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January 31, 2022 Editor’s Take

Bordonaro: State-backed public option won’t be the antidote to rising healthcare costs

Photo | CT Mirror The state Capitol.
By Greg Bordonaro

Will state lawmakers rekindle efforts this legislative session to propose a public health insurance option in Connecticut?

It’s not clear yet, but health insurers are already trying to get in front of the issue.

They helped fund a new study by KNG Health Care Consulting, a health economics and policy consulting group, that concluded a proposal to expand access to a state-administered insurance plan to small businesses, nonprofits and multiemployer groups — introduced to the legislature last year as Senate Bill 842 — would likely force the state to raise taxes on health insurers and residents, increase premiums and possibly increase the number of uninsured people.

Greg Bordonaro

The report — supported by Connecticut’s Health Care Future, a project of the Partnership for America’s Health Care Future, which represents hospitals, health insurers and other private-sector interests — said state revenue from premium taxes and health insurance assessments could fall significantly, by up to $122 million by 2023, if a public health insurance plan was adopted.

Regardless of the report’s findings, state lawmakers should drop their focus on a public health insurance plan — which could create further budget instability — and take a more holistic view on how to rein in healthcare costs.

Taxpayers, of course, would be the backstop if such a plan is launched and can’t cover benefit costs. Connecticut may be enjoying a short-term surplus now, but it lacks longer-term budget stability. It doesn’t need to heighten those risks.

Questions have already been raised about the solvency of the state-run healthcare plan for municipal employees — known as the Partnership Plan — that public option proponents want to expand access to.

And there isn’t enough evidence that a public option can deliver on its promise of providing affordable, lower-cost coverage without major government subsidies.

A few states in recent years — Washington, Colorado and Nevada — have adopted their own versions of public options. At the very least, Connecticut ought to wait and see how those programs unfold before moving in a similar direction.

Of course, Connecticut also risks losing high-paying insurance jobs. Insurers, which have strong influence at the state Capitol, have lobbied strongly against public option legislation in the past, even making indirect threats to relocate jobs elsewhere.

Beyond those concerns, the bigger issue is that a public option fails to meaningfully address the rising cost of care.

Health insurers often take the brunt of political and media criticism when it comes to rising healthcare costs. But in reality, they can’t fully control those costs.

Healthcare providers — including hospitals, physician groups and others — are on the front lines administering care and drugs to patients, and the industry has seen serious consolidation over the past decade, which many economists agree has increased the cost of care.

In Connecticut alone, there have been more than 15 hospital mergers since 2009, and that’s not including dozens of smaller physician practice acquisitions, many of which evade state oversight.

Connecticut policymakers have not given the impact of these deals a serious enough look.

And I haven’t touched on pharmaceutical drug prices and Americans’ own health. We are an increasingly unhealthy nation that also wants the best care backed by the best drugs and medical technology. That’s all costly.

U.S. healthcare spending grew 9.7% in 2020, reaching $4.1 trillion, or $12,530 per person, according to the Centers for Medicare & Medicaid Services. Total healthcare spending accounts for 19.7% of the nation’s Gross Domestic Product.

The pandemic has underscored the critical need for an affordable and accessible healthcare system. Many would agree we don’t have that. All parties to the system are to blame; they’re also part of the solution.

But a standalone state-run public option won’t significantly move the needle, and it could bring more risks than rewards.

This is a much more complicated issue that requires a holistic look at the true cost drivers in the system.

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