New rules may attract more health insurance companies

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(Host) The Douglas administration will seek changes to Vermont’s community rating health insurance system in an effort to attract more insurance companies to the state. The provision will be part of the administration’s health care initiative that’s scheduled to be released next week.

VPR’s Bob Kinzel reports.

(Kinzel) The system of community rating was enacted in the 1990s to prevent certain health insurance companies from only covering young healthy people and rejecting all other consumers – a practice known as “cherry picking.” Under community rating, insurance companies must offer the same premium rate to all consumers regardless of the person’s health condition. Proponents of the system argue it’s controlled rates for older consumers, while critics say it’s increased premiums for young and healthy people.

Banking and Insurance Commissioner John Crowley says the administration wants to allow insurance companies to have the ability to charge up to 20% more for consumers who have serious health conditions. Crowley says the change would initially only affect consumers in small market groups, those businesses with less than 50 employees.

The commissioner says there are basically only four companies selling health insurance in Vermont: Blue Cross, Cigna, MVP and United Health Care. Crowley says some other companies left the state because of their opposition to community rating:

(Crowley) “Community rating to an insurer is not an attraction, if you will. I think the insurers want to see the possibility of some underwriting that would allow them to have a profitable block of business. And their view is, with community rating that’s not possible.”

(Kinzel) Crowley says there’s no doubt in his mind that changes to community rating will encourage some health insurance companies to come back to Vermont, creating more competition in the marketplace.

(Crowley) “I definitely think if there was competition it would help keep rates down. I’ve been told by several insurers that Vermont is not attractive and one of the reasons is there’s no high risk pool, there’s no reinsurance pool in Vermont and there’s community rating.”

(Kinzel) The administration hopes to implement the plan through the rule making process. That means the proposal will be reviewed by the Legislature’s Administrative Rules committee next month.

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

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