Gov. Dannel P. Malloy’s budget director expressed reservations Monday about opening up the state employees’ health insurance pool to municipal employees next month.
In this letter to state Comptroller Kevin Lembo, Office of Policy and Management Secretary Ben Barnes asks him to delay the implementation of the measure until further analysis of the state’s risk can be determined.
“I am concerned that the plan will not be able to accommodate most municipal employees because of collective bargaining agreements in place; that as a consequence only small groups of employees from some municipalities will enroll; and that by taking small groups in we run much greater risks of adverse selection and ultimately state financial support for local governments’ health obligations,” Barnes wrote.
Before moving forward with the measure Barnes said he wants the state’s actuary to take a look at it and make sure the state will be able to cover the claims of municipal employees looking to join the health care pool. He’s afraid that if sicker, less healthy municipal employees are allowed into the pool then the risk and costs to the state will be greater than anticipated.
“Based on this assessment, we can refine the risk analysis to the point where we can all be confident that the risks of general fund subsidy to towns is very small, and that reserves and other protections are appropriately structured to mitigate those risks,” Barnes wrote.
The nonpartisan Office of Fiscal Analysis estimated that about 577,949 municipal employees, and 174,342 nonprofits would seek to join the state employees’ pool. The state employees’ plan currently covers about 202,000 state employees and retirees.
Lembo was unwilling Tuesday to comment on Barnes’ letter, which he is still reviewing, along with information from the Health Care Cost Containment Committee that will have to approve the plan.
The State Employees Bargaining Agent Coalition, which is a member of the Health Care Cost Containment Committee, will also have approve opening up the health insurance plan to allow municipal employees join.
The current cost of the state employee and retiree health plan is based on the demographics and claims experience of the existing pool. Additional lives affect the claims loss ratio, so the cost of the state employee and retiree health plan would be directly impacted, which is why SEBAC will have a say in whether to allow municipalities and nonprofits into the pool.
“I understand that this additional analysis will delay the opening of a program beyond January, but I am sure we can all agree that protection of the state’s resources is critical,” Barnes wrote.
Eric George, associate counsel for the Connecticut Business & Industry Association, said he understands why Barnes would have concerns about the program. He said he’s happy to see the state is “proceeding cautiously, as they should.”
In general, creating a large pool of individuals to spread risk and drive down costs in a health insurance pool isn’t a bad idea, George said, but “you have to know who will be joining and what‘s the risk.”
The fiscal concerns expressed by Barnes are similar to arguments Republicans made on the floor of the House when the bill was approved by the legislature in May.
During debate on the bill May 27, House Minority Leader Lawrence Cafero, R-Norwalk, said the measure could potentially bust the state budget. Now that the state will be self-insured it has to make sure its claims match its expenditures and if it decides to open up the pool to a high-risk nonprofit or municipality, it will be the taxpayers that are on the hook, Cafero said.
But the idea of opening the state employees health insurance pool to municipal employees has been at the top of House Speaker Chris Donovan‘s agenda for years. It was vetoed twice by former Gov. M. Jodi Rell before being signed into law by Malloy this year.
Donovan often mentions the legislation as one of his crowning achievements in his legislative career and talks about the battle of getting it passed in his campaign speeches for his Congressional bid.
He was not immediately available for comment on Barnes’ letter Tuesday.