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State Insurers Will Fight SustiNet

By Greg Bordonaro

January 17, 2011

Connecticut’s health insurers say the sweeping health care reform plan pitched by SustiNet board members is a “non-starter” and a “gratuitous shot” at the industry.

Keith Stover, a lobbyist for the state’s health insurers, said the plan to create a public insurance option in Connecticut to compete with private insurers is sending a “very negative message to an important component of Connecticut’s economy.”

And the industry is ready to fight the idea, he said.

“Connecticut has an insurance market that is functioning properly and actively regulated,” Stover said. “There is no need for a public option in Connecticut. The message that it sends to one of the largest employer sectors in the state is precisely the opposite of what Connecticut ought to be doing in terms of jobs growth and the economy.”

Democratic lawmakers passed a law in 2009 that set up a board of directors to develop a universal health care plan by 2011. Then Republican Gov. M. Jodi Rell vetoed the measure but Democrats overturned the veto.

The board’s final plan, which aims to reduce costs and increase access to the more than 300,000 state residents without health insurance, calls for sweeping changes to the state’s health care system and ultimately establishes a public option open to all Connecticut residents, including businesses.

The plan also calls for payment reforms including implementing the medical home model concept and linking provider payments to performance; expanding the state’s Medicaid program to a wider population; and investing in electronic health records.

The final proposal has created a divide within the business community.

Stover said the insurance industry is open to parts of the proposal like payment reforms and electronic medical records, but the “the public option is a total non-starter from the industry perspective.”

Connecticut’s reform attempts will likely garner a political fight similar to the one felt on the national level when federal health care reform was being debated.

Some Democrats pushed for a public option to be included in the federal law, but it never came to fruition. The insurance industry successfully poured millions of dollars into a campaign to lobby against a public health insurance plan.

Now the industry will likely turn its attention to Connecticut, which is home to Aetna, and about 25,000 total health insurance jobs.

The need for a public option, proponents say, is to stem the rising cost of premiums being felt by employers and individuals by creating more competition for private insurers.

Connecticut has been the epicenter for large rate increases recently. Last year, Anthem Blue Cross and Blue Shield were given regulatory approval by the Connecticut Insurance Department to increase rates as high as 47 percent on certain new policies starting in the fourth quarter of 2010.

Later, the Connecticut Insurance Department rejected a 20 percent rate hike proposed by Anthem on its existing customers.

Other insurers have also asked for double-digit rate increases.

Insurers have blamed some rate hikes on new mandates being required under the federal health reform law. Other rate hikes were blamed for the rising cost of health care.

In response to those rate increases, state lawmakers have already proposed changes to how regulators approve rate hikes, including requiring mandatory public hearings on all rate requests.

Stover said the insurance industry was largely left out of process in forming the SustiNet plan. When asked how the adoption of a public option might affect health insurer employment levels in the state, Stover said there “is no way to predict what impact it would have.”

In a previous interview, Aetna CEO Mark Bertolini told the Hartford Business Journal that any attempt to create a state-backed health insurance plan would not be “supportive of the state’s private insurance industry.”