Governor Rowland's Small Employer Health Insurance Subsidy Program: A premium assistance program proposal for Connecticut

What is the Governor's proposal?

The proposal would subsidize health insurance costs for low-income individuals and families who have access to coverage through their employers. Connecticut workers living in families with incomes below 185% of the federal poverty level ($27,787 for a family of three) would be eligible to receive up to $60 per person each month for an individual or $100 per person each month for a family toward their premiums. Enrollment would be capped at between 3000 and 5000 enrollees. The state would contract with one or more small business pools, such as CBIA's Health Connections, http://www.cbia.com/insurretiremen, or MEHIP, a state-sponsored pool associated with the state employee health plan. Employers must obtain health coverage for their employees through one of the state-approved pools and cannot reduce their contribution to employee coverage. The cost of the program would be capped at $3.6 million in consumer subsidies and $400,000 for program administration, for a total of $4 million per year. For more on other states' experience with premium assistance programs, see Premium Assistance Programs: What Are They and Could They Help Connecticut Families without Health Insurance?, CT Health Policy Project, revised Jan. 2002.

To pay for the proposal, the Governor has proposed $5.6 million in cuts and cost increases to over 10,000 low-income HUSKY parents who became eligible for coverage just over a year ago. Parents of children in the HUSKY program with incomes between 100% and 150% of the federal poverty level ($15,020 to $22,530 per year) would be shifted to the reduced HUSKY Part B benefit package and would pay $5 copays for doctor visits, $3 to $6 copays for prescriptions, and premiums of $30 per parent per month.

The state plans to apply to the federal government for waiver authority to both develop the premium assistance program and to implement the cuts and costs on HUSKY parents. Under a HIFA waiver, the federal government would pay 65% of the public costs of the program ($2.6 million) with the state paying 35% ($1.4 million).

What are the potential benefits to Connecticut's uninsured?

• Some currently uninsured Connecticut residents could get access to coverage.
• Premium assistance programs leverage available private, employer dollars to supplement limited public funding. Under the proposal, the state would pay only $60 to $100 per person per month for coverage, compared to $150 per member per month under HUSKY.
• The proposal would keep up to 5000 families together in one plan, the employers' plan. However, moving HUSKY parents to Part B would split up to 20,000 families.
• The proposal reduces the stigma of public health coverage for the few participating families. More low-income families would be able to participate in the same health insurance program that their co-workers enjoy.

What are the potential drawbacks?

• The plan is unfair in many ways.
• Families at lower incomes would shoulder the burden of subsidies for some higher income families. For example, a current HUSKY family of three with an annual income of $15,500 would shoulder costs that could easily reach over 5% of their total income to subsidize coverage for another family of three at almost twice the income (up to $27,787 per year).
• Recipients would be treated differently based on the generosity of their employers. Low-income families with employers who offer benefits through the state-approved pools would benefit, while same-size families at the same income level would be out of luck.
• Timing. Since the program is capped, a family that applies at one point in the year would be accepted into the program while families with even lower incomes who are unfortunate enough to need health coverage at the wrong time of year would be rejected.
• Program dollars could benefit people who already have insurance - There are no provisions to ensure that enrollees in the new program were previously uninsured. Not only might lower-income HUSKY families be sacrificing for higher-income families' coverage, they may be paying to subsidize families that already had insurance. While subsidizing health coverage for low-income families is a worthy goal, it defeats the purpose of reducing the numbers of uninsured and is a poor way to target precious public funding.
• Could increase the number of uninsured in Connecticut - Assessing costs on HUSKY parents living just over the poverty level would undoubtedly force many out of coverage, driving up the number of uninsured. Combined with the overlap potential described above, it is entirely possible that there would be more uninsured Connecticut residents as a result of this program, proving the Law of Unintended Consequences.
• Narrow eligible population - A very small percentage of Connecticut's uninsured would be eligible to participate in the program. Only 31.3% of CT's uninsured lack coverage due to cost. ¹  Of that number, fewer live in families below 185% of the poverty level, even fewer have an employer offer through a state-approved small business pool, and fewer again have employers willing to fill out the paperwork. Current HUSKY and SAGA recipients are ineligible. And as the program would be voluntary, some who are eligible would undoubtedly assess the program's benefits for their families and decline to participate. The total number of Connecticut residents who could benefit from the program is very, very small.
• Administratively complex - Other states have found premium assistance programs very difficult, and expensive, to administer. The provision to use certain state-approved purchasing pools alleviates some of the complexity, but limits the employers who could participate. Ensuring that employers do not reduce their contributions would be very difficult to define and enforce. Moving 10,000 to 20,000 HUSKY parents from Part A to Part B, while maintaining their children in Part A, would be burdensome for consumers, providers and the state. Collecting premiums and copayments, and ending coverage to those who get behind, will complicate the financial burdens on poor families with even more administrative burdens.
• The coverage offered by some pools is not comprehensive. For example, CBIA Health Connections does not include dental or vision coverage, both of which are included in HUSKY. Health Connections also includes significant copays on services, including $250 for each hospital admission. The state must ensure that taxpayers are getting their money's worth; that publicly subsidized private insurance packages are a better value than expanding access to the traditional HUSKY program.
• No public process - Federal response to other states' waiver applications have emphasized the need for a public process that incorporates feedback from stakeholders into the proposal. A very small working group including representatives from only DSS, OHCA, CBIA and consultants drafted this proposal. The proposal includes no plans for a public process to collect and incorporate feedback from consumers or other stakeholders. Consumer input is critical to the success of any program, particularly one as challenging to implement and prone to unintended consequences as premium assistance.

Recommendations:

• Tie benefit cuts and consumer cost sharing to enrollment goals in the premium assistance program. As the reason for the cuts is to expand health coverage in the new program, ensure that parents do not sacrifice needlessly if premium assistance does not meet its goals.
• Create a sincere, open public process to collect and incorporate stakeholder input. Pay particular attention to independent consumer input - if consumers are not willing to or cannot effectively participate, the program will fail. During and after implementation, collect consumer input to evaluate the program and make improvements.
• Ensure a fair system. Target relief to lowest income consumers. Protect consumers from unfair financial burdens. Ensure that access to services is not dependent on employer compliance.
• Provide significant consumer and provider supports. Consumers' decisions about participation in the program must be based on effective, complete, and independent information about options.
• Protect consumers' rights. Ensure that consumers who choose premium assistance do not surrender any of their rights to fair hearings and other due process. Ensure that consumers are aware of their rights.
• Ensure wrap around services for enrollees. Provide critical services and coverage beyond spending caps not included in the premium assistance program.
• Collect comprehensive information on the program. It is critical that the state monitor consumers' utilization and access to care, consumer satisfaction, the full range of program costs (including administrative costs, cost shifting onto other public programs, hospitals and other safety net providers), information on enrollees (income levels, number previously insured, demographics, etc.*), changes in employer contribution levels, effectiveness of outreach and consumer education activities, and effectiveness in reducing the number of uninsured in Connecticut. Regularly compare program benefit packages and access to care measures to commonly available benefits and access in both HUSKY and the commercial market.
• Ensure that the program is fully operational before implementation. The quickest way to kill the program is to rush enrollment before systems are in place to handle the complexities. Ensure adequate resources to administer and monitor the program.
• Protect consumer privacy. Ensure that employers cannot access sensitive information about consumers and their families inappropriately.
• Minimize stigma. Ensure that all references to the program are neutral with regard to traditional HUSKY. It is unfair and counterproductive to further erode the current program that will continue to provide the lion's share of public health coverage to families, regardless of the outcome of premium assistance.
• Consider other options. While premium assistance may be one option for Connecticut's uninsured, it cannot solve the entire problem. Policymakers should continue to pursue other, proven options to address the issue.

CT Health Policy Project February 21, 2002

For more details on the Governor's proposal, go to HB - 5023, AAC Implementing the Governor's Budget Regarding the Department of Social Services, Sections 4 and 5 http://www.cga.state.ct.us/tob/h/2002HB-05023-R00_HB.htm  And Governor Rowland's FY 2002-2003 Midterm Budget Adjustments, http://www.opm.state.ct.us/budget/2003MidTermHome.htm

¹ Report on Connecticut's Insured and Uninsured, OHCA, April 1998.

Back to Top