Government Affairs REPORT

Connecticut employers are:
Treading water on health care costs

(Feb. 24, 2006) Possibly the most amazing aspect of the health care crisis in Connecticut is that despite steadily rising costs over the past several years — health insurance premiums have catapulted nationwide by 73% since 2000 — the vast majority of people in Connecticut have health insurance, and most of them are covered through plans provided by their employers.

Only 5.8% of Connecticut residents are not insured, according to the Office of Health Care Access. And most of those people have access to health insurance but choose not to purchase it, often because of cost considerations.

A national Health Interview Survey for the U.S. General Accounting Office found that the main reason employed, uninsured family heads reported not being covered by health insurance was not because health insurance was unavailable through their employer, but because it was too expensive.

Health benefit costs strain the ability of Connecticut employers and employees alike to afford them. According to the federal government, $1 out of every $5 spent in the U.S. economy will go for health care within a decade, with annual spending consistently growing faster than the overall economy.

Therefore, lawmakers need to address health care cost issues immediately.
Health care costs are adversely affecting Connecticut’s economy. Seventy-five percent of Connecticut businesses say that before they hire more workers, they have to consider the cost of health benefits.

With an increased urgency to boost Connecticut’s economy and stimulate job creation, there are several steps lawmakers can take to slow the rise in health care costs here.
For example, Connecticut has the third-highest number of health insurance mandates in the U.S., according to America’s Health Insurance Plans.

Neighboring Rhode Island, Massachusetts and New York each have at least 20% fewer mandates than Connecticut.

Mandates provide coverage for specialized medical treatments and procedures that help some people but increase costs for all health care consumers. But Connecticut’s mountain of mandates together increase health care premiums between 26% and 65%, according to the Council for Affordable Health Insurance.

Other states have reviewed the usefulness of the mandates they have on the books, and have curtailed adding more. Connecticut should do the same.

More-educated consumers can also lead to better and more effective care. Connecticut’s business community recommends providing more information about the quality and cost of health care. The use of e-medical records and billing can prevent duplicative tests and reduce administrative costs.

According to the Juran Institute, the cost of poor quality in health care accounts for 30% of all direct health care spending as a result of overuse, misuse and waste.

Lawmakers can also help consumers get more control over their health care decisions by requiring the Department of Insurance to approve innovative designs for pharmacy benefits. And they could create health plans for individuals that provide for catastrophic coverage only.

Legislators could help achieve real savings in the health care system by establishing a state initiative related to evidence-based medicine and “pay for performance” systems (in which insurers pay providers if they can prove they are providing quality health care less expensively).

For more information, contact CBIA’s Eric George at georgee@cbia.com or 860-244-1900.