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September 2009— Vol. 87, No. 7

Flawed legislation won’t
deliver true health care reform

"SustiNet" plan carries big price tag but would do little to improve quality, reduce costs, or increase access

 

by Bill DeRosa

 

On July 20, majority Democrats in the General Assembly gathered enough votes to override Gov. Rell’s veto of the “SustiNet” bill, a well-intentioned but seriously flawed measure that will set in motion a significant expansion of state government into health care and greatly increase the burden on Connecticut taxpayers.

That same day, lawmakers sustained the governor’s veto of the Healthcare Partnership, or pooling bill, by a single vote. That bill would have opened the expensive state health insurance plans to small employers, municipalities, and other groups and would have put the state in the risky role of self-insuring its public health care programs. It also would have allowed the statewide purchasing pool to operate outside the safeguards of state insurance laws—including the small group rating laws—which protect small companies from sharp rate increases by spreading the pooled risk across the broadest possible base.

“We’re pleased that the legislature chose to sustain Gov. Rell’s veto of the pooling bill,” says John Rathgeber, CBIA president and CEO. “But the survival of the SustiNet proposal poses some major problems for the state of Connecticut going forward.

“We all want a better health care system,” he says. “The question is how to do it responsibly. It’s unfortunate that, in the face of a massive state budget deficit and a struggling Connecticut economy, legislators approved a plan that won’t improve health care but will dramatically increase the size and cost of state government.”

Falling short of basic goals

When it comes to fixing health care, there is little disagreement over what needs to be done. Any plan seeking to reform the health care system on a state or national level must achieve three fundamental goals: (1) improve the quality of health care delivered by providers, (2) reduce the cost of that care, and (3) increase access to care so that no one who wants health coverage is left uninsured. The SustiNet plan, as proposed, will not achieve those goals.

Michael J. Critelli, former executive chairman of Pitney Bowes and former member of the Connecticut HealthFirst Authority, believes that although the SustiNet act is an improvement over previous attempts to achieve affordable universal health insurance, the measure is “fatally flawed.” Among its failings, Critelli cites the plan’s high cost to state taxpayers, the fact that it shuts out key stakeholders from the policy formulation process, and its lack of coordination with federal health care reform efforts.

SustiNet at a glance

The SustiNet act lays the groundwork for expanding the state’s ability to control health care decision-making and gives more management authority to state government. It is designed to implement the SustiNet plan, a health care strategy created by the Universal Health Care Foundation of Connecticut. That plan puts the state in the role of self-insurer and would establish a government-run health care bureaucracy. The plan would be open to small-business employees, nonprofit employees, municipalities, retirees, participants in the HUSKY Plan Parts A and B, and other groups.

As originally proposed, the SustiNet bill had a fiscal note that indicated it would have a major impact on the state budget. Recognizing that economic conditions and the state’s huge budget deficit would make funding the plan impossible in the current biennium, the bill’s supporters amended it last May to simply be a “study” (which it most certainly is not) to determine if the plan makes sense for Connecticut. Actual implementation was put off until July 1, 2012, to put it outside the next biennial budget cycle. That move allowed the bill’s proponents to avoid a fiscal note and claim that the proposal would have no impact on the budget—a crucial factor in moving it through the legislature and ultimately overriding the governor’s veto.

Any notion that the act is a study is misleading, however, because the “study” outcome has always been presupposed. That is, the measure is not intended to explore options for the most effective, affordable approach to health care reform but is designed to implement the SustiNet plan specifically. Indeed, the act provides for the appointment of a nine-member board of directors to make recommendations for implementing the SustiNet plan but doesn’t give that board any other option—including the ability to suggest that the plan would be too expensive or unworkable in light of potential federal health care reforms.

“The SustiNet board will have to report back to the general assembly by Jan. 1, 2011, with a plan to implement health care reform in Connecticut,” says Joe Brennan, CBIA senior vice president of public policy. “The legislature will then decide whether to move forward with whatever plan is presented to them, move forward with an amended plan, or take no action. Much will depend on the cost of whatever proposals are presented.”

Your cost: $1 billion (or more)

Cost is an issue SustiNet’s supporters would prefer to avoid, which is understandable given how expensive their plan will be. The Office of Policy and Management estimates that it will likely ring up to approximately $1 billion per year. That news comes at a time when the state is facing a Fiscal Year 2009 budget deficit of nearly $1 billion and a shortfall of $8.55 billion over the 2010 and 2011 fiscal years, and income, sales, and other tax revenue has declined significantly.

As was mentioned in last month’s CBIA News, the governor and the legislature are expected to close the FY 2009 budget gap with several one-time revenue sources, including borrowing, the Rainy Day Fund, federal stimulus dollars, and transfers of monies from outside the General Fund. Unfortunately, funds from those sources will not be available to help close the two-year, $8.55 billion deficit—or pay for a new, $1 billion health care program.

Despite (or perhaps because of) SustiNet’s enormous cost and the state’s ongoing budget crisis, proponents of the plan have not offered a funding strategy, a fact that was pointed out in the fiscal note attached to the original SustiNet proposal: “While the bill contains numerous references to carry out its duties ‘within available appropriations,’ none have been provided for in this bill.” That situation has not changed, and amending the bill to push back implementation to 2012 did not change the fact that SustiNet will be very expensive, and the state will be in no position to pay for it.

“Considering the harsh economic and budget realities the state and its residents are facing, we simply cannot afford the government expansion envisioned by this measure,” says Rathgeber. “Even in a good year, a plan such as SustiNet is unaffordable and undesirable. But at a time when the state is facing a multibillion-dollar budget deficit and most taxpayers are being significantly hurt in some way by the recession, it is also extraordinarily ill-timed.”

To make fiscal matters worse, SustiNet proposes that the state assume the role of self-insurer. Under the plan, the state—not private insurance companies—will be liable for the insurance claims filed by participating groups and individuals. The legislature has not, however, set aside money to pay these claims, which will require at least hundreds of millions of dollars. “As with the rest of the proposal, it’s not clear how that revenue will be generated,” notes Brennan.

 

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