Controversial State-Run Healthcare Plan Faces Uncertain Future

A controversial state-run healthcare proposal faces an uncertain future, less than a week after lawmakers unveiled an ambitious new plan that could cost taxpayers tens of millions of dollars annually.

Democratic legislators last week filed a nearly 70-page amendment to the original bill, HB 7267—which, among other things, opened the state employee healthcare plan to small businesses.

The amendment scrapped that plan for a sweeping proposal that included an individual mandate, cost containment board, Medicaid expansion, a drug importation program, and new surcharges on insurance premiums.

It also featured what’s being called the Connecticut Option. The amended proposal dropped a planned expansion of the state employee partnership program due to questions around its solvency.

As proposed, the Connecticut Option is essentially a state-sponsored health insurance plan open to individuals and small businesses that do not have employer provided coverage.

However, legislative advocates said Wednesday the bill faces further revisions before the state House acts on it, including removal of the Connecticut Option and individual mandate provisions.

‘Pay More, Get Less’

The bill has faced broad opposition throughout the legislative session. After last week’s major pivot, representatives from Connecticut insurance companies immediately warned of the negative impact on job growth and economic development.

“Unfortunately, despite the best efforts of everyone involved, we cannot support the Connecticut Option legislation as currently drafted,” company representatives said in a letter to Gov. Ned Lamont.

“Bills of this magnitude, representing a fundamental and material change to insurance market operations and regulation, require careful and thoughtful consideration to avoid unintended consequences that could have a deleterious effect on job growth and economic development.”

In a separate statement, Bloomfield-based Cigna Corp. warned the “the only option this proposal gives the public is to pay more to get less from the healthcare system.”

The only option this proposal gives the public is to pay more to get less from the healthcare system.

“This option does not work for the public, for the state, or for the private sector,” the Cigna statement said. “This is yet another option no one in Connecticut can afford, and in fact threatens the long term viability and vitality of the state.

“Bottom line: The proposal as designed is ill-conceived and simply will not work.”

A new Connecticut Economic Research Center report reveals the insurance companies’ major role in the state’s economy, responsible for tens of thousands of jobs and billions of dollars in economic output. 

The companies asked the governor to “forestall further action until the goals and objectives can be better quantified and the proposal can be subjected to more rigorous review and analysis.”

Medicaid Expansion, Drug Imports

Advocates said restoring the individual mandate, an Affordable Care Act feature Congress eliminated last year, will raise $25 million annually in penalties paid by those who don’t comply with the requirement.

The cost containment board is modeled after the Massachusetts Health Policy Commission, which is authorized to set healthcare growth benchmarks for carriers and providers.

The Massachusetts Health Policy Commissioner position, established in 2012, cost our neighboring state $225 million.

.@hartfordcourant has it right. “For all the talk about where and how to raise taxes, legislators have actively avoided any talk about cutting spending in state government. That conversation needs to start.” https://t.co/U9fzk3A1bA #ctbudget #cteconomy

— CBIA (@CBIANews) May 24, 2019

The Medicaid expansion proposal, which likely will now be included in the state budget, also comes at a cost.

Proponents want to expand Medicaid eligibility to individuals who will no longer qualify for the entitlement program due to the increase in the state’s minimum wage to $15 an hour.

The drug importation program, which also will remain in the revised bill, permits the sale of Canadian prescription drugs in Connecticut.

Drugs in the U.S. cost more because of burdensome regulations and prescription approval processes, but recent reports have shown that a percentage of prescription drugs from Canada are counterfeit.

Costs Estimated at $100 Million

While the nonpartisan Office of Fiscal Analysis had yet to release a fiscal note on this expansive proposal, advocates speculated it would cost an estimated $100 million.

However, most of that cost would go towards state-financed premiums, cost-sharing subsidies, and expanding Medicaid—without mention of the cost containment board.

To help fund the bill, the language included an opioid tax, individual mandate, and carrier surcharge. That tax remains in the revised bill.

We will be better served by an innovative, private sector initiative rather than a costly government-run program.

But without a fiscal note, it is unclear whether these taxes and fees would sufficiently fund the proposed state-run plan.

Before the latest revisions, state Comptroller Kevin Lembo, a major advocate of state-run healthcare, said “this bill is the best thing that we can do to help businesses grow.”

However, businesses—particularly small businesses—say they will be better served by an innovative, private sector initiative rather than a costly government-run program.

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For more information, contact CBIA’s Michelle Rakebrand (860.244.1926) | @MRakebrand