This commentary is by Julie Wasserman of Burlington, an independent health policy consultant who worked for Vermont state government for over 25 years.
Vermonters cannot afford their current health care costs. How then could they afford Blue Cross Blue Shield’s proposed double-digit increases? For the coming year, BCBSVT has requested rate increases for both its Individual Plans (23.3%) and its Small Group Plans (13.7%) as it faces insolvency. This comes on top of BCBS’s double-digit health insurance premium rate increases in each of the last three years.
BCBS’s Average Annual Rate Increase Over Prior Year
The Green Mountain Care Board and Blue Cross Blue Shield agree that the insurer could shrink this year’s request to a 5% increase if Vermont reduced its health care spending by roughly $200 million in the upcoming year or enacted a decrease in hospital commercial prices, or some combination of the two.
But hospitals claim a reduction in their spending or a decrease in hospital commercial prices would force them to cut staff or services.
Hospitals have long asserted they would need to cut patient services in order to reduce costs — but we now know hospitals do not need to cut services to reduce costs. Hospitals can reduce costs in non-patient domains such as public relations, lobbying, marketing, executive salaries, executive bonuses, layers of administration and management, consultants, unnecessary capital expansion and use of financial reserves. Regarding financial reserves, hospitals’ “unrestricted cash” is a ready source of available funds that can be utilized to prevent cutbacks in patient services.
UVM Medical Center and UVM Health Network have over $1.1 billion in unrestricted cash on hand. As GMCB Chair Owen Foster testified at the recent May 21st House Health Care Hearing, unrestricted cash is composed of “Cash and cash equivalents,” “Short-term investments” and “Board-designated assets.” Each of these three line items is listed under the column headings “UVM Medical Center” and “UVM Health Network” on slide 4, which add up to $1.1 billion (the values presented are in the thousands; for example, $234,246 is $234,246,000). This is essentially money in the bank, to be used during difficult times.
If UVM Medical Center and UVM Health Network wanted to be heroes, they could simply write a check for the $200 million needed to reduce this year’s BCBS rates to 5%. Alternatively, UVM could write a smaller check supplemented by reduced UVM Medical Center hospital prices since its highest prices in the nation (slide 116) have contributed to BCBS’s ever-rising premiums and potential insolvency.
The Green Mountain Care Board has the authority to reduce hospital rates enough to result in much lower insurance premium rate increases. For Vermonters’ sake, the Board needs to exercise that authority. Our current crisis demands bold solutions.
