April 5, 2019

$2.2M startup cost for 'public option' health plan

HBJ Photo | Joe Cooper
HBJ Photo | Joe Cooper
The state Capitol in Hartford.

An effort to provide lower-cost health insurance options to small businesses and individuals by allowing them to join the state health plan will cost at least $2.2 million to launch, according to a new estimate.

That's as certain as the Office of Fiscal Analysis (OFA) could be in its cost projections for Senate Bill 134, An Act Concerning Public Options for Healthcare in Connecticut.

The bill would establish a new "ConnectHealth Plan" for individuals, which is where the bulk of the startup costs would be, due to actuarial, legal and other consulting services, an impact study, and potential state subsidies, according to OFA.

The legislation would also permit the State Comptroller to allow small employers (those with less than 50 workers) to join the state's health insurance plan, or alternatively, establish a new, separate plan for them. (A similar bill targeted solely at small businesses would allow those with up to 100 workers).

Other costs are more difficult to estimate, but could include the following, according to OFA:

  • An annual cost of $178,500 for two benefit officers to assist joining businesses.
  • An unknown amount of state subsidies for individual plan participants. While the current version of S.B. 134 calls for subsidies (only for those who don't qualify for the Affordable Care Act's income-based subsidies), it doesn't specify an amount. That decision would come later, after a new advisory council, the comptroller, and Office of Health Strategy submit proposals to the legislature next year.
  • If the comptroller ultimately decides to allow non-public employees and residents to join the state plan, and the new members are sicker than the existing pool of members, it could lead to higher costs for the state employee retiree health plan and current non-state participants in the state plan, which include municipalities and UConn's graduate union. The bill notes that allowing those new members into the state's health plan would require the approval of the state's collecting bargaining union coalition, SEBAC.
  • Since the state self-insures its health plan, and has no stop-loss insurance against abnormally high claims, it may incur additional costs if claims come in higher than usual.

Health insurers here have testified against a public-option this year, arguing it could forge "a path to single-payer health care that will likely limit people's choices while increasing taxes and ballooning the state budget."

Comptroller Kevin Lembo supports a public option.

"This legislation would allow us to extend the successes of the state plan – high-quality health care coverage at the best price – to more Connecticut residents, beginning with small businesses and their employees," Lembo testified to lawmakers last month.

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