In a surprise move, a key legislative committee this week amended legislation creating a new state-run healthcare plan, adding much-needed regulatory and fiduciary oversight.
Following a remarkable series of events during the committee meeting, the bill was eventually approved, but with radically different language than originally proposed.
SB 842, better known as the public option bill, is a priority this legislative session for progressive Democrats and state Comptroller Kevin Lembo.
The bill, as originally drafted, authorized the comptroller to expand the state-run municipal healthcare plan to offer coverage to small businesses, nonprofits, and Taft-Hartley plans.
CBIA and a number of other groups testified against the bill last month, raising a number of concerns with the proposal.
Chief among these concerns were the unresolved questions about the fiscal health of the State Partnership Plan, which was the model for the new plan proposed in SB 842.
The SPP has a history of multi-million dollar deficits and unanswered questions about its future solvency. CBIA last month called for an independent audit to resolve those questions.
The public option proposal also threatened to destabilize the insurance marketplace, authorizing the comptroller to cherry-pick risk, and creates an unequal playing field for the private sector.
Many of the concerns with SB 842 were addressed by moderate Democrats and Republicans on the Insurance Committee yesterday.
Committee co-chair Sen. Matt Lesser (D-Middletown) opened the hearing by proposing new bill language that he said addressed a number of the concerns voiced by CBIA and other organizations.
For example, the substitute language required the comptroller’s state-run plan to obtain stop-loss insurance and subjected it to a number of the state assessments that private carriers must pay.
Additionally, the language required the comptroller to hire an independent actuarial firm to propose premiums and provide financial analysis of the plan.
Regulatory, Fiscal Oversight
However, during debate on the substitute language, co-chair Rep. Kerry Wood (D-Rocky Hill) offered an oral amendment to Lesser’s proposed language, which she said did not go far enough to address concerns with the bill.
Wood's amendment proposed two major changes. First, it requires the public option plan to be fully insured, meaning it would be subject to Connecticut Insurance Department oversight and a number of regulations that private sector carriers must follow.
Second, it would require annual, independent audits by the state Auditors of Public Accounts.
“With these two changes in place, I think we would feel this is a fiscally responsible approach to a public option,” Wood told the committee.
"This would ease our concerns about this adversely affecting our state budget. All the things we do on the Insurance Committee would now be applied to this plan.”
The committee adopted Wood’s amendment on a 10-8 vote, with Sen. James Maroney (D-Milford), Rep. Stephen Meskers (D-Greenwich), and Rep. Emmet Riley (D-Norwich) joining Wood and all Republican members in support.
The committee then approved the amended bill on a 12-6 vote. It now awaits action by the legislature's Finance, Revenue, and Bonding Committee.
The amended bill was a victory for small businesses, as the plan now has significant consumer protection safeguards that better protect taxpayers and plan participants.
CBIA president and CEO Chris DiPentima applauded the efforts by Wood and other committee members to add those protections to the bill.
"Making the public option a fully-insured plan adds transparency and a number of critical consumer protections and creates a more even playing field with the private sector," he said.
"Fully insured plans are subject to regulation and oversight by the Connecticut Insurance Department, they have to maintain specific medical loss ratios, they are subject to annual rate review and actuarial analysis, subject to penalties, including receivership, for running a fiscally insolvent operation, and require a third party administrator.
“If the state is unable to administer a solvent program under a fully insured scheme, the program should not be administered on a self-insured basis."
Gov. Ned Lamont later told reporters "if the public option means the taxpayers have to underwrite the risk I’ve got some real questions about it."