Savings suspect, costs high for state employee health plan purchasing-pool proposal
 
(April 18, 2008) Why is Connecticut’s business community concerned that some public officials and advocates want to open the state employee health plan to municipalities and small businesses?

• Not because the private sector doesn’t want the competition — in fact, the private sector and the state have been selling competing health insurance to businesses for years.
• Not because the private sector fears the state will do a better job. With a nearly $22 billion unfunded liability for state employee retiree health insurance, and a state employee health plan that is very expensive, at more than $21,000 a year for a family of four, the state’s track record in this arena is not very good.

What is troubling Connecticut businesses are many factors that all add up to one misleading and misguided proposal (HB-5536).

These include the proposal’s inherently high cost and illusory savings potential; absence of consumer safeguards; potential for rate increases within a three-year “lock-in” period; and its true intent of merely paving the way for a taxpayer-funded, state-run health care system.

Without safeguards 
Proponents of HB-5536 have dangerously elected to keep the system set apart from the safeguards of state insurance laws, including the state’s small group rating laws. These protections have helped businesses with less healthy or older employees maintain health insurance by spreading the pooled risk across the broadest possible base so that no single small employer experiences a dramatic increase in premium rates.

For some unknown reason, the purchasing pool created under HB-5536 would operate outside of these laws —meaning that companies with employees who suffer from chronic conditions or who are generally older could have trouble obtaining and maintaining insurance under this system.
 
Lock-in?
Businesses or municipalities that decide to enter these untested waters will have to commit to purchase the plan for at least three years without guaranteed rates, even though many small businesses choose to shop for their health insurance each year to find the best health care coverage rates. 

What’s more, HB-5536 offers no rating guarantee. Participating companies and municipalities may want to believe that by agreeing to participate for three years they will receive, in return, a guaranteed rate for those three years. Instead, they could be vulnerable to rate hikes within their three-year commitment, which would be a costly misunderstanding.
 
Savings? 
Savings through the plan are also suspect, especially when the state employee health plan is known for its high costs and benefit levels. While some municipalities believe they will save money under this plan, in fact they could see their health insurance costs — and their property taxes — rise as a result.  Unfortunately, proponents of this system have not made available a clear cost comparison of plan designs and benefit levels.

Finally, proponents of HB-5536 admit that their ultimate goal is nothing less than a full government takeover of health care system and the imposition of a single-payer health insurance system in its place.  Such a taxpayer-funded system would be very costly, unsustainable and devastating to the state’s economy.

For more information, contact CBIA’s Eric George at 860-244-1921 or eric.george@cbia.com.