Budget Director Worries About Health Care Costs, Asks To Delay Pooling
by Christine Stuart | Dec 13, 2011 1:08pm
(14) Comments | Commenting has expired
Posted to: Health Care, Labor, State Budget
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.
Tags: Ben Barnes, Kevin Lembo, health care pooling, Chris Donovan
(14) Comments
posted by: GoatBoyPHD | December 13, 2011 4:27pm
Why not kill off SustiNet completely and call it “We will do whatever the minimum the Federal Government requires”?
posted by: johnnyb | December 13, 2011 8:30pm
Is Barnes asking Lembo or telling him? Anyone think Lembo says “No, we are going to go with the original plan.”
posted by: perturbed | December 13, 2011 9:11pm
This is beautiful! I can’t tell you how much I’m enjoying this.
SEBAC makes a deal with the Devil, selling out state employees’ pensions to get Malloy’s begrudging approval of the last remnants of SEBAC’s prized SustiNet plan—consisting primarily of this pooling bill—only to have the Devil reneg on the deal! Ha! Feel betrayed yet SEBAC? Join the club (you despicable SOB’s).
Let’s see, you’ll lose millions of dollars in union dues when your state employee cash cows claw their way out of your greedy clutches, and you might not even have your pooling bill for a consolation anymore!
Livingston. Peterson. Rinker. Krzys. Luciano. You crooked fools.
You’re actually trying to convince your state union member minorities to stay with you because of your political expertise in negotiating our contracts?
Good luck with that.
—perturbed
posted by: Commuter | December 14, 2011 1:24pm
This letter is the formality the process requires. Barnes and Lembo have already discussed this and have a game plan. Meanwhile, Sustinet has been dead for months (lookin’ at you GoatBoyPHD).
SEBAC has taken a strategically smart position in supporting this. What perturbed union members don’t grasp is that by expanding the pool participating, both the political base necessary to protect public employees and the insurance itself become more sound. Public employees have a target on their backs, and perturbed screeds demonstrate the attitude that people despise.
I don’t have any skin in this game, but I have to feel pretty good about it when I see the Comptroller and the Secretary and CBIA all on the same page as they move to implementation of this - very good - plan.
posted by: NOW What? | December 14, 2011 2:02pm
The cautiousness is very good and very much needed right now, especially if there are too many “technical” elements in current municipal and/or non-profits’ labor (and other) contracts that would delay or prevent such workers’ employers from being able to participate in the State’s health insurance plans. And especially given that the State is self-insured, it must have reasonable guarantees that participating municipalities and non-profits will have the money to cover all of their own employees’ claims.
posted by: lkulmann | December 14, 2011 5:37pm
My first thought is discrimination. Avoid insuring the “sicker, less healthy…” are you serious? CT throw in the towel. The Affordable Care Act’s GOAL is to insure everyone, even the sick ones! At this point, I wonder if the Federal government should administer healthcare in CT. Bet they care about peoples health…even the sick ones. Some people in decision-making positions need to take a break. Rethink priorities a bit. This explains why I was denied CT Pre existing Condition Insurance for having a pre existing condition that doesn’t meet the criteria for pre existing conditions in CT. Guys…take a break…please….
posted by: lkulmann | December 14, 2011 7:45pm
An addendum to my previous note…of course I notified the Governor’s office about the pre existing insurance incident and of course they brought it to the DSS Commissioner office for review. By the time THAT process was complete, I had to re-apply for benefits because I had expired some sort of DSS application time limit…as soon as the Government turned their back, DSS found another way to deny me…and yes I would be paying about $400.00/month for it…no real bargain…moral of the story: when the cat’s away the mice will play. DSS is above the law…
posted by: perturbed | December 14, 2011 9:02pm
What some skinless bystanders might fail to discern is that opposition to SustiNet or the pooling bill is not a prerequisite for feeling betrayed by the SEBAC oligarchy. State employees were used as a political pawns by those who are paid—and paid well—to represent their interests. SEBAC didn’t “support” the legislation. With great determination, in clandestine meetings that elected union leaders were barred from, they bought the legislation with state employees’ pensions.
The SEBAC oligarchy bought the pooling bill with state employees’ pensions.
No matter how worthy the ends, those means cannot be justified. It’s amazing that some might think otherwise.
—perturbed
posted by: Commuter | December 16, 2011 2:46am
If I were so abused by misapprehensions, I too would be perturbed. There is no connection between the pensions and health insurance pooling plans, unless your point is that any dollar that might have gone to funding pensions prior to the modifications is now misappropriated. Some employees were opposed, but a large majority were in favor, understanding quite well what they were giving up, and why.
posted by: Commuter | December 16, 2011 2:53am
ikulmann misread the statement as reported above. The state isn’t avoiding insuring anybody, it is having its actuaries determine that in fact the projected revenue and cost experience is sound.
The idea of beginning with municipal employee groups before expanding to a wider participation (specifically, small business), is that municipal employee groups are anticipated to be similar in makeup to the existing pool covered by this self-insurance pool.
The actuaries will determine if in fact this premise is actuarially valid before the state expands the pool.
posted by: lkulmann | December 16, 2011 10:43am
Oh thanks for correcting me Commuter…I feel crystal clear about my comment now. I’m still a little fuzzy about the CT PCIP program. Maybe you can help me with my misinterpretations there? I’ll check back later for your response.
posted by: perturbed | December 17, 2011 12:35am
Apparently, ignorance is bliss. Anyone who believes Malloy’s late acceptance of the pooling bill wasn’t borne of intense political wrangling between Malloy and the bill’s SEBAC supporters during the clandestine (“air-tight” was the phrase Roy Occhiogrosso used) union contract negotiations is either uninformed of the way events unfolded, or terribly naive. (Another possibility is being disingenuous.) It was during that secret horse trading that SEBAC was willing to go to unprecedented extremes in pension give-backs in order to secure Malloy’s acceptance of the bill. That’s the connection. Malloy’s leverage with the SEBAC elite wasn’t the phony threat of ridiculously inflated layoff numbers that both sides knew couldn’t be implemented. (Twenty-seven percent of the work force?) Malloy’s real leverage was the pooling bill.
Unfortunately, state employees’ were not allowed to be represented in the negotiations. All we had was a tiny group of SEBAC lawyers and untouchable union elite, all fighting for health care reform.
And hopefully, no casual observer with no skin will claim they know more about the vote—and the various state employee sentiments at the time—than an actual state employee, perturbed or otherwise.
—perturbed
posted by: Commuter | December 18, 2011 12:35pm
If nobody believed that the layoffs would occur, then why did they vote even more heavily for the same deal when it came around the second time? This is a nonsense.
And, the idea that became pooling bill was discussed during the campaign by Malloy the candidate. It’s far from a new idea. Wyman and others have bee talking about this for years.
The belief that there was some conversion / deal is just not accurate. What Donovan, Luciano, Figueroa (and others who might fit your description), wanted was Sustinet - a state-run single payer program. But Malloy and Wyman tabled that idea because it was simply unaffordable.
And a sizable minority if not a majority of public employees were quite unperturbed by the deal, and spoke about it to others and to the media. Perhaps a more balanced diet of opinion will settle you down.