Health care costs predicted to rise 15% annually

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(Host) There’s some bad news for many consumers and businesses throughout the state. Most health care premiums are expected to increase at least 15% this year, and the outlook for the future is just as bleak.

VPR’s Bob Kinzel reports.

(Kinzel) According to a new national report, the average cost of providing health care to a single person in an employer-based plan was $3,800 last year, while the premium for a family policy was just over $9,000. This represents an increase of almost 14%. In Vermont, the state’s largest insurer, Blue Cross and Blue Shield is anticipating sizeable rate hikes for the foreseeable future.

Blue Cross Spokesperson Kevin Goddard says there are a variety of factors responsible for these major increases, including more utilization of health care services, higher prescription drug costs and a cost shift from several federal programs:

(Goddard) “As difficult as that is for folks to hear, that their health insurance premiums if they are an average utilizer will be going up by 14%. Let’s say next year it’s even more difficult to hear, that’s probably likely to continue into the future. Because all the things that are driving health care cost increases, that are driving that utilization to the hospitals or at least a lot of it appears likely to continue.”

(Kinzel) Many of Vermont’s hospitals recently applied for rate increases in the range of 8 – 12%. Hospital Systems Director Bea Grause says the cost shift is an important component of these increases:

(Grause) “If you look at Medicare, Medicaid and the uninsured, none of those payers if you want to call them that, pay costs. Medicare is at about 92% in Vermont, pays about 92% of costs. Medicaid pays in general to hospitals about 70% and only 30% for physicians. And then the uninsured pay negligible amounts toward the cost of their health care, and then it’s the commercial market that essentially pays retail plus.”

(Kinzel) The premium increase for many non-group policies is expected to reach 20% because members of these groups typically have higher utilization rates than employers based programs.

For Vermont Public Radio, I’m Bob Kinzel in Montpelier.

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