Many legislative attempts were made this year to modify state health insurance policy. With federal healthcare policy already driving significant transformation–including continued efforts to finalize the federal rules and implement changes--it’s essential that lawmakers focus on establishing consistent state health insurance policy.
Furthermore, taking into account the new federal healthcare taxes and fees, Connecticut lawmakers must not add to increasing costs of healthcare.
Nevertheless, the state’s exchange (Access Health) is charging the small group and individual health insurance carriers 1.35% of premium to pay for their operations.
And, a provision in the budget implementer bill (HB 5597) ensures the state’s exchange may turn to the Department of Insurance to enforce the collection of those new fees.
Additional cost multipliers are the SIM tax and more and more mandates (discussed below) which will be passed on to consumers in the form of higher premiums–meaning the price tag is going up instead of down.
SIM Tax Adopted
Contained in the state budget bill (HB 5596) is a new healthcare assessment to pay for the State Innovation Model (SIM). It’s a prime example of yet another tax on employers to fund a government initiative.
As first proposed in SB 21, the assessment fell on health insurance carriers and self-insured employers. The problem was SB 21 specifically targeted employers offering their employees health insurance to pay for an initiative designed to benefit everyone in Connecticut.
Health insurance carriers would have passed on the assessment through higher premiums to fully insured employers (typically smaller employers). And, self-funded employers would have been required to pay for a state initiative duplicating efforts that many of them were already undertaking.
As finally adopted in HB 5596, SIM will be funded through an existing Connecticut Insurance Department (CID) assessment. While avoiding a new taxing mechanism is a good thing, tapping the existing CID assessment just means another set of employers will be required to pay for SIM.
Self-insured employers are not included in the CID assessment, but all domestic insurance companies--such as property and casualty entities--are. While the goals of SIM are laudable–improving quality and reducing cost–the funding mechanism unfairly targets certain employers , and consequently will be passed through to consumers in the form of higher premiums.
CBIA will continue to work on this issue because SIM should be a General Fund line item and not put on the backs of selected employers and consumers.
Health Benefit Mandates
Most of the new health benefit mandates proposed this year failed to pass–a good thing for those worried about the high cost of healthcare.
A health benefit mandate is a procedure or service the state requires health insurance carriers to include in their plans. However, mandates only apply to fully insured employers–that is, smaller employers that cannot afford to self-insure. Larger employers that choose to self-insure are exempted from state benefit mandates and instead are regulated by federal law.
While each new mandate addresses a specific health-related need, it also adds to the escalating costs of healthcare in Connecticut. The state already ranks among the top five states nationally with the highest number of health benefit mandates.
The problem is that the state has among the highest number of health benefit mandates in the nation–impacting the state’s high cost of healthcare. Lawmakers should review the current list of mandates, because controlling cost is central to expanding access to healthcare.
This session, SB 10 was amended to include two new health benefit mandates that cap co-payments for different services. While neither of these new mandates will impact the state’s budget they will impact cost in the private sector. The issue is that capping the copayments means that other plan features must change–such as premium, deductible or other payment options.
A number of changes to the definition of medical necessity were discussed but ultimately, not adopted. Two proposals would have negatively impacted healthcare quality and cost, one by deleting the reference to “based on credible scientific evidence published in peer-reviewed medical literature” and another by designating any service provided to a patient as medically necessary.
False Health Claims
Several sections of HB 5597expand the state's False Claims Act to all state Health and Human Services programs.