Vermont Legislature SmartTranscripts:

[Rep. Alyssa Black (Chair)]: And for anybody that was in here last year,

[Rep. Leslie Goldman (Member)]: we will

[Rep. Alyssa Black (Chair)]: be intimately familiar with some of the challenges we face around our only domiciled insurer. And so I thought we should get an update on where things get sorted

[Rep. Leslie Goldman (Member)]: across the field. And we're going to

[Rep. Alyssa Black (Chair)]: start with Nolan. Nolan wrote the best brief I've ever read in my entire life. He's not pro to hyperbole. He was great as having you. He was great. He's very great of it, and it was very good. And I learned, I actually learned a lot out of it. So he's going to go over what he did around insurance solvency, just to refresh us.

[Nolan Langweil (Joint Fiscal Office)]: For the record, Langwell, the joint fiscal office, I was having a Jerry Maguire moment. Show me the money. So yeah, today I'm going to talk about health insurer solvency in Vermont. And if you weren't nauseous before with my other presentation of ups and downs, hopefully this will get you nauseous. It's easier to make you feel better. So I'm gonna talk about insurance insolvency, I mean, solvency, it's a big difference, and I'll kind of go through what that is and then talk about Blue Cross Blue Shield a little bit. There are two, and I'll pull my slides. So there's two things I wanna highlight. One, and there's a link to it on the website, there's a link to it in the presentation, is to the issue brief itself. And if you haven't read it, it's the best thing that represented Blacks ever read. It's gonna be on Amazon soon and maybe on Audible. And I'm gonna have representative McFaun read it for Audible.

[Rep. Alyssa Black (Chair)]: No,

[Nolan Langweil (Joint Fiscal Office)]: but all seriousness, there's a link to it. I really encourage people to read it. It goes into much more detail. When Representative Black said, Will you do a presentation? And I was like, No, can't people just read the original brief? And she was like, Well. So I threw together this PowerPoint that kind of hits the highlights, the high points, and basic, but I do encourage you to read it. There are two health insurance regulators, two main health insurance regulators in Vermont. Let me pull up my screen here. I wish there was a big live. I want to show you.

[Rep. Alyssa Black (Chair)]: Is the dollar sign supposed to be touching the teeter totter?

[Commissioner Guy Sampson (Department of Financial Regulation)]: No. What?

[Rep. Alyssa Black (Chair)]: Okay.

[Nolan Langweil (Joint Fiscal Office)]: The dollar sign's supposed to be rolling up the teeter totter, but then the stethoscope is supposed to highlight the medical piece of it.

[Rep. Alyssa Black (Chair)]: Okay. But where

[Nolan Langweil (Joint Fiscal Office)]: did the

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: rhombodium papers go?

[Nolan Langweil (Joint Fiscal Office)]: Did an AI make that image? I made it. I don't use it.

[Rep. Leslie Goldman (Member)]: So an NI made it. An L made it. In natural intelligence.

[Commissioner Guy Sampson (Department of Financial Regulation)]: No one made that.

[Nolan Langweil (Joint Fiscal Office)]: All right, so okay, well, there's major regulators. You have the Green Mountain Care Board, and I don't want to get into the weeds about what they do versus DFR, but on a high level, the Green Mountain Care Board does insurance rate reviews in terms of the health insurance market. And they look at things like access to care, quality, equitability, but part of that rate filing is it solvent. And what they do, within that rate filing, they get a memo from the Department of Financial Regulations. Now the Department of Financial Regulations really is the main agency that looks at solvency across all insurers. And I will let Mary explain more about what it is that they do in terms of solvency and consumer protections, etcetera. But I just want to highlight that they are the two pieces, the two regulators, but when it comes to insurance and solvency, there obviously is a link because, you know, DFR oversees solvency, but then they make a recommendation to the board about what should be in the rates to help maintain solvency. Now, what is solvency? So let's get to that. Let me just pull up my

[Rep. Leslie Goldman (Member)]: here. I see your definition in side panel.

[Nolan Langweil (Joint Fiscal Office)]: Slideshow. Oh, and then there it is in

[Rep. Leslie Goldman (Member)]: the presentation. I

[Nolan Langweil (Joint Fiscal Office)]: I don't know why it's misbehavior. User

[Commissioner Guy Sampson (Department of Financial Regulation)]: error.

[Nolan Langweil (Joint Fiscal Office)]: You're narrating, remember? So solvency. So what is solvency? At a very high level, solvency is a company's ability to meet its long term financial obligations and continue operations into the future. It's a critical indicator of a company's financial health. And in Vermont, the Department of Financial Regulations is charged with ensuring insurance that companies have the solvency to fulfill their financial obligations to policyholders. There's this thing called risk based capital. Now it's not the cure all, but it is the tool that is used, very popular tool used amongst regulators. So I'm gonna go a lot into risk based capital. The reason why is you'll see that that's a term that's used to how the states measure things and how the statutes are set up to react to certain situations. So it's a popular tool used within the industry for gauging and reacting to a company's solvency and financial health. It was created by the National Association of Insurance Commissioners after the banking crisis in the late 80s and early 90s. And it gives regulators legal authority to take preventative and corrective measures to intervene before insolvencies become inevitable, therefore minimizing the adverse impacts on companies and policymakers. So it's got multiple pieces. There's like a number, but then there's also like action, like you've got statutes. So the model was designed by the NAIC in terms of, here's how you measure it. And I won't get into like, how do you come up with the ratio that get The issue really touches upon it, but you don't need to know that, it's just complicated. But it's also a set of model statutes that's recommended to states for, okay, when you hit certain ratios, what do you do? So again, it's expressed as a ratio is determined by a complex formula that looks at credit investment, underwriting, and other operating risks that are faced by insurers. And again, it outlines specific actions to be taken by the company and the regular if the ratio declines or hits certain benchmark levels. And I have a chart that will show you what that is. Most states, including Vermont, have adopted these statutes, regulations, or bulletins that follow or are similar to the NARC RBC model. And then it's not just the regulators that use it, but like, for instance, Blue Cross Blue Shield Association also uses it within its own internal policies of how they regulate their trademark.

[Rep. Leslie Goldman (Member)]: So just to clarify that, the association is the overarching organization that So

[Nolan Langweil (Joint Fiscal Office)]: the Blue Cross Blue Shield Association owns the trademark. Franchise? I wouldn't call it a franchise. Okay, my bad. I will defer to the EFR to explain it. Okay. Actually, I'll defer to You Ruth to explain can identify yourself, self identify. When Wench justifies, she can get into the weeds on it. But it's a good question. It's a good question.

[Rep. Leslie Goldman (Member)]: But at least we understand what it means here, that there's an overarching organization that sets standards for its subsidiaries or whatever they're called. Yes.

[Nolan Langweil (Joint Fiscal Office)]: So what you have here is like how it's implemented. The ones on the bottom below the double line, that's actually what's in statute. So that's what's actually in the statute, that's the things that DFR, it's all based on NAIC, but the stuff that's above are other thresholds that are used also using RBC. So for instance, this five ninety to seven forty five target range of RBC, that was a target set by DFR for Blue Cross Blue Shield in 2019 it was used based on actuarial analysis of this report done by Oliver Wyman's. March, the Blue Cross Blue Shield Association uses as an early warning, like, oh, if your RBC gets to this level, we're going to do what's called intensified monitoring of you. And then if you hit 200% of RBC, the association is the minimum level that you need to maintain your Blue Cross Blue Shield affiliation. So if you go below it, if you're a Blue Cross Blue Shields company, if you go below it, you're in trouble. And we'll get into a little more details about where we're at. And then you have, below there you have the different action levels. So from 200 to 300, this is all NAIC, but this is stuff DFR follows. So if it's below 200 to 300, it's called a potential company action level and corrective plans may be required. And then from 150 to 200, you have a corrective plan is required. And then from 100 to 150, you have like your regulatory actions. So the regulator has authority to intervene. If you get down to 70 to 100, that's called an authorized control level, the regulator has the authority to assume control of the company and of course, if you're less than 70, the regulator is actually required to take it over. So what does that mean? So here's the chart again, and here's what Blue Cross Blue Shield's RBC ratio was over time. So you can see that in 2021, it was at six zero seven. This is actually the second time I've done an issue brief on RBC. I did one like ten years ago, and I looked at what RBCs were across the country, and some of them were like in the thousands, like 1,100. This is a different time, and I think it, I don't remember what Blue Cross Blue Shield was at the time, but it was in that 600 range. And the reason I say I don't know is RBC ratios are actually confidential. It's not something that we can ask and get or that's put out there. I have this because it was in a public report, but if I went to DFR now and said, what's their RBC at this moment? They would say, unfortunately, I cannot tell you. It's confidential and it's protected by law.

[Rep. Leslie Goldman (Member)]: So Yes. Is it considered proprietary information because it could put them at an unfair advantage with other competing companies? I'm going

[Nolan Langweil (Joint Fiscal Office)]: to defer to the commissioner to that question. Maybe you can hold that for when

[Rep. Leslie Goldman (Member)]: they can. Well, hear it, so then Thank you.

[Nolan Langweil (Joint Fiscal Office)]: In 2021, it was $6.00 7. You can see it started to go down. At the 2024, it was at $2.14. Now, if you look above, wow, that's pretty low, right? If they go below 200%, their Blue Cross Blue Shield Association is in trouble. Now, keep in mind, they got a $30,000,000 loan from

[Rep. Alyssa Black (Chair)]: Blue Cross Blue Shield of Michigan.

[Nolan Langweil (Joint Fiscal Office)]: Yeah, so they got a $30,000,000 loan from the Blue Cross Blue Shield of Michigan. If you recall, Blue Cross Blue Shield of Vermont and Michigan have sort of merged affiliation. I don't know how it actually now, again, I'll defer to the Blue Cross to explain that relationship, but they gave them a loan. It's not a gift, it was a loan, and they have to pay it back, and it's not an insignificant amount of money. But according to this report that was issued by DFR, their RBC ratio would have been at 104% if So they had not received

[Rep. Francis McFaun (Vice Chair)]: if you

[Nolan Langweil (Joint Fiscal Office)]: look at this chart, that would have required, that would have been basically borderline of regulatory having to assume control. Now, I will also pepper that by saying that that was that point in time, Blue Cross Blue Shield is in a much better space. I think it was actually on this next slide, yeah. In November 2025, they reported $47,000,000 gain for the first nine months. When you compare that to $29,000,000 loss from the previous same period So last they're in a much better place. That means they're moving in the right direction. I'm sure their RBC is higher, I will not ask nor should you. But the point is that we came very close and they're much in better financial shape. I will let Ruth talk more about that. So I didn't want to just scare everybody. Well, I do want to scare you, don't get me wrong. I do want to scare you, but I don't want to scare you and think that they're about to crash. They're in much better shape, but we came close. And so one of the things that this issue brief talks about is what happens if we went over that a bit. The first thing I'll point out is that, you know, Blue Cross Blue Shield is meeting with DFR regularly. They do have a corrective action plan. There are things acting behind the scenes to try to make things better. And I will let the other folks talk more about that. And they continue to meet frequently. The other thing, I think I touched upon all this already, that if they had gone below 200%, they would potentially lose the Blue Cross affiliation name. I kind of jumped around, not exactly matching the slides and how I talked, but it's the first time I've actually tried to explain an issue brief in a PowerPoint. But what I really want to kind of talk about is, let's say we didn't go over the abyss, that's good, and we think we're moving away from the abyss. But if we had gone over the abyss, what does that mean? What would that have looked like? And so if Blue Cross Blue Shield were to have lost its affiliation license, the implications would be significant. Blue Cross Blue Shield is the largest health insurer in our state. Policyholders would lose access. Let's say they lost their Blue Cross affiliation, but were still in business. They probably would wind up going out of it. But if they lost that, I, as a Blue Cross Blue Shield beneficiary, would lose access to my networks. Blue Cross Blue Shield Vermont would also lose significant technical and legal assistance from the bigger association. They rely on that association for a lot of help, a lot of resources. That is part of why you are part of the association. You have access to provider networks. You have access to significant technical and legal support. There's a lot of branding and a lot of communication resources. There's a lot of shared data, and there's a lot of valuable supports for them to be part of that. But if they had lost it, they would significantly threaten their even existence. And so what happens if Blue Cross Blue Shield went out of business? It would be enormously disruptive. They have about 200,000 benefit policyholders in the state, and it would have a huge ripple effect. So for something like the state, the state uses Blue Cross Blue Shield as a third party administrator. So larger businesses that use them as a third party administrator, it would be disruptive, but the state would go and find some, they'd find Cigna or UnitedHealthcare or somebody else, right? But what about those people in the individual small and large group markets? There's about 7,000 people on those markets. Well, let's say Blue Cross Blue Shield went out of business, the only one you'd have left in the individual small group would be MVP. It can be speculated pretty strongly that MVP would say, we don't want all that risk. We're out of here. See you. If that happened, which there's a good chance that would have happened, I know this is going happen, but if that were going down a doomsday scenario, you would have an insurance desert for 70,000 people, because they would not be eligible for Medicaid, they wouldn't be eligible for Medicare, and they couldn't buy insurance anywhere else. So I just want people to be mindful of how important all the different players, Blue Cross Blue Shield included, is in our system. We have a very fragile system, And Blue Cross Blue Shield, if they went out of business, it would be extremely, extremely disruptive to our underlying system.

[Rep. Francis McFaun (Vice Chair)]: And

[Nolan Langweil (Joint Fiscal Office)]: it's the only health insurer domiciled in Vermont, and they're in statute.

[Rep. Alyssa Black (Chair)]: That doesn't even take into account the loss of networks

[Nolan Langweil (Joint Fiscal Office)]: for It

[Rep. Alyssa Black (Chair)]: doesn't take into account that hospital budgets are essentially built on survival with being paid by commercial insurance as opposed to Medicare and Medicaid.

[Rep. Leslie Goldman (Member)]: Anyways, Leslie. I was just wondering, you said $70,000 which we know about, but 200,000, so talk about that other 125,000.

[Nolan Langweil (Joint Fiscal Office)]: Mostly self insured.

[Rep. Leslie Goldman (Member)]: So self insured, but also people who are getting supplemental, who will get Medicare and get supplemental.

[Nolan Langweil (Joint Fiscal Office)]: Sure, all the ones that

[Rep. Leslie Goldman (Member)]: get what I'm saying, it's way beyond 70,000. I just wanted to

[Nolan Langweil (Joint Fiscal Office)]: Yeah, all those lines of business. But if you're getting MedSup, you can probably buy MedSup elsewhere. Don't know what the market for, think you are. I don't know what the MedSup market is. I just know what the individual small group market is and there's nothing But for some of the other products, there are other options. Like for a state, there's other options for third party administrators.

[Rep. Leslie Goldman (Member)]: Like UnitedHealth or what?

[Nolan Langweil (Joint Fiscal Office)]: Yeah, Cigna, we used to be Cigna when I started with Yeah,

[Rep. Leslie Goldman (Member)]: Probably the med sup too then.

[Nolan Langweil (Joint Fiscal Office)]: Don't know that get part

[Rep. Leslie Goldman (Member)]: I think you might have just said this, but I want to make sure, because the state is self insured and they contract with Blue Cross Blue Shield to be the benefits administrator. Yeah, it's called

[Nolan Langweil (Joint Fiscal Office)]: a third party management.

[Rep. Leslie Goldman (Member)]: Yeah, yeah, yeah. Okay. But the state employees and teachers are self insured.

[Nolan Langweil (Joint Fiscal Office)]: I can't speak to the teachers, teachers are a completely different thing. It's kind of like an association, Jen's nodding her head too. Don't even know how to describe it, but they're not self

[Rep. Alyssa Black (Chair)]: Jen, Berbeco,

[Rep. Leslie Goldman (Member)]: let's Thank you.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: Yes and no, they are an Intermediate School Insurance Association regulated by DFR. They have a contract with Blue Cross Blue Shield, it's just different.

[Nolan Langweil (Joint Fiscal Office)]: Rupchino, one way to think about it is that the state is a single employer, where the school districts are multiple employers. So it's a different-

[Mary Black (Deputy Commissioner of Insurance, DFR)]: It's the inter municipal part of

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: the inter municipal insurance system.

[Rep. Leslie Goldman (Member)]: Yeah. Our private, I don't want go off topic too much, so if this is doing that, we can come back to it another way, but our private Companies allowed to buy into these kinds of public cooperatives or associations or whatever it's called.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: There are association health plans. It's its own

[Nolan Langweil (Joint Fiscal Office)]: That's a different subject.

[Rep. Leslie Goldman (Member)]: We'll come to it then, of that.

[Nolan Langweil (Joint Fiscal Office)]: Good question, not Jermaine, but good question.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: Come to it then.

[Nolan Langweil (Joint Fiscal Office)]: Very good rabbit hole.

[Rep. Leslie Goldman (Member)]: It is?

[Nolan Langweil (Joint Fiscal Office)]: It's a good rabbit hole. We won't put it out today, but it's a good question.

[Rep. Leslie Goldman (Member)]: But why is it a good rabbit hole? Is there, like, wondering

[Nolan Langweil (Joint Fiscal Office)]: You're going down another rabbit hole by rabbit hole. Okay. Any other questions?

[Rep. Leslie Goldman (Member)]: No further questions,

[Commissioner Guy Sampson (Department of Financial Regulation)]: your honor.

[Nolan Langweil (Joint Fiscal Office)]: Defense rests.

[Rep. Alyssa Black (Chair)]: Any questions at all? Thank you, Nolan, thanks for your summer project. Was it a labor of love like Jen described Title eight?

[Nolan Langweil (Joint Fiscal Office)]: Sorta. Sorta. What I would say is that many people read this, but the person who I really wanted the most in tact, put one, was Mary. I win.

[Rep. Alyssa Black (Chair)]: You say me?

[Nolan Langweil (Joint Fiscal Office)]: No, no, I mean, no, factual. If Mary says it has mustard, then I've done my work.

[Rep. Alyssa Black (Chair)]: All right, so let's start with Blue Cross Blue Shield.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Black and members of the committee, thank you for inviting me to testify. I'm very excited to be here and would like to thank the committee and the legislature for all the hard work. There's been a lot of hard work on Vermont's health care system and it takes a village and we're all in it together. I just would like to acknowledge that. I also would ask the committee to bear with me. I have some short comments that I'd like to go through and make sure that I get through them all so that I don't forget anything. And then I'd be happy to answer some of the questions that came up earlier and other questions. We do appreciate the opportunity to speak in the context of the testimony that you're hearing today, the issue brief from the JFO and then the Department of Financial Regulations Act 68 report. Both reports appropriately underscore the importance of collaboration, discipline and stability to protect Vermonters and the broad health care system that we all rely upon. The challenges outlined in those materials reflect real financial pressures that Blue Cross Vermont has experienced, and we wanted to be clear that we acknowledge those pressures directly. And our financial condition matters not only to our members but also to the stability and functioning of the entire system as we just heard about. We're here today to report some meaningful financial progress that's underway, and that progress has been achieved through collaboration with the regulators, policymakers, system partners, including hospitals. Really has been a collective effort. As you just heard, in 2024, we faced significant financial stress, primarily driven by unexpectedly high medical cost trends. This claim surge, if you will, included utilization patterns that exceeded our premium assumptions. So that's really the source of the losses that occurred in 2020 Our expectations that we built into our premiums, which are fixed at the beginning of the year, we had to pay all the planes that came through the door that year, and they were very, very much higher than we had expected. Though the surge was especially severe in 2024, the cost of health care has been increasing at an accelerated pace over multiple years prior to that. So our member reserves and surplus had dwindled. And so when 2024 came along, we really didn't have anything to fall back on. So in response and in partnership with the Department of Financial Regulation and the Green Mountain Care Board and the legislature, we did implement a comprehensive recovery plan and we submitted that plan to the Department of Financial Regulation in the 2024. The good news is that 2025 results have shown notable improvement year to date through September, as, Nolan reported earlier, we saw $47,000,000 gain through September. And our fourth quarter results are tracking to expectations. Maybe it's worth underscoring that part of our job is to set some premiums for the future, and it's important for things to pan out in alignment with those estimates. Things running close to expectations is a good thing in our world. We won't know the full result of fourth quarter results for a few weeks yet. We're still in the process of processing claims for the 2025 plan year and we'll close the books and we'll be able to report out what the full year looks like. Importantly, and wanted to emphasize for the committee, the financial results for this year so far reflect both recurring and non recurring items. And that's an important thing to think about. About approximately half of the 2025 gain, the $47,000,000 that I mentioned year to date through September, is attributable to the improved alignment of our premiums and our claims. And that is such an important concept and is laid out very well in the Act 68 report. The other half of the gain is reflective of favorable unplanned one time items. These items include claims and risk adjustment run out from the previous plan year 2024 and inflows associated with some contract settlements, including the negotiated resolution with UVMMC as well as our pharmacy benefit manager Optum. While these items are unplanned and non recurring, they are a welcome addition to our member reserves and they materially contributed to our member reserves. And, it's important to note that the loan that was mentioned earlier that we, were able to access through Blue Cross Blue Shield of Michigan at the end of last year to bolster that year end RBC. These one time non recurring items have enabled us to pay that loan back. It's a very expensive source of money. So that's been really good news. In parallel, we've also been working very hard on our operating expenses. In 2025, Blue Cross Vermont reduced our expenses by $7,000,000 which is about 7% of our budget. So 2025 was $7,000,000 lower than 2024. And that reflects internal cost discipline, staffing controls, as well as other process efficiencies. We did want to just emphasize this reduction to the committee because it is a big piece of what our organization works hard at every day. And it was important for us to do that while we also remained focused on delivering the quality service that everyone is used to getting from us. Taken together and compared to where we ended 2024, all of these actions materially strengthened our financial position in 2025. But it's also important and to be clear about what this progress does not yet represent. Even with the improvement in 2025 so far, we're really only about halfway towards that minimum level that Nolan mentioned earlier that the FR requires for our member reserves. So, it's important that we stay the course. We expect continued yet slower progress in 2026 as we can't bank on those, favorable non recurring items to happen, over again. It's important and underscores why solvency restoration is important to be viewed as a multi year consistent disciplined process, not a single year event. So, the solvency issue brief and the Act 68 report emphasize that rebuilding reserves and stabilizing the insurance market requires sustained discipline over time. And one year positive performance is meaningful and very helpful. We're pleased with the hard work and collaboration that it took to make it happen. It does not eliminate the need for continued adequate premiums and the ongoing focus on lowering the cost of healthcare. And we also need to continue to carefully manage our pricing risk, which is making sure that we're estimating our premiums as best we can. That's why we strongly believe patients must accompany accountability and our approach in coordination with regulators has been to address these underlying drivers directly, including hospital pricing, site of care differentials, payment integrity, and utilization management while also maintaining access and quality for Vermonters. I can't overstate the value of the hard work of the legislature, this committee, in addressing the underlying high cost of care directly. The Act 55 pharmaceutical bill passed last year directly impacts our customers in 2026 by lowering the premiums. The increase in premiums in 2026 was lowered by about 4% based on, that, action, and that is very, very meaningful to the monitors. Sadly, however, it does not alleviate the harsh reality and the catastrophic increases facing those who are losing their federal subsidies. That's kind of in a different category. In 2025, we also launched Affordability Matters. This was an initiative to help Vermonters better understand the relationship between health care prices, utilization premiums, and affordability, and how it all works together. That effort reflects our belief that durable reform requires shared understanding and a data driven approach to change. As we looked ahead to 2026, we remain committed to work in collaboratively with DFR, the Green Mountain Care Board and the legislature on key components of reform, including reference based pricing, site neutral billing, other formative efforts. And we welcome those conversations and believe they are most productive when they're informed by data and shows demonstrated progress and a clear understanding of the system wide impacts. So in closing, I just want to say we share the committee's goal of ensuring health care, the health care system that is affordable, accessible, and financially sustainable over the long term. And the progress achieved in 2025 demonstrates that collaboration is critical. With continued partnership, patience and sustained focus on the true drivers of cost, we believe Vermont can continue moving toward greater stability and affordability. And thank you for letting me get through all of that so I could make sure it was complete, and I'm happy to take any questions.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: I am.

[Rep. Leslie Goldman (Member)]: So I have to read. I'll just ask them upfront, and I can repeat them if I need to. The first one had to do with earlier when I asked about the organizational structure and the association versus the local subsidiaries or whatever they're called, if you could just explain that a little. The second would be if you're allowed to disclose this information, if not, you can say, We don't share that, and that's okay. What is the interest rate like on your $30,000,000 loan? If that's confidential, I understand. And then that leads me to my final question, which is why is the corrective action plan in the RBC, which is a something, something capital, Depends on the look, ratio based, no.

[Rep. Leslie Goldman (Member)]: Risk

[Rep. Leslie Goldman (Member)]: based capitals. Okay, so I'm trying here, was my quiz. Why is that confidential? So that would be my final question. Just so the public understands it, because I think there's probably a good reason.

[Rep. Alyssa Black (Chair)]: Yes, thank

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: you for those questions. The interest rate on the surplus note is not as high as 8%, and it's a high rate. It's driven by the fact that our AM Best rating is C plus plus What

[Rep. Leslie Goldman (Member)]: does that mean?

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: AM Best is a financial strength rating like a bank would have or issue on

[Nolan Langweil (Joint Fiscal Office)]: Like your credit score.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Credit score. Yeah, thank you. And because of our financial situation, the interest rate is market driven, and so you pay more when you don't have as strong financials. That's why it's 8%.

[Rep. Leslie Goldman (Member)]: Is that also influenced by the federal rates, or is it its own?

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Over time it would, but it's more influenced by the condition of the company that's asking for the loan. Yes, that's a good question.

[Rep. Alyssa Black (Chair)]: Can I interject just because we're on this one? Did you mention that Blue Cross has paid that off in

[Rep. Leslie Goldman (Member)]: its entirety? In its entirety. So

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: one of the positives of having strong results in 2025 with the one off nonrecurring items is that it did allow us to accelerate the payback event, because nobody wants to be paying 8% on that money. Is that inclusive in the forty seven? The forty seven year to date through September would have included interest because the payback was in November and December. We we wanted to wait until we saw October claims before we paid back any surplus note.

[Rep. Alyssa Black (Chair)]: Oh, through September. Okay. I was just wondering if that 30,000,000 plus its interest came out of the 47, or if the 47 is on top of what you paid back. Yeah, the

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: 30,000,000 is not an income related item, so it wouldn't be included. The interest on the 30,000,000 is included in that 47,000,000. Sorry to interject.

[Rep. Alyssa Black (Chair)]: I just didn't want to go back

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: to the wall. And I'm sorry, I should have introduced myself. I'm Ruth Green. I'm CFO of Blue Cross Blue.

[Rep. Leslie Goldman (Member)]: People aren't picking that aside.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: I probably introduced myself over there, but I've been with Blue Cross Blue Shield of Vermont for fourteen years. I was born and brought up in Vermont, and I went to the University of Vermont, and I live over in Barrytown, very glad to be here. Sorry about that, I just skipped over there.

[Rep. Francis McFaun (Vice Chair)]: Gary Town is the home of the present and the past.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Yes, and I think you're my neighbor. I'm on Windywood Road, so. You're my neighbor.

[Rep. Leslie Goldman (Member)]: Small world.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Might not be

[Nolan Langweil (Joint Fiscal Office)]: a good idea. In

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: terms of the the other one was the association. What's the relationship? So it's not a franchise, but it's not inappropriate to think of it like a franchise. So the association owns all of the blue branded marks nationwide. And so the belief amongst the Blue system is that health care is local, but we recognize that people travel around, and there needs to be a nationwide network to support members as they travel. And so the Blues plans are given the branding and the marks to serve our local customers. But also when you go to California or Rhode Island or wherever and you present your card to a provider, you don't have to worry about whether or not they know Blue Cross Blue Shield of Vermont. We're part of the club, so to speak. So they'll serve you. So that association doesn't own the entities, but it owns the brand. And so the requirements from the association ensure that the brand is appropriately administered nationwide on a consistent basis. So that's the piece. It's a little bit like a franchise where we have to have certain types of services and turnaround times for our customers. And all Blue plans nationwide have those same turnaround times, etcetera. So it's a way to make sure that that service is consistent. I hope that helps.

[Rep. Leslie Goldman (Member)]: It does. And I will say as a provider who is contracted with Blue Cross Blue Shield, I might explain this in a way that's not the best, but that's exactly come to me with the Blue Shield plan from any state, and then I build the Vermont local, and then they figure it out. And that makes it easier to do business with Blue Cross Blue Shield. So that's a benefit of being in your network.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: That's a great real life example of how the local plus national is made to work through this association. So the association has more than just the brand function. They have some mechanisms like what you're describing to make it easier. Can you explain the reasons for

[Rep. Leslie Goldman (Member)]: I don't think you said the reasons for confidentiality yet. Is there

[Rep. Leslie Goldman (Member)]: Right.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: So the third one is the confidentiality on RBC. I would obviously defer to Department of Financial Regulation to comment as well. But I believe it's in statute that we don't communicate interim RBC publicly, in large part because the official calculation is really only valid once a year at the end of the year. Then once we publish our statutory statements at the end of the year, the RBC ratio itself is not public, but anyone who knows the two numbers to divide can get to the RBC ratio that's there. And the reason why it's not, something that we can just talk about, I believe, day to day is that the financial condition you don't want to panic anybody if there's a situation. In fact, it was very difficult when things started to go very poorly in 2024. The decision to begin talking about that a little bit more publicly was very difficult because we didn't want people to panic and worry about things. And that's why the regulator gets involved, and we put together a corrective action plan to make sure that everybody's Okay with what the future looks like. So I believe that's the reason, but I'm certainly anxious to hear if the FR has other things to add. Thank you. Other questions?

[Nolan Langweil (Joint Fiscal Office)]: Anybody else have questions? I feel like I

[Rep. Alyssa Black (Chair)]: have a million questions, but I wanted to defer to anybody else. Okay, well, I'll start. I'm curious how much of the loss from '24 could be attributed to your Medicare Advantage, and now you're not offering that anymore. I'm wondering how the different lines of business that you have sort of contribute to all of this. And if there are some lines that are worse than others? Do they all get pooled together, basically?

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: All of the businesses that we support, we sell. I was thinking about the different types of members that adds up to the 200,000. We do federal employee program health plans, the MedSup. We do self funded QHP. We also have a small book of large group business. All of those businesses have to of be a certain minimum margin requirement for us as an organization. But as you know, and as we experience, the things don't pan out the way we expect. So when gains and losses happen, they all go into the same set of surplus. And in the case of Medicare Advantage, I would have to look up the actual number from last year. But since we launched Medicare Advantage in 2021, I think the cumulative losses was in the range of 40,000,000 to $50,000,000 over time. So it has been a significant driver of the decline in RBC. Luckily, we did go into that market launch on a shared risk share basis with Blue Cross Blue Shield of Michigan. So they took half of the losses, and we took half of the losses. And at the beginning of this year, arranged one of the corrective actions we had was to reduce our ownership share over to Blue Cross Blue Shield of Michigan. So they weathered the vast majority of the losses in 2025. In that $47,000,000 that we talked about, the Medicare Advantage losses are very, very

[Rep. Alyssa Black (Chair)]: small piece of that. I also wanted to ask you about the rate review process with the Green Mountain Care Board. I mean, you were your order came down significantly lower than what you had proposed. When I say you, I mean Blue Cross Blue Shield, not you personally. And I'm wondering if there are concerns, particularly since I don't even think the increase equated to what you wanted to put into reserve. Are worried about your ability to

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: feed into your reserves? That's a very, very good question. So the submitted rate increases were put in in the May. And so there was a lot of work done between May and when the Green Mountain Fair Board decision was ordered. And one of the big ones was the Act 55 came into play. And since that was passed, our actuaries were able to estimate the impact of that on the claims for 2026. And as I mentioned earlier, they were able bring down our claims estimate to the tune of about 4% of premiums. So that was a big piece of a change. There was also a few other changes that happened between when they were submitted and when they were finalized. In terms of how I feel about where we ended up for 2026, I think it's short of where I would like to be in terms of keeping our recovery motoring along. But I do think that some of the actions that the Green Mountain Care Board took on the hospital budgets really are supportive of the assumptions that were in the Green Mountain Care Board rate order. And then we've recently done some work under the contracting order from DFR that I think will also increase the probability that the contribution to our reserves that we ended up getting in that rate review, I have a higher confidence now that it'll actually happen. So it's slowing things down, but I still feel good that we're in the right direction. I guess that's how I would characterize it.

[Rep. Alyssa Black (Chair)]: And you mentioned the ending of enhanced premium tax credits. I'm wondering, I would think that you would have since January 1 started an idea of how that has affected that book of business for you, what your enrollments are?

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Yeah, it's a little early yet because

[Rep. Alyssa Black (Chair)]: a

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: lot of people won't notify us if they're not sticking with us. They'll wait until the first bill goes out, then the delinquency sort of tells us who's staying and who's going. Were expecting in our again, this is all just the best estimates from the actuaries. We were expecting around 4,000 to 4,500 people that would probably not be able to renew their coverage because of the subsidies going away. We do know that when the first bills went out, there was very, very significant changes to what people are paying on a monthly basis because of the federal subsidies going away. So we're expecting that that $4,000 will come to pass. It could be higher. It could be lower. It's a little bit too soon to tell just because the process takes a little bit time for the enrollment process to sugar out.

[Rep. Alyssa Black (Chair)]: And first of all, I also wanted to commend Blue Cross on your Vermont Affordable Care. I think that's something y'all should have been doing for a long time, advertising to your members where more affordable care is and that we all have a role to play. Thank you for that. I hope it has an effect. To that end, I also have a question. It was quite public during the hospital budget review process that there had been possibly some gremoney between Blue Cross and UVM Health Network in the previous years over contract negotiations. And I know that you all just didn't you sign off on the new year a couple of So months I'm wondering how it went

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: this year. Yeah, so I'm pleased to report that we've come to an agreement, which was good. And the goals that were stipulated have substantially been achieved. And we're in the process of reporting out and confirming everything is in order per the DFR order from earlier this year. On the process, I wasn't directly involved in it, but from what I saw and heard, was maybe more fact based and more process oriented in terms of staying focused on the goals and working together to get to an outcome so that we could collectively contribute to the whole in terms of solving the real world problems.

[Rep. Alyssa Black (Chair)]: You had mentioned the one time positive of the settlement, the UVM settlement. Can you remind us how much that was? Was it

[Rep. Leslie Goldman (Member)]: 203,000,000?

[Rep. Leslie Goldman (Member)]: I

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: think it was $12,000,000 And it came through in June. So this was relating to years '22 and '23, and the money came through in June. Did that get put into the 47? A portion of that comes into the 47. A portion of it also went back to the self funded clients that, since they are the ones who would have paid those claims to the extent that their share of that settlement went back to them. But a piece of it related to the insured book of business, which went into the $47,000,000

[Rep. Alyssa Black (Chair)]: And you mentioned something with your PBM Optum. What was that?

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Yeah. So pharmacy benefit managers, when we have a contract with them, there's a lot of terms around discounts and rebates and certain guarantees around the discounts and rebates. And so there's always a run out period. And you look back to see how did we do relative to the contract terms. And that settled up in a favorable light. Was a little bit more favorable than what we're used to. And that has to do with one of the benefits of our affiliation with Blue Cross Blue Shield of Michigan is that we are now negotiating with Optum through their contracting team. So we have a lot more negotiating power. So the settlement and the run out of that contract was more favorable than we would have expected.

[Rep. Leslie Goldman (Member)]: Leslie? If you're ready.

[Rep. Alyssa Black (Chair)]: No, I think I'm ready. I can sit here and talk about this all day long.

[Rep. Leslie Goldman (Member)]: And I don't know if you know this answer. I actually work on the clinician side of things. Well, did, McFarrier. And when I'm thinking about reference based pricing and how that's going to unfold,

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: in the past, you had

[Rep. Leslie Goldman (Member)]: to have an order from a clinician to order your MRI at a certain place. But if we have reference based pricing and we don't, how does that work then? Who orders the test and who gets the report and who then is required to act on the report? And I'm not sure I understand that process. And I doubt, I imagine you wouldn't know that and I need help maybe from you or something to see how that would unfold. I think I would need to understand your question a

[Rep. Alyssa Black (Chair)]: little bit better. I'm not sure I understand. Okay, let's say you need

[Rep. Leslie Goldman (Member)]: to get an MRI, but you do all your due diligence and you find that you want to go to hospital X because their price is so much better than hospital Y, but your clinician doesn't have admitting privileges at hospital X. Who orders the MRI? Who gets the report? Who's required to act on the report?

[Rep. Alyssa Black (Chair)]: Well, it would depend on, I guess, the provider would only be able to send you places. I mean, wouldn't need admitting privileges.

[Rep. Leslie Goldman (Member)]: Well, that's the question. How does unfold? I don't

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: know where that lies. One way to think about it, and it's a great question, and you've got me thinking. I'll bring it back to the team. But I don't think that dynamic is different today. So reference based pricing, I don't think would necessarily introduce a new complication in that arena. It might make more transparency around what the costs are. Providers might have a better idea where But then do they get

[Rep. Leslie Goldman (Member)]: on staff at all these different places that they can put the orders once again, who is responsible for acting on that result? Curiosity It's of mine, I haven't heard any answer.

[Rep. Alyssa Black (Chair)]: I will say, you mentioned the effects of the price cap. But one other thing that I think is a little overlooked is we did work around the certificate of need. And you named in your testimony, I think, what are they called, Vermont Diagnostic Imaging or something like that, which I think is brand new and was able to open without going through the CON process. We did that too. Yes, no.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: So I called this place and

[Rep. Leslie Goldman (Member)]: I say I want my MRI there as a consumer. And I want the cheapest price for my insurance company or whatever. But who's in charge of that? The provider who's ordering your MRI. But that means the provider can be ordering it at any of these places. I mean, maybe that's how it works. I'm just curious, how does it work? Let's talk about

[Rep. Alyssa Black (Chair)]: it when we get to talking about that topic. You have a question?

[Rep. Francis McFaun (Vice Chair)]: Yes. Prior approval. What is the financial impact of not having prior approval?

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: The prior approvals are sort of different services have different levels of prior approval. And each prior approval, I'll call it program, for lack of a better word, will look at the data that tells us how many are being denied or accepted. And we'll determine whether or not that program is adding value. But I don't have the total impact across all the programs as to what the impact would be. We do know that there's a sentinel effect of making sure that there's consistent good medical practice around how things are ordered. And that feeds into the studies that we do on each of the programs.

[Rep. Alyssa Black (Chair)]: Can I ask a question about prior approval? Interject before you ask me next? Actually, it's not even a question. It's more of a statement. We do have a bill that recently came onto our wall and there is a piece around approval.

[Rep. Leslie Goldman (Member)]: And I would say that

[Rep. Alyssa Black (Chair)]: the report that I thought was due this month is actually next year. But I feel as though we might need some of that information a little in a more preliminary sense. So if Blue Cross Blue Shield in the ensuing weeks could maybe try to give us, I mean, not a full report, but some numbers of how Act 111 has affected utilization from '24 to '25. Keep going with your question.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: I just wanted to throw it out there, I'll bring that back.

[Rep. Francis McFaun (Vice Chair)]: I should bring it on that bill.

[Nolan Langweil (Joint Fiscal Office)]: Won't be on the wall.

[Rep. Alyssa Black (Chair)]: Yeah, I believe that Representative McFaun's name is on that bill.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: I do. You believe it?

[Nolan Langweil (Joint Fiscal Office)]: First get it off the wall.

[Rep. Francis McFaun (Vice Chair)]: No, that's really what I, we know from past witnesses that I think was somewhere in the 90% of prior approvals, that they were positive for the patient. So that is one of the reasons why we got rid of it.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Yeah, it is a balance on sort of knowing what would have happened had you not had the review process in place. And so we do invest time and energy studying what we, when we make a change, we see what the change is. And so to the extent that the Act 111 changes have been put in, we are keeping track, we'll have a look at that. And I'll bring back the request for some early read on that. Any other questions?

[Rep. Alyssa Black (Chair)]: Well, you. So Thank much. Appreciate it.

[Rep. Leslie Goldman (Member)]: It must be decided your testimony.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: On our committee page. That's not what it is. That's the community letter.

[Rep. Leslie Goldman (Member)]: Or the governor for the outgoing president. Don George. The CEO.

[Rep. Alyssa Black (Chair)]: Yes.

[Rep. Leslie Goldman (Member)]: So yeah, it would be great

[Mary Black (Deputy Commissioner of Insurance, DFR)]: if submit it to him.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Sure. Thank you.

[Rep. Leslie Goldman (Member)]: It's under your name though. Think that's

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: why it's Oh, see what you said.

[Rep. Leslie Goldman (Member)]: Yeah, it's like submitted by you, but when I read it, it was from Don George.

[Rep. Alyssa Black (Chair)]: Yes. Okay. Thank you. So we next have Commissioner Sampson from DFR, as well as Mary Black, deputy commissioner.

[Nolan Langweil (Joint Fiscal Office)]: Hello. Hi. Hello.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Guy Sampson, commissioner of DFR.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: Mary Black, deputy commissioner of insurance.

[Commissioner Guy Sampson (Department of Financial Regulation)]: I don't know all of you. I know many of you. By way of introduction, I wanna say that in the world of insurance, there's really no such thing as a real expert. So I'm not gonna call myself an expert when it comes to my experience, which was ten years at DFR approximately before I became tax commissioner, before I went into the private sector for six years, before I came back this April or April 2025. I was the Blue Cross Blue Shield financial analyst, then examiner, chief examiner, and then deputy of insurance. And if there's any area that I feel most comfortable around as far as what DFR regulates, which, of course, is captive banking insurance and securities, it is health insurance finance and specifically Blue Cross Blue Shield. So I'm a big proponent of kind of fact based regulation and understanding following the money in what are very complex very complex issues where I'm very comfortable saying I'm absolutely not an expert is health care policy. But those two are so, as this committee knows better than than any, so intertwined, you know, because, you know, access to health care is so behavioral. It's about wellness, all these things that aren't just straight math, but result in in in mathematical realities. So we did a report coming out of act 68. We we had a piece of that that was asked us to talk about how to ensure domestic health insurer sustainability. Our only domestic health insurer is Blue Cross Blue Shield of Vermont and entities within their control. There is a very, you know, quick answer to that. And the primary and it's not even tongue in cheek. They have to have adequate rates. And there is no doubt that since the separation of rate review from Department of Financial Regulation or Bishco when I used to work there in my prior iteration. That has become more difficult. So it is a little odd. It's a little challenging. I'm not saying it's wrong, but it's challenging to be responsible for the solvency of of an entity like Blue Cross Blue Shield. It's our number one regulate regulatory duty, right, is to ensure the solvency of our domestic companies. And you'll find regulators in all 50 states saying solvency is the best consumer protection. I wanna thank Nolan for really good testimony and a really good report and agree with everything he said in terms of the catastrophic consequences to the market and to Vermonters if a company like Blue Cross Blue Shield became insolvent and we had to take control of it, lost the Blue Cross Blue Shield affiliation, that would be very, very terrible. So I I truly believe that solvency is the number one consumer protection, and it's the most kind of basic thing we need to take care of. But how does an insurance company make money? They have to they have even a nonprofit. Blue Cross is a nonprofit, but they have they're accepting huge amounts of risk. Okay? So the 70,000 fully insured is by far where what will make or break that company. So the balance getting up to 200,000 lives, most of which is self insured, there's very little risk in that because I make a contract with you. You know, you're gonna pay me x per member per month to handle your claims as a TPA, but you're paying the claims. Right? So if claims double, that employer's paying that. That's oversimplified. But in a QHP scenario or fully insured scenario, I do my best with my actuaries, not me, the the company. Blue Cross does their best with their actuaries to estimate what utilization and costs will be in the in the future, and they're on the hook. And we saw that, unfortunately, very clearly in the last several years. But, really, since the inception of the QHP, I believe Blue Cross has lost cumulatively. They had some years where they got a gain on the QHP, but cumulatively add up the gains and losses, $80,000,000 in the hole from QHP products.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: Since when?

[Commissioner Guy Sampson (Department of Financial Regulation)]: Since its inception. And that was? 2014. Yeah.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: You just say what QHP is. Oh, I'm sorry.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Oh, sorry. QHP, qualified health plans. So the exchange. So since since the ACA and, you know, that individual and small group market moving on to an exchange based ACA compliant ACA's the Affordable Care Act. Thank you. Obamacare.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: Yeah. 2017, by the way.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Oh, 2017?

[Nolan Langweil (Joint Fiscal Office)]: I think

[Mary Black (Deputy Commissioner of Insurance, DFR)]: it was 2017.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Okay. 2017.

[Rep. Alyssa Black (Chair)]: Oh, is that on the individual? They've lost and I'm looking over lost on the individual or the small group as well?

[Commissioner Guy Sampson (Department of Financial Regulation)]: I believe that's the cumulative. Yeah. Yeah. And that that computes to about cumulatively over 2% in the red in terms of that line of business for for Blue Cross. And the reason I made sure I remember those numbers is I know you have and will heard testimony concerned about cross subsidization, concerns that the care board has about why is all of the weight to rebuild a company surplus or all of the emphasis on getting a contribution to reserve or a margin on this business? Why does that all have to be on a vulnerable population, which arguably the the QHP small groups that that don't have a lot of options and individuals that don't have employer provided insurance? You know, that is a concern, and it's true. There's a lot of weight and a lot of emphasis, but that's just how it has to be because that's where all the risk is. And but in terms of just mathematically answering the question you haven't asked me, which is has, you know, the fully insured business, whether it's the better results this year or cumulatively since the exchange, has that been subsidizing other lines of insurance? No. It's been the opposite. And we have arguably the most unaffordable rates on the exchange in the country. It's very difficult to measure that objectively because of we don't have age rating in the state, but we'll talk about that later when we get to age five eighty five.

[Rep. Alyssa Black (Chair)]: I would also note, however, that it's it's those very plans that are subsidizing other organizations reserves. True. I love that line reserves dip really low and they need to rebuild, they can't go to it's that one line of business, the commercial insured market, is the one contributing to those reserves.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Right. Right. And and within what the way I define commercial insured, that's gonna include self insured. So it's not just the underwriting gain or loss of the where, you know, the the the fully at risk line of business. It's it's also the self insured. It's the state of Vermont, V High, which is that school, intermunicipal that Jen mentioned.

[Rep. Alyssa Black (Chair)]: Can I interject? Yes. Course. Committee. Yeah. Just feel like we're having a conversation here. I'll ask the same question that I asked Ruth, which is, I know that you submit to the care board what your recommendations are. And I know that there's I'm doing this, I don't mean there's a clash because

[Nolan Langweil (Joint Fiscal Office)]: I know there's hope that

[Rep. Alyssa Black (Chair)]: as there should be. Because you are concerned with solvency. They are concerned with rate payers. But you made recommendations, and they didn't follow those very well either. How do you feel? Are you concerned that the board did not increase rates enough this year to?

[Commissioner Guy Sampson (Department of Financial Regulation)]: Not one bit. This year was different. This year was different, and it was there's there's a lot of things that surprised me coming back to DFR. The first thing was the financial condition of Blue Cross Blue Shield as reported to me when I showed up April 2025. But, you know, we didn't Vermont had does not have a record of companies going into that NAIC I'm sorry, that RBC action level event. We we just we have a good set of solvent companies, so that was scary. What was counter to that was or or less scary, encouraging was conversations with the chair of the care board to understand something that, frankly, I'll just say, don't think that care board understood in my prior life in in Bishka, which is that you cannot meaningful meaningfully control the cost of health care by simply suppressing insurance rates. Okay? That is the ultimate shoot the messenger. And the proof is in the history, and the proof was in the financial challenges that Blue Cross faced. If you don't empower them or change the cost of care, empower them to do it or them to do it or compel providers or the hospitals, whatever. You do not control the cost of care. A health insurer is simply, you know, 90¢, very roughly 90¢ of a dollar is going to the cost of care that so suppressing that and saying it's unaffordable. You have to charge less, but you still have to pay your providers x y z. It doesn't take a financial expert. It doesn't take anything except for looking at the history of of some of those the the rate decisions on those products. But this year was different. This year, there was an initially concerning rate decision in August, I believe it was, for Blue Cross' rates. And following up after that was a very dramatic and decisive set of orders to the hospitals on cost directly and unequivocally addressing cost issues. And what I want really wanna leave to the major players in terms of insurers and major hospitals to disclose and announce in due course. But what we've seen is that between DFR's order and the willingness of everyone to really understand that the I hate to say we're at a crisis. We've been at a crisis level of affordability. But what we're seeing as a as a you know, in 2025 is a true genuine recognition that we have to do things different by regulators, by the hospitals, and by the insurers. And the evidence I've seen in terms of cracking certain negotiations that Blue Cross is involved in with providers is that it's going as planned in terms of what, you know, the care board ordered and intended in their order. So what they did essentially was reduce the rate of Blue Cross' filed rate, but then followed up mathematically with corresponding action on the cost side using their their authorities there to make sure that things were in balance. That hadn't happened as directly in the past. There was a lot of more aspirational actions. We're gonna lower your rate because we know you can go do this, and then that didn't happen. Why is RBC confidential? I don't disagree with anything that was said or agree with with with Ruth, but from a and also loved Ruth's description of the branding and the Blue Cross Blue Shield Association. I think you said it's you know, health care is local, but the the market is is kind of national or global and same thing for actually the National Association of Insurance Commissioners. Right? We are state based regulation, not like securities or banking that is primarily federal based with some state based exceptions and cooperation. But the National Association of Insurance Commissioners is 50 of us, 56 of us, if you count territories in DC, and we work together to create uniform standards. Risk based capital is not just popular as Nolan put it. It is required accreditation standard of everyone who has a multistate company. You have to regulate them by risk based capital. It's confidential in addition to the comments you heard from from Nolan and Ruth, also because it is a complex count calculation, payments that are proprietary. So the the form the calculation itself, which is a twenty, thirty I don't know. When I last time I looked at one, twenty, 30 plus page document of factors that go into it, it shows the risk of the products, It shows the, you know, investment risk, there's many components to it. And those are those are trade secret, proprietary, and confidential. So that report itself is always confidential. Another reason really driving the confidentiality of it is regulators never this is being debated with my colleagues now and and across the different states, but I'm in the camp that believes that risk based capital should never be used for anything but regulation for extreme scenarios like potential insolvencies or or financial challenges and should not become like a Moody's S and P or credit rating where where companies are saying, well, buy from us. We have a thousand RBC. Don't buy from them. They have a 300 RBC because there's there's many reasons why a 300% RBC company might actually be stronger than a thousand percent because they may be part of a family of companies. And so that is a debate now, but currently, I believe in law, companies may not market or publish their RBC, and that's one of the driving reasons. There's a proposal. There's discussion about, is that the right approach, not in Vermont, but just nationally among among regulators. So

[Rep. Leslie Goldman (Member)]: I just didn't know, because it doesn't seem to give a presentation, so I didn't want to interrupt, but it's related to this. And then I have another question that I can ask now since I'm interrupting you, and then you can ask, you can always answer later. Want to make sure I understood what you just said, I'm going to summarize it and then you can correct me. That one of the reasons that risk based capital, okay, I'm trying not to cheat and look, risk based capital is not allowed to be publicly disclosed or promoted, is it might create an unfair advantage in the marketplace for a company that has a high RBC, yet it's not necessarily the best measure for determining the company's overall benefits or functioning as a company to a customer who'd be purchasing their services, not the individual, but the companies. So that's one main reason is that it's considered more of like a behind the scenes measurement tool and it would not be a good way to It could create an unfair advantage, it sounds like on the marketplace.

[Commissioner Guy Sampson (Department of Financial Regulation)]: It's very easily improperly used if it was used as a consumer facing mark because it requires a bit of sophistication and understanding to understand why an RBC is a certain place. So it's kind of it's a little bit too esoteric to be used on Main Street.

[Rep. Leslie Goldman (Member)]: And it could be misleading. And it absolutely. Yeah.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Yeah. Okay. So a a great example is is a company that's a full wholly owned subsidiary of another company. They're gonna manage that RBC to keep the money at the top to manage, you know, in the same investment portfolio. And then someone could come along and be like, you don't wanna buy from that company. It turns out parent has 10,000 RBC. This one has a 300, and they're unfairly. So that that's the that's one main reason why it just it shouldn't it it's a solvency measure in my opinion and nothing else.

[Rep. Leslie Goldman (Member)]: And it could also I mean, maybe I'm wrong, but it could also lead to a company failing that otherwise would have succeeded if people are judging it prematurely because it's struggling in one year. Like a run on

[Commissioner Guy Sampson (Department of Financial Regulation)]: the bank type concern. Okay.

[Rep. Leslie Goldman (Member)]: And then the second question, it's unrelated, but it's like who bears the risk in self insurance? For example, probably a bad example, but UVM Medical Center is self insured, I think. So if too many of their employees have catastrophic illnesses that deplete the reserves of that self insurance plan, do they have to then go to their organization's reserves to fill that hole? And what if an organization doesn't have that one point whatever billion reserve? Like, what do they do? Does the company want a business because of its insurance claims? Well,

[Commissioner Guy Sampson (Department of Financial Regulation)]: I think the easiest answer to that and the most universal answer to that, it would depend on each employer, is stop loss. So there's a stop loss insurance.

[Rep. Leslie Goldman (Member)]: Usually Anyone else does the buy

[Commissioner Guy Sampson (Department of Financial Regulation)]: a claim? So usually when you go self insured, including clients of Blue Cross and the major insurers, is you say, hey, I'll take the claims, but you're going to cover that extreme risk by saying, I want a stop loss policy, which is essentially an insurance policy for the extreme. So an aggregate stop loss would say, hey, we expect you to have a $100 of claims next year, your company. But I'll sell you a policy, that if it goes a 120 or above, I'll pay 80% of that.

[Rep. Leslie Goldman (Member)]: Who's the I?

[Commissioner Guy Sampson (Department of Financial Regulation)]: A different insurer. Insurer. A different insurer or the same insurer that's managing?

[Rep. Alyssa Black (Chair)]: Insurance on your insurance.

[Rep. Leslie Goldman (Member)]: Is that reinsurance or is it

[Commissioner Guy Sampson (Department of Financial Regulation)]: kind like reinsurance? It's kinda like reinsurance.

[Rep. Alyssa Black (Chair)]: So interesting.

[Commissioner Guy Sampson (Department of Financial Regulation)]: And there could be a specific I like the former answer. I love

[Rep. Leslie Goldman (Member)]: this Okay. Yeah. Yeah. Yeah. Experience. But it's also It's not to me.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Like And you can also have this so that's an aggregate stop loss that says your aggregate costs were over a 120%. You could also have specific stop loss that says any individual who goes over $40,000 in claims, we're gonna cover the rest with this stop loss policy. So that's how they protect themselves from the extremes. But within a a band fairly big band of risk, the self insured employer covers that risk and is at risk.

[Rep. Leslie Goldman (Member)]: And who in the end I'm just trying to imagine, who would benefit at the end of all of this? If insurance is reinsured or reinsured is like some hedge fund in the end, he's like, we have so much money that we don't care. We'll be the ones who make money off of these plans because we can bear the risk. And this is not meant to be mean. I was trying to be comical about it. In the end, is there someone who's going to bear the fall if a nuclear bomb hits and all these people get radiation cancer or something?

[Rep. Alyssa Black (Chair)]: Have to worry about

[Commissioner Guy Sampson (Department of Financial Regulation)]: something I like think ultimately, it's probably a better question for Ruth as CFO, but Blue Cross itself or any insurer may offer stop loss, right? But they themselves have higher level agger you know, big reinsurance contracts with your, you know, your global reinsurers or even through through

[Rep. Leslie Goldman (Member)]: So who are yeah. Like, what is the

[Rep. Alyssa Black (Chair)]: is there, like, in the end,

[Rep. Leslie Goldman (Member)]: these big international corporations that have lots of money that just are kinda protecting everyone?

[Commissioner Guy Sampson (Department of Financial Regulation)]: It it it really depends on the line of insurance, but that's where global insurance, private equity

[Rep. Alyssa Black (Chair)]: Yeah.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Big big big time global money is in reinsurance. And I'm not speaking specifically to health. I'm talking about Yeah. Catastrophic hurricanes, all that kind of stuff. But Alright.

[Rep. Leslie Goldman (Member)]: Well, we don't need to get into too much. I I

[Nolan Langweil (Joint Fiscal Office)]: just wanna understand Good. I can't

[Commissioner Guy Sampson (Department of Financial Regulation)]: go I can't go further than that.

[Rep. Leslie Goldman (Member)]: It's good to understand. No further questions, your

[Rep. Leslie Goldman (Member)]: honor. Okay.

[Rep. Alyssa Black (Chair)]: Leslie has a question.

[Rep. Leslie Goldman (Member)]: So thank you. I'm looking at

[Rep. Alyssa Black (Chair)]: the tax CA report. And

[Mary Black (Deputy Commissioner of Insurance, DFR)]: thank you for that.

[Rep. Leslie Goldman (Member)]: And I'm looking at strategies for sustainability across. And I think some of these you addressed, but I'd sort of like to see it as a whole, if that's doable and maybe whatever.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Act five eighty five would be our goal.

[Rep. Leslie Goldman (Member)]: Okay, but I'm not going there. That's where we're be.

[Rep. Alyssa Black (Chair)]: Glad to mention that.

[Rep. Leslie Goldman (Member)]: So the first thing, if I'm understanding, I just want make sure

[Mary Black (Deputy Commissioner of Insurance, DFR)]: I understand. Sure.

[Rep. Leslie Goldman (Member)]: So the first thing was the need for adequate premium rates. Yes. And I'm curious to know, do we feel like we did that? So that's one. Adjusting the cost of care

[Nolan Langweil (Joint Fiscal Office)]: was your

[Rep. Leslie Goldman (Member)]: second. Right. And do you feel like we did that or are doing that? And then the third piece, I think, is the reinsurance option, which has come up. And it looks like there are two different options for reinsurance and for the expert and a newbie. So I'm just under I wanna understand the current state.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Yeah.

[Rep. Leslie Goldman (Member)]: Like, where do we stand as of now, and what do we need to do next as based on this report?

[Commissioner Guy Sampson (Department of Financial Regulation)]: Right. So in terms of rates, I feel comfortable with the 2025 rate decision and what I've seen from cooperation between the major hospitals and the insurers in terms of address making those rates actually not problematic, right, for 2026. Mhmm. In terms of, like, a a cost of care, I mean, that's related.

[Nolan Langweil (Joint Fiscal Office)]: Mhmm.

[Commissioner Guy Sampson (Department of Financial Regulation)]: I mean, that that's that's a long haul. Right? But in terms of how, again, 2026, insurance is a year by year game. Affordability is a long term took us a long time to get here, it's gonna take a long time to not be at the top of the wrong list nationally in terms of cost of care and cost of insurance, but absolutely heading in the right direction.

[Rep. Leslie Goldman (Member)]: So one of the things, if I may, came up was our prices were too high. And that was sort of what got us into some of this problem as time went on. But we've addressed some of those prices, or we are. Right? Yeah.

[Commissioner Guy Sampson (Department of Financial Regulation)]: And prices are high for many reasons. We're a rural state. You know, we've got recruitment and retention problems, you know, in every industry. But we we've in terms of I'm speaking strictly in terms of Blue Cross Blue Shield's twenty twenty six rates.

[Rep. Alyssa Black (Chair)]: Mhmm.

[Commissioner Guy Sampson (Department of Financial Regulation)]: I'm feeling good Mhmm. Thus far that cost of care, which is what those rates are paying for Hold on. Is is in line and in in a greater balance with the approved rate than we've seen in prior years.

[Rep. Leslie Goldman (Member)]: Okay. One thing that came up last year, we had a conversation about if Blue Cross

[Rep. Alyssa Black (Chair)]: no. Not Blue Cross.

[Rep. Leslie Goldman (Member)]: If the Green Mountain Care Board had held hospitals to budget orders, we may not have ended up in this position.

[Commissioner Guy Sampson (Department of Financial Regulation)]: It's a fair question, a fair comment, I think.

[Rep. Leslie Goldman (Member)]: I'm just wondering, because how do we make sure it doesn't happen again is kind of what

[Nolan Langweil (Joint Fiscal Office)]: I worrying think

[Commissioner Guy Sampson (Department of Financial Regulation)]: from my seat, it's making sure the orders are you know, the the hospital orders need to be clear and unambiguous.

[Rep. Alyssa Black (Chair)]: Mhmm.

[Commissioner Guy Sampson (Department of Financial Regulation)]: And we need to give all parties the tools to execute on them. And from what I've seen, through 2025 and today, that's happening.

[Rep. Leslie Goldman (Member)]: Yeah, that's good. Okay, so the last thing is reinsurance,

[Rep. Alyssa Black (Chair)]: I guess.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Reinsurance, we put in there it's a constantly, no surprise to anyone, evolving landscape at the federal level, but there are programs, reinsurance programs, that you can get some funding through a waiver, an ACA, a waiver from CMS, to fund a reinsurance program that would take care of that would mitigate some of the high cost claims or or patients in exchange products. And there's a way to optimize it that can be a win win. Not sure what the appetite is at CMS at this point. Then there's the non kind of I think it's a thirteen thirty two waiver. Right. Then there's the there's a general reinsurance, which we talked about that, you know, that less less likely to really offer relief because it costs money. If I'm gonna lay off the risk for everything, you know, above $40,000 per individual, there's a cost to that. Mhmm. Some someone else wants to make money off that and cover their cost. But there's lots of options with reinsurance that can what I think is maybe less reinsurance and more value based care or is risk sharing between providers and hospitals and insurers. I think that's progress that I'm seeing seeing being made. I think there's goals and statute around that or at least aspirations and statute. That's, you know, in a way, it's a little bit like reinsurance. You know, essentially saying if if if x y z happens, we're gonna share this cost spreading that risk, but also providing ideally incentive to not cross certain thresholds to all parties.

[Rep. Leslie Goldman (Member)]: So the my last question. Maybe this is five forty five that is enabling legislation that's required for the reinsurance piece or not? Is that where that was? $5.85. Yeah.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Five eighty five. Yeah.

[Rep. Alyssa Black (Chair)]: Oh, sorry.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Didn't say five forty five. Yeah.

[Rep. Leslie Goldman (Member)]: Too many. Yeah.

[Commissioner Guy Sampson (Department of Financial Regulation)]: I didn't know if that was another bill there.

[Rep. Leslie Goldman (Member)]: No, no. It's about $5.85, let me get my number right.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Yep, there's a piece for a reinsurance in there. Okay.

[Nolan Langweil (Joint Fiscal Office)]: Thank

[Rep. Alyssa Black (Chair)]: you. Karen has a question and then ballot question as well.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: The turnaround was before Medicare Advantage was discontinued, correct? We need this better profile as well. Is before over a five year And maybe, I'm not sure this question is from you, is that projected to have significant savings significantly? If I could just read about the blood, so the 2025 results showing the positive outcomes that we were headed has a much smaller share of glycolytic organophosphamide. Excuse me, huge advantage losses in it because we shifted more risk to Michigan.

[Rep. Karen Lueders (Member)]: And then in 2026, as we talk about the outlook for 2026, by not, unfortunately, by not having offered any products in 2026, we just really loss, the potential for losses. So it doesn't add gain, but it removes losses going forward. Yes, it does. Thanks. This is really simple.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: It's just a little piece for my puzzle here. A hospital order, can you just define that?

[Commissioner Guy Sampson (Department of Financial Regulation)]: I think as it was referenced would have been the Green Mountain Care Board's budget and revenue orders for the hospitals, I think. Easiest question yet.

[Rep. Alyssa Black (Chair)]: Switching of orders. I have a question about two different boards.

[Nolan Langweil (Joint Fiscal Office)]: Okay.

[Rep. Alyssa Black (Chair)]: So you had talked about, and I know, you know, I think it's important because obviously Bishka used to set rates, but you know, you're looking at if DFR was doing that or the old Bischka was doing that, you're looking at it from the perspective of insurance and insurance solvency.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Can I elaborate, tell you specifically what we were looking at in the old days? It was adequacy, not unfairly discriminatory, I believe. Is there another one? Not unfair, not unfairly discriminatory, and adequate. Adequacy and there might have been something not called affordability, but not excessive. Not excessive. Excessive. So excessive became affordability with and then went to the care. But anyway

[Mary Black (Deputy Commissioner of Insurance, DFR)]: yep.

[Rep. Alyssa Black (Chair)]: You know, the board looks at it from more of a perspective of from right there. Yep. So what do you think that DFR should have a little bit more influence around insurance rate review that the board is doing, like voting member?

[Commissioner Guy Sampson (Department of Financial Regulation)]: I'll have to get back to you on that one. That's an interest as far as a voting member, do I think we should have more influence? Yeah. I think to we we issue a solvency opinion. Yeah. In the opinion, we essentially state the same thing every year. This contribution, every every rate has claims,

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: administration,

[Commissioner Guy Sampson (Department of Financial Regulation)]: you know, which is a small piece. Blue Cross does a good job of efficient not charging a lot per member per month. Competitive. And then contribution to reserve to cover that volatility that we've seen. Every year, we've supported the contribution to reserve because we need Blue Cross, and history bears it out. We need Blue Cross at around 600% minimum. And the one good thing about coming into this tradition now is I can point to recent history to say why that's essential, because look how quickly we went from 600 to, without the loan, 100 plus.

[Rep. Alyssa Black (Chair)]: That was my next question.

[Commissioner Guy Sampson (Department of Financial Regulation)]: But but so I think what what we should have is the ability to and I don't know what it's like. And if you'd like a proposal, we can work on it. But we shouldn't be powerless. All we have is an advisory opinion. We should not be powerless in stopping what we see as a forthcoming solvency issue. And but I will also say that in terms of the work of the care board since I've come back, and I think the year prior as well, I think there's a different approach that's understanding that. And certainly, since this trauma that everyone's collectively been through of of the solvency or the challenges, financial challenges, I think everyone's learned that. But I think sometimes we repeat history and we forget the lessons we've learned, and it'd be nice to have a little more formal relief valve for the solvency regulator to intervene where appropriate or influence whatever it may be. And if this committee is very interested in that, we can take that back.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: I think it's Jack.

[Rep. Alyssa Black (Chair)]: The boards are probably watching right now.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Yeah. That's

[Rep. Alyssa Black (Chair)]: fine. I can I can it's like I can collectively hear them screaming down? One other thing

[Mary Black (Deputy Commissioner of Insurance, DFR)]: to interject is, I mean, you talk about the fact that the board things are going very well right now. Our relationship with the board is really good. It's a board, it changes.

[Rep. Leslie Goldman (Member)]: And that's

[Mary Black (Deputy Commissioner of Insurance, DFR)]: a little bit different, right? But so the math doesn't change, the RBC ratios don't change, but the board could change, and that could change the perspective again.

[Rep. Alyssa Black (Chair)]: How often is Blue Cross Blue Shield sharing financial information? And I know they're under a corrective action now, in the past, because the thing that struck me and maybe y'all over there knew it, but the thing that struck me was how fast it happened. And it was almost like everyone was sort of caught unaware. And today, as we sit here on January 9, things are trending in a good direction. But is there mechanisms in place right now where we're going to be able to spot if a year from now we're in a very, very different situation? So

[Commissioner Guy Sampson (Department of Financial Regulation)]: first question, how often are we in contact with with the lacrosse? I think there's some type of touch point weekly with me, whether it's around negotiations, certainly with Mary, the deputy of the insurance division who oversees the entire solvency and financial staff. There's at least monthly meetings, financial updates, and then, you know, they file a quarterly financial statement with us that goes through an official kind of NAIC dictated review process and analysis. And that, you know, you know, September 30 filed on November 15. You know, our Mary's analysts are probably working through that with weekly or whatever communications. What's this number? Where's this number? How do explain this trend? Etcetera. As far as the other part of the question, I think Ruth would be a better person to answer it in terms of how their mechanisms to to predict the next storm. Problem is rates are approved annually. Right? And trends trends could become evident on the 2026 rate in two months, and there's always a lag. You know? There's a there's a lag. So it might be April before they can really tell you how January actually went.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: Yes.

[Commissioner Guy Sampson (Department of Financial Regulation)]: So I think that's a a just a problem that is hard to get around, but and then the other major process, adjusted year is something that nobody wants to do and understand. I wouldn't wanna do it. Customers don't want it. So but, you know, I I I think I think it'd be interesting to hear.

[Rep. Alyssa Black (Chair)]: I mean, we dealt with that when we were when we were doing s 01/26. Remember is and we did put a mechanism or maybe it was April. I can't remember which one. But because you cannot change the rate that the rate payer pays in a year, we did give the board authority to adjust hospital rates down when the insurer had a risk of

[Commissioner Guy Sampson (Department of Financial Regulation)]: into a risky situation. The question and concern that brings that question is exactly why I am unequivocal and that Blue Cross needs to have that approved range of of risk based capital. It's not a made up number. It's an actuarially evaluated by Blue Cross back in the day, reviewed actuary independently vetted and evaluated by us as a regulator, that is an appropriate range because you can't you just simply can't act fast enough. You can't detect and act fast enough on an annual rate to to fix whatever the problem is. That's why you need that surplus buffer because there's so much risk in a fully insured contract. I mean, you're literally saying, I'll take a $100 for next year, and I'll cover you no matter what. That $100 could literally be $500. There's there's very little cap. There's very little backstop to the risk that a fully insured product takes or what the company takes in offering a fully insured product.

[Rep. Alyssa Black (Chair)]: Back to boards. Okay. So after I floated the idea of somebody on the care board, in May, you're recommending and just to be clear, eighty five is in consultation with part of financial regulation and measures that you'd like to see. You have the governor appointing two members of Blue Cross' board.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Yes.

[Nolan Langweil (Joint Fiscal Office)]: Well,

[Rep. Alyssa Black (Chair)]: not necessarily the governor could appoint any it doesn't need to does it need to represent the public?

[Rep. Leslie Goldman (Member)]: Would read it correctly.

[Commissioner Guy Sampson (Department of Financial Regulation)]: The proposal fits within the current statute and and I believe also, by law's of Blue Cross in terms of board composition. There's a certain percentage of members of the public, public, certain percentage of subscribers, and also there's an allotment for Blue Cross Blue Shield of Michigan with which they have not a merger, but an affiliate.

[Rep. Alyssa Black (Chair)]: Yeah. I guess I'm just wondering You mean, you have a corrective action with Blue Cross. We're paying attention to it. We're Do you think it's necessary?

[Rep. Leslie Goldman (Member)]: I think

[Commissioner Guy Sampson (Department of Financial Regulation)]: it's necessary because the board You know, you congratulated Blue Cross as is appropriate on the affordability efforts. I I believe a a a board let's entertain the idea that a board from from the tone from the top and from governance might have proposed that five years ago, might have compelled management to think differently about why they were continually unsuccessful in influencing the Green Mountain Care Board to give them the necessary rates. Board is is about governance and compelling management to take certain approaches and strategies. And while I always support and do support the competence and the hard work of Blue Cross Blue Shield. I'm not here to second guess their management decisions. At the end of the day, I'm a strong believer that when something appears to have not been working well, you need to try different things. So as a regulator, we're proposing different things in terms of how Blue Cross, which is a statutorily enabled, premium tax exempt, nonprofit ruled by the Supreme Court to be quasi governmental, We believe a more public or a more policy and public policy and statewide driven membership on the board, just two of 12, I believe, will will help potentially influence the tone of the governance of the of the company.

[Rep. Alyssa Black (Chair)]: My last question. Promise, my last question. And it's just a really simple question. We we're talking about Blue Cross Blue Shield. But in order for our marketplace to even function, we have to have at least two, and there is another one. How's MVP doing? Are they doing okay?

[Commissioner Guy Sampson (Department of Financial Regulation)]: You know, before I

[Rep. Alyssa Black (Chair)]: You're gonna get, like,

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: middle of the night calls saying

[Commissioner Guy Sampson (Department of Financial Regulation)]: I'll I'll I'll tell you that when they schedule a call with us, I'm always a little concerned like, oh, no.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Oh, okay.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Regular. I their believe the raw business I believe, less than 10% easily of their total business. So it's always a concern for us that, they decide that Vermont isn't worth it in terms of, you know, the the effort of of offering a plan. All indications that we've had from them is that they're continued to be committed to the market. And, you know, in terms of rates and profitability, they've had challenges on on the the the qualified health plan, the QHP on the exchange, and not not quite as impactful because of their the rest of their business. But as a line of business in the state, it it has not been free of challenges for them as well. So what Nolan mentioned in terms of potential knock on effects of that catastrophic future if if Blue Cross had to to to be to to not exist. I think he he said it correctly that it's pretty strong thoughts that MVP would exit the market as well. I cannot speak for them, obviously, but they probably would not be willing to be the sole player in the fully insured market like that.

[Rep. Alyssa Black (Chair)]: I lied. I you reminded me as you were talking. I had another question.

[Commissioner Guy Sampson (Department of Financial Regulation)]: That's fine. Yeah.

[Rep. Alyssa Black (Chair)]: Speaking of QHPs, Health Plans, we, the legislature, and I hear a million reasons why health care is so expensive, and I always say it's all of them and none of them. But we get a lot of criticism that the reason that Vermont's prices or rates are so high is because our benefits are too generous. And I am wondering, I mean, our qualified health plans, if they've been losing money every year since their existence, except for one, DFRs typically you're the ones that always give us advice on essential benefits, benchmark coverage changes. Do you think our benefits are too generous? Do you think we cover too many things? Is there I mean, I'm not asking you to name like you should get rid of this or add that, but do you in general?

[Commissioner Guy Sampson (Department of Financial Regulation)]: My my approach to that question is not you know, I'm not gonna opine on that. I enjoy generous health insurance as does my family. I think the only thing that I think we all need to stay conscious of everyone is that every benefit has a cost. Right? And it's like insurance. It's spread across everyone. So if we're gonna, you know, cover ABC that only applies to 51 year old males who are insurance regulators, we're all gonna pay for that. Right? It's not like I said, I'm not a health care policy person. I know we have good benefits. I know Vermonters love their benefits. Sure it's a factor. I don't I don't know how much of a factor it is.

[Rep. Alyssa Black (Chair)]: Are our benefits much more generous than out of line with other states? I

[Commissioner Guy Sampson (Department of Financial Regulation)]: think before the ACA, it was clear that we were doing things, progressive things in health care coverage that other states were not, and we were proud of that as a state. ACA level set a lot of that, Obamacare. And but I'd like Mary, maybe you might have some more experience in this area or thoughts on that.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: I would say that we do have some benefits that other states don't have. And every mandate costs money. And so, I mean, a question of it's a math question really, right? It's long as you have, from our perspective, from a solvency perspective, as long as you have an adequate rate to deal with those mandates, fine. But people have to pay that adequate rate. And so, will see, actually It amazed me actually, I saw an article the day before yesterday. We frequently get questions about why can't we be like New Hampshire? New Hampshire does not have as many mandates. There was actually an article the other day because there was a proposal in New Hampshire to pass an anti white bagging law. The I don't know.

[Rep. Alyssa Black (Chair)]: Criticism

[Rep. Leslie Goldman (Member)]: It's gonna get

[Rep. Alyssa Black (Chair)]: into it.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: Quote in the article was, Oh, Oh yeah, Vermont did that. Look how high their rates are.

[Commissioner Guy Sampson (Department of Financial Regulation)]: And one thing too,

[Rep. Alyssa Black (Chair)]: New Hampshire's rates are lower because New Hampshire's costs are lower.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: That is part of the equation. They Boston. They get the benefit of Boston in some ways because they are sort of on the periphery of Boston, but they do have fewer mandates. They've had somebody, I think, on their healthcare committee for twenty years who has opposed mandates vehemently. And so it has kept some of that down some, and that contributes, everything contributes.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Yeah, bigger risk pool, probably more private options, more competition in the provider world, hospital world, services world. Yeah. Again, bigger risk pool. The one thing about there is some some interesting different ways to look at are we the most expensive. We're definitely, you know, essentially, are. Right? If we're not number one, we're number two, three, four, or five. But it's hard to compare because we have one rate for everyone in this room, whereas New Hampshire has age based rating up to three to one. Right? So 300 to 100, you know, three x.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: I don't know what that means. Sorry.

[Commissioner Guy Sampson (Department of Financial Regulation)]: So in Vermont, only Vermont and I believe New York Mhmm. You will pay the same rate for a fully insured product, whether you're 25 or or 55.

[Rep. Alyssa Black (Chair)]: Okay. Community.

[Rep. Leslie Goldman (Member)]: Yeah. That's community rating. Yep. Yeah. And then when that's the 300 x. That's what confused me.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Three times. So so the ACA allows before the ACA, Obamacare, each state could do whatever they want. They could they could have preexisting you know, all that stuff. But one of them was regardless of your medical background, you're, you know, whatever, Kai, you're 51, you're paying this rate, and the ACA limited that spread how much you could deviate by three.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: Mhmm.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Three to one, I believe. So no no one's I'm not sure exactly how that was calculated, but no one's premium, I believe, could be, based on age, could be more than three times or 300% of someone else's. In Vermont, it's zero, but everyone pays the same. So then the question is, how do you compare New Hampshire's insurance rates or 49 others 48 other states' insurance rates to Vermont, are we looking at a 25 year old's rate or 55 year old's rate?

[Rep. Francis McFaun (Vice Chair)]: Mhmm.

[Commissioner Guy Sampson (Department of Financial Regulation)]: How do you blend them? You gotta do a an age weighted analysis. You know? So there's there's folks that geek out on that and have different opinions on whether we are the most expensive or or just very expensive, And then you have to calibrate for for benefits as well.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: For yeah. And then why don't they get New Hampshire? I mean, what proportion in New Hampshire as contrasted with from our our state employees or our teacher employees? I mean, how much of our insured people in this state proportionately are in those two categories?

[Commissioner Guy Sampson (Department of Financial Regulation)]: Right. Are are in an exchange plan or yeah.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: And then leaves that very narrow band Yep. Of the individual in

[Nolan Langweil (Joint Fiscal Office)]: small Yeah.

[Rep. Leslie Goldman (Member)]: 70,000. It's a small number. It's a small market.

[Commissioner Guy Sampson (Department of Financial Regulation)]: It's not easy to It's not apples to apples by far.

[Rep. Leslie Goldman (Member)]: That's really helpful, actually, because I never really understood that. I really appreciate that.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: Whoever asked that question, thank you.

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Will we ever get out of this? We are

[Rep. Alyssa Black (Chair)]: a very small state, we're not New Hampshire. We don't have a pool. Right. You can build all

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: the houses we have on the bathtub, I like.

[Rep. Alyssa Black (Chair)]: Love hot tubs.

[Rep. Leslie Goldman (Member)]: Hot tubs.

[Rep. Leslie Goldman (Member)]: No. It's like a hot tub. But,

[Rep. Alyssa Black (Chair)]: will we ever get out of this because of that? We're never gonna have competition. We're not having insurance companies. Yeah.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Well, I'll go way off script and say I'm a big fan of the Vermont futures project, Kevin Chew, who really says we need 800,000 people in this. Right? Mhmm. I I'm former tax commissioner, so looking at tax policy, looking at critical mass to just have healthier or not healthier, but broader risk pools, employment, all that stuff. We need more people in the state. Yeah. Whether it comes to

[Rep. Alyssa Black (Chair)]: attract more people when we have the highest insurance premiums in the Right. Higher Also the best

[Rep. Leslie Goldman (Member)]: and no houses. But but

[Commissioner Guy Sampson (Department of Financial Regulation)]: I I would say one thing to avoid that Mary and I talk a lot about is that there is a lot of attention on well, you know, speaking of New Hampshire, we've also heard, like, we need to be like New Hampshire. They have x amount of insurers on the exchange. I'm very clear, you know, in my opinion, that competition among insurers or you know, is is not

[Mary Black (Deputy Commissioner of Insurance, DFR)]: Not a health problem. Yeah.

[Commissioner Guy Sampson (Department of Financial Regulation)]: You know, because because we have some very large provider groups as well. So we just on all sides of the equation, we don't have a lot of competition, but just adding competition on the insurance side isn't magically gonna drive down the cost of care on the provider side. Mhmm. Because there are many hospitals and groups that have to be in the network that you have to contract with them. Yeah. And so, really, we just need to address with those entities how do we tackle the cost of care.

[Rep. Alyssa Black (Chair)]: Speaking of things that we get criticized for is that if you just got rid of all the insurance regulations, lots of insurers would be coming here. There are no insurers coming here.

[Mary Black (Deputy Commissioner of Insurance, DFR)]: It's from Boston.

[Rep. Alyssa Black (Chair)]: Okay. State sponsored care. If we can't make money.

[Commissioner Guy Sampson (Department of Financial Regulation)]: Yeah. The idea of, like, if you let insurers sell over state lines, what that really means is, I think, not comply with Vermont mandates. Mhmm. Okay. Well, that's an unfair competition to ensure that has to comply with the mandates. So, of course, they will cherry pick and pull good risks out. And, also, at the end of the day, they have to pay the same bill for an MRI or an ER visit in Vermont as the domestic company insurance company has to. So it's it's not a silver bullet.

[Rep. Alyssa Black (Chair)]: Competition. Competition. Insurance regulation are not our insurance problems. Right. Leslie, and then I think we're going to finish up.

[Rep. Leslie Goldman (Member)]: I guess you get the final word,

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: but this is a question that has

[Rep. Leslie Goldman (Member)]: come up to me a lot from constituents in other places, that yes Vermont's too small, we know that. Is there a regionalization opportunity for us as in our New England backyards? Or we heard about Michigan. I don't know how that would work. But that comes up a lot. I mean, we're talking about regionalization in other ways and health care, education, but of course it would be beyond our borders. Is there any sense in that? I just sort of figure with our risk, no one wants to touch us. So

[Commissioner Guy Sampson (Department of Financial Regulation)]: Right. Yeah. That that's the ultimate thing. It's like if if you're the if you're if you're the oldest, second oldest state in the nation, and if there is an absolute linear we all know it in our lives as we got older, we went to the doctors more and cost more and thanked everyone for our insurance more. Right? But we we are the second oldest state, and we do have a high cost of care. Nobody wants to be our dance partner, I would guess. You know?

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: That's the

[Rep. Leslie Goldman (Member)]: answer I'm giving. I just wanted to

[Nolan Langweil (Joint Fiscal Office)]: make sure

[Rep. Leslie Goldman (Member)]: I wasn't being too cynical. Or

[Commissioner Guy Sampson (Department of Financial Regulation)]: But but I think in terms of Blue Cross Blue Shield of of Michigan and that affiliation, you know, sure Blue Cross could speak to actual savings and benefits that had from that. So we or, you know, sharing sharing resources and spreading cost over larger organizations in terms of the administrative cost, And and and that may or may not be the case. I can only speak to insurance, but but outside of insurance as well, elsewhere in the kind of value chain.

[Rep. Alyssa Black (Chair)]: Am I misremembering, but didn't Blue Cross Blue Shield of Vermont used to be with New Hampshire? Mhmm. A long time

[Rep. Leslie Goldman (Member)]: I wasn't even a kid. Any

[Rep. Alyssa Black (Chair)]: other burning questions?

[Ruth Green (CFO, Blue Cross Blue Shield of Vermont)]: Thank you.

[Rep. Alyssa Black (Chair)]: Not the most exciting topic. I'm not being is actually good. Will be This thinking your stuff

[Nolan Langweil (Joint Fiscal Office)]: is the

[Rep. Leslie Goldman (Member)]: best topic. Think we're going finish.

[Rep. Alyssa Black (Chair)]: Thank you everybody for coming in. Thank you for all the updates. Thank you for all the work you're doing on this. And we're done for the day and the week. See you back here on Tuesday. Thank you, Wendy.