Concerns Raised About SustiNet

Issues & Policies

Several concerns over the proposed SustiNet healthcare plan were expressed this week at a public hearing; concerns center on including about the plan’s cost, timing and relationship to federal reform. 

As contained in HB 6305, SustiNet would create a state-run public healthcare option and compete directly against Connecticut’s private sector. Eventually, the plan would be offered to all residents and companies in Connecticut, although the program’s costs have yet to be fully measured.
In testimony submitted by Gov. Malloy’s budget office, the Office of Policy and Management (OPM), the agency had questions about SustiNet’s timetable and the overall scope of the legislation.  
There also was concern that the potential cost of SustiNet places a significant strain on the state’s general fund. What’s more, OPM expressed concern about how the new bureaucracy created to administer the SustiNet plan would take away a good deal of authority from the administration. 
CBIA reiterated many of these positions and testified that the bill would place significant strain on Connecticut’s already beleaguered state budget.
Unfunded debt
Already, Connecticut has the highest per capita debt in the United States—total unfunded liabilities are $70 billion, of which nearly $43 billion are attributed to state employee healthcare and pension costs.
Over the years, Connecticut has had a very poor track record of paying for its existing healthcare cost obligations. In fact, as Connecticut underfunds such state health programs as Medicaid, healthcare providers are forced to shift a sizable portion of these costs onto the private insurance—hiking health insurance costs in the process.  
Businesses are concerned about how SustiNet would add even more to the costs of healthcare in Connecticut.  
Under HB 6305, SustiNet would use existing state health insurance programs as the platforms for the various health plans under its program. Each of these state health plans (from the state employee plan to Medicaid, HUSKY and Charter Oak) either has already been converted to a self-insured system or will be soon.
While a self-insured system would release the state from having to pay health insurance premiums to carriers, the trade-off is that Connecticut would have to pay the medical claims for everyone in the SustiNet plan.
This is highly risky, since no one knows just who will opt to participate in SustiNet–and if those entering SustiNet have high risks and high claims, then the cost to the state could be very expensive.
Federal health reform (which requires every state to set-up new health insurance marketplaces, known as “exchanges”) allows only fully-licensed insurance products may be sold inside the exchange. A self-insured plan is not a fully-licensed product and would conflict with federal reform.
Job Loss
At a recent press conference, Governor Malloy said that he intends to grow the insurance industry, which is a key economic factor in our state. The governor cited the fact that the industry has lost about one quarter of its workforce over the last 20 years.  
Since SustiNet seeks to be a direct competitor to the private sector, for SustiNet to be successful, it would do so to the detriment of private industry – which contradicts the goal to protect these jobs and grow this key economic base.

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