Business community praises
governor’s veto of state employee health care purchasing plan

Would have been costly for Connecticut taxpayers

(June 17, 2008) Gov. Rell has vetoed a proposal that would have opened the rich state employee health care plan to small businesses and municipalities. She said that the plan “will not achieve the intended cost savings or increase the number of people with insurance and could lead to substantial costs to taxpayers.”

CBIA applauds the governor’s veto because the legislation “didn’t improve quality, reduce costs or expand access to health insurance,” said John R. Rathgeber, CBIA president and CEO.

“People without insurance will not choose this expensive option if they are not signing up for the more affordable plans already available in the marketplace,” added Rathgeber.

All three of the state’s participating insurance carriers said if the bill went forward as envisioned by its proponents, they would have to rebid their rates — jeopardizing $54 million in state budget savings.

Other problems with the bill include the:
• Inherently high cost of state employee benefits
• Absence of consumer safeguards
• Potential for rate increases within a three-year mandatory commitment period
• True intent of merely paving the way for a taxpayer-funded, state-run health care system.

Labor organizations and other special interest groups promoted the proposal on the notion that participants would save money by opting into the rich state employee health plan.

However, they used flawed comparisons to support that notion and convince the House and Senate to approve the proposal. Those cost-savings estimates were called into question by many, including some of the municipalities that were supposed to benefit from the plan. Danbury and New Haven, for example, said that closer examination showed that the plan would significantly increase their health care costs.

Two pools
What’s more, the attorney general declared that the state couldn’t unilaterally bring everyone into the state employee pool and insurance carriers couldn’t unilaterally rebid their rates. Either act would violate state law and the state bidding process. In his opinion, that meant the bill would essentially create two pools:
• The original state employee plan
• A second pool for new participants

Still, supporters are gearing up for a reprise of the proposal in the 2009 session.

HealthFirst CT
All the while working behind the scenes, the HealthFirst CT Authority has been charged by the legislature to explore and recommend future health care reform initiatives. Two of the choices under consideration are:
• Strengthening Connecticut’s current employer-sponsored system (which covers two-thirds of the state’s population)
• Dismantling this system and imposing a government-run, single-payer system in its place.

The authority has looked at Massachusetts and San Francisco as possible models. Unfortunately, both of these health care systems are funded in part by an employer “pay or play” health care tax. A similar scheme was shut down by a federal court in Maryland as violating ERISA and the San Francisco law is under review for the same reasons.

While its ultimate recommendations remain to be seen, the group will report to the legislature by Dec. 1, 2008.

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