But now the trend line is moving in the opposite direction.
In its most recent filing with the state, Blue Cross and Blue Shield of Vermont had a 3.7 percent increase in its medical costs. Blue Cross Vice president Kevin Goddard says it’s been a long time since the growth rate has been this low.
"It has been a reduction in overall claims costs driven by a reduction in utilization, said Goddard. "It has brought trends down over the last few years to near historic lows really or certainly the lowest point they’ve been in a long, long time."
State officials are trying to determine why the growth rate is slowing down. Anya Rader-Wallack is the chairwoman of the Green Mountain Care Board, the group that oversees virtually every aspect of health care in Vermont. She thinks the sluggish economy has played a key role:
"That the shift towards higher deductible health plans has caused people to reduce utilization and think more about before they use health care costs, forego the use of health care that they might have used if they had had something closer to first dollar coverage."
Blue Cross’s Goddard sees another factor.
"The very significant migration of folks, now almost 8 out of every ten of the prescriptions our members get are for generic drugs that’s very, very high," said Goddard. "Back five or six years ago that was a number that was thought potentially to be unachievable.
The federal Affordable Care Act will provide states with billions of dollars in subsidies beginning in 2014 and these subsidies are paid for, in part, through a new assessment on health insurance companies.
When the assessment is fully implemented, Goddard says it could raise Blue Cross rates by about 3 percent a year.
"So there will be additional costs as well that folks will face not only here in Vermont but across the country to raise revenues in order to provide the subsidies to expand access," said Goddard. "So there’s things going on that will reduce overall costs and there are things going on that will add a little bit too."
But Green Mountain Care Board chairwoman Rader-Wallack says the impact could be less because more people will have coverage.
"So care that doesn’t get paid for or fully paid for will now be paid for through commercial insurance premiums so some of that is reducing cost shift to commercial ratepayers."
The U.S. Supreme Court is expected to rule on the constitutionality of the Affordable Care Act in the next week. If the Court strikes down the entire law, the federal subsidies and the insurance assessment will be eliminated but it’s also possible that the Court will leave this part of the law intact.