Now It’s Two Health Insurance Pools
by Christine Stuart | May 27, 2008 4:16 PM
Posted to Health Care
Attorney General Richard Blumenthal released an opinion Tuesday saying that threats made by insurance companies to increase rates to the state employees health insurance plan are unfounded.
Blumenthal said that a bill expanding the state employees health insurance plan to nonprofits, municipalities, and small businesses will create an entirely new pool of individuals, separate from the pool of state employees covered by the pending contract. At a press conference Tuesday morning he said the three health insurance companies that bid on the state employees health insurance plan are legally bound to adhere to the rates they offered in those bids.
Blumenthal said the insurance companies have “no right to raise charges to the state of Connecticut,” and “the state can not unilaterally expand the pool of insureds.”
“Clearly, any mandatory inclusion of significant numbers of new individuals or entities in the existing health insurance pool would be materially different from the RFP and would violate state bidding procedures and state law,” Blumenthal wrote in his opinion.
Anthem Blue Cross & Blue Shield President David Fusco wrote earlier this month that his company would have to raise its rates for the state by 4 percent, or $24 million, if the law to expand the current pool passes. The letter cites, without details, “actuarial calculations” that assume “an adversity in mix and utilization” — in other words, a widened pool would include more unhealthy people.
Tuesday was the first time the idea of two pools has come up in discussions about the bill. Initially the idea was to use the bargaining power of the more than 200,000 lives already covered under the state employees health insurance plan to get better insurance rates for nonprofits, municipalities, and small businesses.
So if there are two pools how can there be bargaining power?
Majority Leader Chris Donovan, D-Meriden, the bill’s main proponent, said there is at least one insurance company willing to offer the same benefits and rates to the new pool of individuals. “The benefits would be the same. The rates would be the same,” Donovan said Tuesday. “We know there’s one insurer that is very interested,” he added.
Gov. M. Jodi Rell has expressed concerns about the bill, which has yet to reach her desk. She has said she’s concerned about the potential increase in rates to the state, at the same time as the state’s deficit continues to grow.
“There is no legal or practical reason to veto this legislation because of an unfounded fear of legally tenable charges,” Blumenthal said in his opinion.
“The governor joined me in standing up to the insurers when they broke state laws requiring full and fair disclosure of health insurance provider rates and other important records. I ask her to stand strong again and reject these legally unfounded, unfortunate threats from the same insurers, who seek to distract and deceive her and Connecticut citizens,” Blumenthal said.
Comments (8)
Posted by: lori | May 28, 2008 10:48 AM
Actually, it's one pool. Certainly there will be a transitional step, but in the end one pool!
Posted by: christine | May 28, 2008 1:32 PM
It will have to be two pools for three years until the contracts with Anthem, Health Net, and United Health run out. Then it can become one pool.
My question is what insurance company is going to bid on a second unknown pool of individuals at the same rates and benefit levels offered to the state employees pool?
According to Chris Donovan, United Health has a agreed to one year at that rate only for municipalities, not nonprofits and small businesses.
Am I missing something?
~Christine
Posted by: cedarhillresident | May 28, 2008 2:27 PM
Ask Governor Rell to sign HB 5536, CT Healthcare Partnership
Office of Governor M. Jodi Rell
(860) 566-4840 or (800) 406-1527
Posted by: cedarhillresident | May 28, 2008 6:47 PM
Hmmm I just read your post christine. Is that true?? Hmmm well even so if we can get the municpalities to buy in and grow the pool that way it still will be a step up.
My side thought of anger...it seems to me that BCBS is blackmaling the state. And If I was the woman in charge that in it self is a reason to move foward with this bill! It shows how corrupt the health care industry has become.
Posted by: christine | May 28, 2008 8:43 PM
If you want to hear Chris Donovan address it specifically you can watch the press conference:
http://www.ctn.state.ct.us/ondemand.asp?ID=3603
Posted by: cedarhillresident | May 29, 2008 8:52 AM
Thanks :)
Posted by: Toronto life insurance broker | May 29, 2008 3:49 PM
Interesting..I am selling optional health and Life insurance in Canada I have to say something to defend insurance industry :) Risk pooling is maybe the most important and difficult work for insurance business managers and usually is very carefuly balanced. Every government change can severly influence their work. So I am not surprised they are affraid of the changes and are trying to stop it...
Lorne
Posted by: Bill | June 2, 2008 4:57 PM
The original intent of the bill was to reap the benefits of the purchasing power of the state of Connecticut employee's group for other municipalities, non-profits, and small businesses in CT. Since the insured population would change dramatically the insurances carriers indicated they would need to reevaluate the risk and possibly change the rates. This is not only legal; it is appropriate and necessary.
Based on the insurance carriers reaction to HB5536, Mr. Blumenthal has indicated a separate "pool" would need to be established. This would of course eliminate the advantage of the economies of scale or purchasing power of pooling everyone together, and would therefore create a completely separate and unknown risk.
Nancy Wyman has already formed two very similar programs for Connecticut municipalities (MEHIP & Enchased MEHIP) which allow all municipalities, small businesses and non-profits to join together to purchase health insurance. Since a separate pool would now need to be established for HB5536, the two MEHIP plans accomplish essentially the same thing as HB5536, therefore eliminating the need for such a program.