By Michael Bielawski
On Thursday, lawmakers for the Senate Committee on Health and Welfare will take up a bill to increase the power of the Green Mountain Care Board (GMCB) to rein in spending at Vermont hospitals.
Some lawmakers say it’s necessary because a surge of illness that began in 2021 has unsettled health care systems’ financial stability.
The bill – H. 482, as passed by the House – and senators heard testimony on this subject in early April and will take it up again on Thursday. The bill would allow an “independent observer” working with the Board to ensure that hospital budgets operate within the financial commitments that health insurance companies make to their customers.
Sen. Martine Gulick, D-Chittenden Central, the committee vice chair, told VDC on Tuesday that the insurance company Blue Cross/Blue Shield has recently expressed that things are not going well budget-wise in Vermont.
“They have made the public aware of their financial situation,” Gulick said.
She said that the Department of Financial Regulation helps to determine whether a hospital is in adequate financial status. With this bill, if certain financial benchmarks aren’t met regarding an insurance provider’s capital for paying claims, the GMCB could intervene to ensure that all Vermonters’ health insurance claims are financed as promised.
The bill says if the Green Mountain Care Board working with the Commissioner of Financial Regulation determines that an insurance company faces “an acute and immediate threat to its solvency” based on its risk-based capital level falling to certain thresholds defined in statute (8 V.S.A. § 8304), then the Board may “order a reduction of the insurer’s reimbursement rates to one or more Vermont hospitals.”
It would also “permit the Board to reduce a hospital’s budget for the forthcoming fiscal year to account for the hospital’s budget overage in the previous fiscal year.”
Vermont gets suddenly sicker?
In written testimony submitted to the committee on April 10, Don George, President and CEO of Blue Cross and Blue Shield of Vermont, offered some concerning data on their operations in Vermont. First off, they report that more Vermonters are suddenly getting sick, and it started about three years ago.
“In 2024, claims were up more than 15% from the previous year as part of an unprecedented and sustained three-year cost surge,” the report states. The report does not speculate as to why there was a sudden uptick starting three years ago.
This new level of sickness has resulted in increased financial pressure on the insurer. They wrote to the committee, “As a result, in 2024, Blue Cross VT lost $65 million and concluded the year with an RBC [risk-based capital] ratio of 214%, which equates to $58 million in member reserves.”
Risk-based capital is a metric used to determine the minimum amount of money that an insurance company must have on hand to ensure that all customer claims are honored. The report notes that, currently, $30 million of those reserves are via an 8% interest loan to keep their operations viable in Vermont.
The report then states, “To put 2024 in perspective, consider that at the end of 2021 our RBC ratio was over 600% (the bottom of the range mandated by DFR), which equates to $136M in member reserves.”
The last concerning stat they share is “Our non-surplus note reserves dropped from $136 million to $28 million in just three years.”
More challenges ahead
The Vermont Association of Hospitals and Health Systems (VAHHS) put out a presser on Monday stating that, based on the testimony they observed, it does not appear that there are any other health insurance companies willing to take on the Green Mountain State.
“The Department of Financial Regulation underscored that no other insurance carrier is willing to take BCBSVT’s book of business,” the release states.
They further reported that not all interested parties are enthusiastic about everything so far in this legislation. VAHHS noted that Judi Fox, President and CEO of Rutland Regional Medical Center (RRMC), had “testified on how reducing reimbursement rates and appointing an independent observer could conflict with financial covenants, resulting in having debts called in.”
Fox also expressed interest in reference-based pricing as well as “providing the Green Mountain Care Board a tool to use under extenuating circumstances and urged the parties to get together to craft a solution,” according to VAHHS.
Contact them to weigh in
See all bills assigned to this committee here. Constituents may contact committee members (click link on name for bio, party affiliation, etc.) with comments, questions, and information at the following email addresses:
Senate Healthcare
Sen. Virginia “Ginny” Lyons, Williston, Chair, vlyons@leg.state.vt.us
Sen. Martine Larocque Gulick, Vice Chair, Burlington, mgulick@leg.state.vt.us
Sen. Ann Cummings, Montpelier, acummings@leg.state.vt.us
Sen. Larry Hart, Topsham, lhart@leg.state.vt.us
Sen. Samuel Douglass, Clerk, sdouglass@leg.state.vt.us
All committee transcripts are available at http://www.goldendomevt.com. The Committee meeting video is available at the committee’s YouTube channel. The committee meets in the morning in Room 17.
The author is a writer for the Vermont Daily Chronicle