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Insurance Bill Missed The Boat

Stan Simpson

May 31, 2008

When legislation to pool small businesses, municipalities and others in the state-employee insurance plan is delivered dead on arrival at the governor's desk, the autopsy will read: bad timing.

The concept of getting volume discounts on gold-standard health coverage by adding hundreds of thousands of new customers to the program is a good one. Twenty-four other states have taken similar action. But the conversations to increase the pool should have occurred before the state settled on a new contract, not after.

After a year of negotiations, a new three-year, $3 billion state health insurance contract kicks in July 1. It will cover about 200,000 participants — state employees, retirees and their families. The state pays $17,200 per family.

Insurers say it's too late in the game to have that many new participants jumping into the pool. And by the way, the insurers claim, it would raise rates, not lower them.

So the bill will be DOA on the governor's desk because — as state Attorney General Richard Blumenthal says — even if the law were passed, the state couldn't compel insurers to participate.

Insurers might be singing a different tune had the state put the expanded pool on the table when negotiations began.

Think about it.

If the state was in the last year of a contract and told its insurance carriers it wanted to try something different, something that could more than double the size of the contract, I doubt we'd be hearing all this talk about higher premiums.

The state's leverage would have been: Hey, we can cut a deal or we'll take our business elsewhere.

"The timing is awkward," Blumenthal said. The only way to make the plan work now, he said, would be to form a "separate pool" for those small businesses and municipalities, which could be supervised by the state comptroller.

The comptroller's office — in an insurance plan separate from the state employees' — currently provides coverage for municipal employees, nonprofit workers and, in recent years, small businesses.

But only about 15,000 people participate, in part, the comptroller's office says, because the insurance plan is not a "pooled" one. Each individual is given a health rating for coverage — a major distinction from pooled insurance in which each member of the group pays the same rate, no matter his or her condition.

Lost in all the conversations about upgraded health coverage is the story of other small business owners. Guys like Jerry Long. He owns a Bloomfield-based technology company and can't afford an upgraded health plan. He struggles just to control existing health costs for the 40 employees at his PCC Technology company.

"I can't afford to have someone get laser surgery at $5,000," said Long, a past president of the Greater Hartford Chamber of Commerce. "What would that do to my premiums? There's no talk about the onus it's going to put on me."

So, we've got a few problems here. There are small businesses that can afford higher premiums for health insurance like state employees receive, but they can't get an in.

Then, there are small businesses that couldn't afford to join the pool and can barely pay for their current plans.

Also forgotten are the hundreds of thousands still uninsured in the state. Coverage has always been a complicated problem — unless of course, you're a state employee.

For Connecticut, once the insurance capital of the world, it's awkward.