Connecticut is poised to be on the leading progressive edge of what is possible under the new federal health care law by providing a rather robust state-based public option. If the state adopts the proposed SustiNet health plan (PDF) it would integrate the many different group insurance plans the state currently provides into a unified self-insured program, provide quality automatic coverage to everyone under 200% of the Federal Poverty Level, and eventually offer a commercial “publicly-administered health plan” open to all individuals and business in the state, under the management of a quasi-government agency. Its designed to save the state roughly $300 million a year and hopefully reduce health care spending over the long-term
In 2009, before the passage of federal health care reform, the state legislature of Connecticut, over the veto of the Republican governor, approved that creation of the SustiNet Health Partnership Board of Directors to write a proposal to expand insurance coverage and reduce cost. Early this month, the SustiNet board released their draft report (PDF) to the state legislature. The report needed to design the SustiNet proposal to take into account the new reality produced by the passage of the federal health care law. The next step is for the proposal to be turned into a law by the state government, the chances of which are good thanks to the recent election of Democratic Gov. Dan Malloy and the Democratically controlled legislature.
Three critical elements of this plan will allow the state to take advantage of increased efficiency, develop significant markets of scale, help vulnerable populations get cheaper insurance, and make a state-based public option viable.
1) Putting all those covered by the state in a single program
The basic design of the proposed SustiNet health plan is a self-insured plan that is administered by a quasi-government agency. The plan itself will focus heavily on patient-centered medical homes (PCMH) and incentives to practice evidence-based medicine.
The program would automatically cover all those who are currently being provided health insurance by the state such as state employees, retired employees, people in Medicaid and HUSKY.
By putting everyone currently covered by the state and encouraging local municipalities to buy into SustiNet it should help increase efficiency by reducing redundancies. The large customer base will give the plan the size needed to negotiate good rates. Importantly, it will automatically give it a large risk pool making it appealing to people to join.
2) Open to the individual and businesses.
In the first few years municipalities and non-profit corporations will be given the option to buy into the program. Finally, in 2014, when the health care law fully goes into effect, SustiNet will be a premium-supported commercial insurance option for individuals and businesses.
If a state tried to just create a brand new public option just for the new exchange, it is likely suffer the same problems the co-ops will by struggling to get to a viable size. There is the inherent problem that an insurance plan needs good provider networks and low rates to attract customers, but it can’t negotiate good networks and rates unless it has a large customer base.
SustiNet critically gets around this problem using the state-sponsored population to create an initial customer base. This will give it a start-up base of roughly half-a-million. In many ways, this operates as a small scale state version of Jacob Hacker’s original public plan proposal, which could piggyback on Medicare and Medicaid to negotiate rates. This general scheme is probably the only way states could assure the creation of a public option with a large enough stating size to be viable.
Similarly, if a state for some reason wanted to assure it develops a viable new CO-OP, a commitment to cover all state-provided health care populations for three years should significantly help getting to the necessarily large size.
3) Uses the “basic health plan” to cover those under 200% FPL with SustiNet
A system of subsidized private insurance exchanges is extremely wasteful. Instead of forcing people making under 200% FPL to buy expensive, low-quality, private health care on the exchange, the board recommends the state use the option to create a “basic health plan” to automatically enroll them in SustiNet.
This will allow these individuals to get better coverage at both a lower personal cost and a lower cost to the government. In addition, it will increase that important original starting pool for SustiNet.
Within the limitations of current federal law
Both the new health care bill and other federal laws like ERISA make it very hard to for states to adopt my preferred solution of single-payer health care, or even my secondary choices, like a robust national public option or a comprehensive, extremely regulated all-payer system of only non-profit mutual insurers.
Assume the state can’t get waivers from the new federal laws until 2017, and this unfortunately restricts this relatively progressive proposal. I highly commend their recommendations to limit the worthless private exchanges by using the basic health plan for people making less than 200% FPL. I’m also glad they suggest a basic design that should produce a viable public alternative to private insurance for everyone in the state. Although I would prefer SustiNet to be a fully governmental agency instead of a quasi-governmental one.
In a few days, Vermont’s health care advisory board is expected to present three proposals for reforming their health care system, which I will be looking at very closely. So far, though, this is the best proposal to deal implementing the new health care law I have seen in any state. While not prefect, if Connecticut and other states adopt this model, it will be a good step at the state level toward making decent reform out of what was frankly a pretty bad new federal law.