After a blitz of hearings in late February and early March, legislators are barricading themselves behind closed doors to hammer out an overhaul of the state”™s health system.
How they handle insurance costs for small businesses may well determine the health of any system going forward.
After re-filing legislation that would make small businesses eligible to join the state”™s insurance pool for public employees, key Assembly Democrats appeared to be wavering  on that proposal, passed by the legislature last year but vetoed by Gov. M. Jodi Rell who feared runaway inflation in premiums charged by commercial insurance carriers to cover the unanticipated surge in enrollment in the state pool.
That threat could backfire against carriers, after legislators weighed two proposals to convert the insurance plan for state employees to a self-insured mechanism, in which the state would cover health bills racked up by plan participants rather than paying premiums to commercial insurers.
After backpedaling from a pledge to allow small businesses to join the state insurance pool, Democrats appeared to be reversing course again in early March as the Universal Health Care Foundation of Connecticut Inc. presented its “SustiNet” plan that allows small businesses to join the state pool.
“They are getting a lot of flack for leaving everyone out and are desperate for support,” said Ellen Andrews, executive director of the Connecticut Health Policy Project in New Haven. “As an advocate ”“ but also as someone who runs a small business that is committed to providing employees with good coverage ”“ it is getting nearly impossible.”
With a veto-proof majority in the current legislative session, Democrats have the clout to push through whatever plan they choose ”“ if Senate President Donald Williams Jr. and House Speaker Chris Donovan can keep party members in line.
While SustiNet”™s purchasing power might help small businesses cut premiums by up to 10 percent, many would still find that unaffordable given the rapid inflation in health insurance this decade, according to Stan Dorn, senior health associate with the Urban Institute, who testified in support of the plan.
Robert Genuario, Rell”™s secretary of the Office of Policy and Management, voiced doubts that the simple function of converting to a self-insured pool would save money; and the Connecticut Business and Industry Association and others have voiced fears that a mass flight into a state-sponsored plan could bury the state budget in health care costs.
“The state”™s health insurance plan is the Cadillac plan,” said Rep. Lile Gibbons, a Republican from Greenwich.
Dorn said SustiNet”™s commercial offerings would not include many mandates for guaranteed coverage that push up the state”™s costs for covering public employees. Under state law, self-funded plans are not subject to statutory mandates covering some ailments. And SustiNet”™s administrators would be able to adjust the plan to ensure that the state would not be overwhelmed by companies abandoning their commercial policies en masse to join the program, Dorn said.
“We are confident that the proposal we put together will prevent adverse selection ”“ prevent disproportionately attracting high risk people into SustiNet in ways that could damage sustainability,” Dorn said. “We are confident that the proposal would prevent crowd out, would prevent major reductions in employer coverage. But you know what? We may be wrong ”¦ We think that capacity for mid-course correction is very important.”
In converting to a self-insured mechanism, the state could save as much as $145 million in the short term due to merely covering current medical expenses as they crop up, rather than paying premiums that create a pool against future costs. SustiNet would prove costly in the long-term, however, with Dorn estimating it would add nearly $1 billion in costs, roughly split between covering people who currently lack insurance and increasing reimbursement paid to hospitals and doctors to get them to accept the plan. After Rell created the Charter Oak Health Plan last year in a bid to provide a low-cost insurance plan for people lacking coverage, hospitals were slow to accept the plan on grounds it provided inadequate reimbursement.
Rell commissioned the HealthFirst Connecticut Authority in 2007 to find ways to increase health care availability while cutting costs. Last month, the group submitted its final report to the Connecticut General Assembly; both Rell”™s plan and those of Democrats have several features in common, including the concept of “medical homes” in which patients rely on their primary-care physician or other consultants to get ongoing prompts on their medical needs, with an eye on preventative care.
None of the plans propose an individual mandate like that in the state of Massachusetts, which penalizes individuals and businesses at tax time if they do not carry insurance.
