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
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
- 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
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
- 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
- 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.
- 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
- Ensure wrap around services for enrollees. Provide critical
services and coverage beyond spending caps not included in the premium
- 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
- 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, An Act Concerning
Implementing the Governor's Budget Regarding the Department of Social
Services, Sections 4 and 5, and
Governor Rowland's FY 2002-2003 Midterm Budget Adjustments.
1 Report on Connecticut's Insured and
Uninsured, OHCA, April 1998.