The SustiNet Board of Directors voted 7-1 Wednesday on a lengthy package of recommendations that lay the groundwork for the creation of a plan which covers state employees and retirees, Medicaid recipients, and eventually municipalities, nonprofits, businesses and individuals.
The most controversial item for the lone member of the board who voted against the proposal was the creation of a competitive insurance option that will be expected to compete with commercial health insurance plans through the federal healthcare exchanges created by the federal legislation.
Paul Grady, a partner in the consulting firm Mercer, raised concerns about the feasibility of offering SustiNet to the public as a plan that competes with commercial insurers.
“It needs to be sensitive to the needs of the residents and fiscally prudent,” Grady said Wednesday during a two-hour long conference call to vote on the draft recommendation.
Grady worried about what kind of reserves the state has in order to offer such a plan in the private marketplace. There was also concerns about antitrust violations expressed by at least one of the consultants.
Nancy Wyman, the state’s fiscal watchdog as state comptroller and the lieutenant governor-elect, said “I think there’s a balancing act on this.”
She said she’s been very vocal about the state’s fiscal situation and more than $3.67 billion budget deficit, but concluded that SustiNet should be looking beyond the immediate financial problems.
“We should show what the road ahead should look like,” Wyman said.
Grady ultimately disagreed and voted against the recommendations Wednesday, while other board members said the debate for exactly how the state would structure its competitive public option should be left up to the legislature.
“Of course, we understand that work will be required before offering commercial coverage,“ the consultants wrote in the draft report. “A state insurance license will be needed to offer coverage in the exchange, for example, but we are convinced that this should not be an insuperable obstacle.”
The proposal says the public option will be financed entirely by premium payments and federal tax credits without any state funds. Under the proposal the public option will be managed by a quasi-public board, initially run out of the comptroller’s office, to oversee implementation of SustiNet and contract for services as necessary as it evolves into a health care benefits plan.
“We believe the SustiNet board should have the flexibility to change benefits and cost-sharing arrangements over time, within the constraints of applicable state and federal laws, including state benefit mandates, and based on evidence about the most effective benefit designs, categories of covered services, and cost-sharing arrangements,” the report concludes.
But the competitive public option SustiNet will offer doesn’t come until the end of the proposal, which will be rolled out incrementally over the next four years, if the legislature and the new governor give it the green light.
The proposal starts by enrolling state employees and retirees and Medicaid and HUSKY insurance recipients into one pool. That pool will then be opened to municipalities, small businesses, and nonprofits before it gets to the public option in 2014.
The proposal urges the legislature and SustiNet board to find the necessary resources to expand HUSKY eligibility before then so it can take advantage of the additional federal funds available under the Patient and Affordable Care Act.
But what advocates say is revolutionary about SustiNet is its attention to lowering health care costs through reforms such as patient centered medical homes, electronic medical records, and preventative treatment initiatives to improve health outcomes.
SustiNet, which was vetoed in 2009 by Republican Gov. M. Jodi Rell, who claimed the cost of implementing a universal type health care plan was too expensive, will likely get a warmer reception from Gov.-elect Dan Malloy.
While early projections pegged the implementation of SustiNet in the billions of dollars, passage of federal health care reform changed those expenditures into savings for the state.
“We’ve estimated that the combination of federal health care reform and SustiNet will save Connecticut taxpayers $226-$277 million per year, starting in 2014, by replacing current state spending on HUSKY and Medicaid with newly-available federal dollars,” Kevin Lembo, co-chairman of the SustiNet board and state comptroller-elect, said. “And if SustiNet slows health care cost growth by just one percentage point per year, state budget deficits will fall by $355 million in 2014, with reductions reaching more than $500 million a year, starting in 2019.”
The legislature and the governor will still need to approve the recommendations before they become law.