Says It Threatens Municipal Health Insurance Strategy
By DIANE LEVICK, Courant Staff Writer
March 07, 2008
Connecticut is planning a new approach to reduce health insurance costs for its struggling municipalities, but a bill in the General Assembly could cripple the effort, Comptroller Nancy Wyman warned Thursday.
Her office wants to convert Connecticut's existing Municipal Employees Health Insurance Plan to a self-insured arrangement. Instead of buying traditional insurance, the plan would collect money from participating towns to fund their employees' claims and hire an insurance company or other firm to process them.
Wyman told the legislature's Insurance and Real Estate Committee Thursday that municipal and union leaders have been working on the self-insured idea for two years as a way to lower insurance costs that are "choking municipal budgets and threatening jobs."
However, a provision in a technical bill before the committee would give the Connecticut Insurance Department the power to amend or reject the self-insured plan, and Wyman opposes that.
"Our projections show that we can save these cities and towns tens of millions of dollars," Wyman said. "But those savings, and these two years of unprecedented cooperation, will be seriously jeopardized if this bill passes as written."
Wyman said she's concerned partly because insurance department officials have expressed concern "more than once" that proposed rates her office negotiated with insurers were too low.
"I think that speaks volumes about the climate we are operating in," she said.
Insurance regulators sometimes worry that insurers, looking to out-compete each other, price coverage too low to cover claims. The department regulates fully insured health plans. The Connecticut department, in written testimony submitted Thursday, said it does not believe the legislature intended to exempt Municipal Employee Health Insurance Plans from the agency's regulatory oversight, even if self-insured.
The skirmish between the department and comptroller's office has been going on since last summer. Attorney General Richard Blumenthal has issued opinions saying current state law allows for a self-insured MEHIP that would not be subject to the insurance department's authority. Self-funded health plans of private employers aren't state-regulated, either.
By pooling their risk in a self-insured plan, municipalities could save money over traditional insurance because insurers build a little extra into their premiums in case claims are more costly than expected, said Thomas C. Woodruff, director of retirement and benefit services in the comptroller's office. In addition, traditional insurance premiums build something in for profit.
The comptroller's office projects that rates in a self-insured MEHIP could be 13 to 42 percent lower for some towns than what they're paying now or expect to pay later this year. The figures are based on towns that aren't in the existing MEHIP.
Wyman said the savings are especially important for towns such as Portland, which is facing a 22 percent premium increase.
About 15,000 people are covered by the MEHIP, which includes members from nonprofit organizations that receive public funds, volunteer firefighters and others. Wyman believes that if the program becomes self-insured, it will attract more towns.
The insurance committee did not vote on the bill Wyman criticized, but Rep. John C. Geragosian, D-New Britain, praised the effort to expand MEHIP.
"You've been one of the forces for good in this," he told Wyman.
The Connecticut Association of Health Plans is not taking a stand about whether the MEHIP should be self-insured, but says that if it is converted, it should remain subject to state regulation, and so favors the bill. The insurance companies providing coverage are Anthem Blue Cross and Blue Shield, Health Net, and Oxford Health Plans, which is now part of UnitedHealth Group.
State Healthcare Advocate Kevin Lembo opposed the bill in question Thursday. MEHIP, he said, has made positive changes over the years, "but every step of the way, another roadblock is put up to stop it from going forward. This is the most recent."
Reprinted with permission of the Hartford Courant.
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