Connecticut would seek a waiver to adopt a state reinsurance program to use state or federal dollars to reimburse health insurance companies for high-cost claims under a package of proposals announced Thursday by Senate Republicans and intended to lower premiums.
During a late morning press conference in the atrium of the Legislative Office Building, Senate Republican Leader Kevin Kelly said that a reinsurance program, which would have the state and federal government cover the most costly claims, could reduce health insurance premiums by up to 30%. For an average family of four that could mean a savings of $7,000 per year, he said.
“Imagine what that could do for a family budget that’s breaking. That’s real money — real money that can be saved,” Kelly said. “This is a proposal that not only provides real money but also keeps good-paying insurance jobs right here in the insurance Capital of the world.”
Kelly, a Stratford Republican who previously served as a ranking member on the legislature’s Insurance Committee, has been pursuing a reinsurance waiver for the last several years. A reinsurance program was temporarily included in the Affordable Care Act but the initiative expired in 2017.
Since then, more than a dozen states received waivers from the federal government to aggregate tax credits residents would have otherwise received as subsidies to plans purchased on health exchanges and used those funds to pay insurance companies for high-cost claims. The program reduces risks for insurance companies. By lowering the costs of providing insurance, proponents hope insurers will lower their premiums.
State reinsurance programs typically rely on some state funding in order to offset the cost. On Thursday, Republican lawmakers said their plan would utilize funds from the state’s current budget surplus.
“It is a product that has been used by many insurance industries that we should be utilizing, using some of our surplus funds as well as federal funds to be able to dilute the insurance costs that is passed on to the consumer,” Sen. Tony Hwang, R-Fairfield, said.
The concept has failed to gain traction here in Connecticut. A bill authorizing a reinsurance program passed the House in 2019 but expired on the Senate calendar. And although Gov. Ned Lamont expressed support for the idea back in 2021, he has not pursued the policy nor has the state legislature advanced a bill.
On Thursday, Sen. Jorge Cabrera, a Hamden Democrat who co-chairs the legislature’s Insurance Committee, said he had serious questions about the program and the savings identified by Republican lawmakers.
“I’m open to talking about it, but right now, I don’t think it’s going to save the money we think it is,” Cabrera said. Cabrera said he has favored efforts to enact a public option in Connecticut, another policy that has proven difficult to move across the finish line.
Sen. Matt Lesser, a Middletown Democrat who formerly chaired the insurance panel, said lawmakers had repeatedly vetted and rejected the reinsurance proposal because of its impact on residents who do participate in the subsidized plans available on Connecticut’s health exchange board, Access Health CT.
“It actually raises costs for consumers by reducing federal subsidies for plans sold through Access Health,” Lesser said.
Republicans said they hoped their ideas would be met with bipartisan support. Other proposals announced Thursday include a taskforce to examine Pharmacy Benefit Managers or PBMs, examining purchasing pools to reduce prescription costs, and expanding a state benchmarking program beyond hospital costs to also include data on drug costs.