State to Self-Insure Healthcare Plans

The Malloy administration this week announced that it will move Connecticut’s Medicaid, HUSKY and Charter Oak health plans out of managed care and into a self-insured administrative services only (ASO) model.

While the move is designed to save the state money on premium costs, the state will now be responsible for paying the medical claims of the programs’ nearly 600,000 participants. 

Managed predictability

The managed care (MCO) model provides the state a certain level of predictability on costs because participating health insurance plans are given a fixed payment amount, per member per month, to manage participants’ health care needs.

Managed care plans also shield the state from the financial risk on claims. Under a self-insured system, however, the state will have to take on that risk.

If the claims end up being less than the previous premiums, it could be a good bet for the state. However, the financial tables could be turned upside down on the state if claims register higher than the premiums.

More to it

Success in moving from managed care to the ASO model also could depend on how much “management” the state performs with the plans’ participants.

Currently, insurance carriers are given incentives to provide significant management services in order to keep costs down. Through wellness programs, chronic disease management, care coordination, use of claims data, and others, managed care carriers are able to improve their clients’ health and contain costs.

Under the ASO model, the state will have to dedicate time and resources to provide equivalent claims management services in order to keep the costs of the attendant medical claims low.

CBIA encourages the state to plan for and provide these important medical claim services so that the move to self-insurance doesn’t overburden the state budget.