State Confirms: Hundreds of Millions for SustiNet

04.08.2011
Issues & Policies

The legislature’s nonpartisan Office of Fiscal Analysis (OFA) this week released its cost estimate for the proposed SustiNet healthcare plan: Hundreds of millions of taxpayer dollars.

According to OFA, a single piece of the SustiNet plan (HB 6305)–the creation of the “Basic Health Plan” for low-income individuals–would cost the state between $222 million and $478 million a year.

What’s more, OFA estimates that the state will have to pay between $4 million and $6 million a year to administer the SustiNet program.

Though some are feeling “sticker shock” over the SustiNet plan cost, businesses are not surprised. Since the concept was first proposed, businesses have said the cost would be significant. What is surprising–and alarming–is that these hundreds of millions of dollars in new costs to the state could easily get exponentially higher.

That’s because the OFA estimate doesn’t address the potential cost of the public option portion of SustiNet. Since SustiNet is self-insured (that is, the state will be paying for SustiNet participants’ medical claims through monies collected from those participants), if the state miscalculates how much it needs to collect from plan participants, the result could be devastating.

In fact, the Hay Group recently released SustiNet cost estimates that say even if the State miscalculates by 1% how much it needs to collect from participants, that would result in an $80 million cost to the State.

While SustiNet has a laudable goal of providing every Connecticut resident with access to affordable, quality insurance, its cost is much too high for taxpayers.  

Good exchange

Meanwhile, the Finance Committee this week approved a positive measure (SB 921) necessitated by federal healthcare reform. Connecticut must create new health insurance exchanges that will act as regulated marketplaces for consumers. 

Governor Malloy’s administration also is supporting SB 921, which would start the process to establish Connecticut’s exchanges by promoting the exisiting private market.

CBIA strongly urges policymakers to continue following that path. Strengthening the private marketplace would help the state avoid shedding any more jobs and could actually promote the growth of the market and new job creation. Gov. Malloy’s support of SB 921 indicates that he shares this goal.

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