State Health Care Advocate Kevin Lembo told Department of Social Services Commissioner Michael Starkowski during Friday’s meeting that he was concerned about Charter Oak’s ability to erode the employer-sponsored health insurance market.

Starkowski said the state has received a number of letters from employers asking if it can cancel health insurance for its employees. Three months into the program it’s too soon to tell if this is actually happening, he said.

He said the department will be monitoring the situation and report back to the council once it has more data.

Lembo said he’s concerned about this because Charter Oak has been marketed as health insurance when the state’s Insurance Commissioner has specifically stated that it’s a social program, which means it does not offer the same protections to consumers as commercial or employer-sponsored insurance plans.

Charter Oak is a new program for uninsured individuals. The plan’s monthly premiums range from $70 to $259 depending on an individuals income.

Echoing Lembo’s concerns, Sen. Jonathan Harris, D-West Hartford, said Friday that younger healthier people can purchase less expensive plans than Charter Oak in the individual insurance market.

Starkowski said the state has been doing outreach to universities and community colleges to get the younger population signed up for Charter Oak.

Department of Social Services consultant Steve Schramm said Friday that many individual plans have high deductibles which means Charter Oak is “fairly well-positioned” in the marketplace.

Lembo pointed out that he doesn’t believe Aetna or United Health would be able to offer the Charter Oak plan, at this price, in the individual insurance market. And as of Jan. 1, 2009 it will be harder to target a younger healthier population since young adults up to age 26 will be allowed to stay on their parents health insurance.

For the first time on Friday the council learned that the original Charter Oak bids came in around $335 per month. It wasn’t until the state agreed to an annual $100,000 maximum benefit limit that the insurance companies administering the plan agreed to drop the price to $259 per month, for those individuals above 300 percent of the federal poverty level.

However, many people in that income bracket are not signing up for the plan. Most of the 843 individuals enrolled in the Charter Oak plan as of Thursday last week were in the lowest three of the five income groups.

In addition, very few commercial insurance plans have annual benefit limits, Lembo said. He said some may have higher deductibles than others and some may even have a lifetime benefit, but those with annual benefits are a rarity.

Lembo said he has to wonder if the state continues to subsidize the bulk of individuals enrolled in the plan how it will be able to afford it. He asked Starkowski when the state will know if it gets into a “death spiral”?

Ellen Andrews, executive director of the Connecticut Health Policy Project, said Monday that she thinks “it’s going to cost the state more money.” More than the $11 million the state budgeted for the program.

Last month the Medicaid Managed Care Council voted 11-0 to ask Rell and her administration to delay enrollment in Charter Oak.

Rell responded with a strongly-worded statement saying, “Let me be crystal clear: Charter Oak and HUSKY are going ahead - on time and on schedule - period.”

In that same statement Rell said the lawmakers on the Medicaid Managed Care Council “oppose Charter Oak because they know it is working.”

“They oppose Charter Oak because what they really want is ‘universal health care’ at any cost - and they know that cost is $17 billion a year, which Connecticut taxpayers neither want nor can afford,” Rell said.

Andrews maintained Monday that an individual with a major medical issue which requires a hospital stay may be better off without insurance because they may be able to access free bed funds. She said it’s easy to get to the $100,000 limit during a hospital stay.

She said others with a less serious medical conditions may be better off going to one of the community health centers and paying anywhere from $0 to $20 for an exam, rather than the $259 per month for Charter Oak.

However, Andrews said she has steered a few clients to the Charter Oak plan because it makes sense for certain individuals, just not everyone.