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Update on Connecticut Healthcare Reform Initiatives


Email Alert

By Jennifer Willcox*

June 15, 2009

As Connecticut's legislative session wound to a close on June 3, 2009, the state's fiscal troubles were at the forefront of the legislature's efforts. Last-minute sparring between the Democratic-controlled General Assembly and Republican Governor M. Jodi Rell (Governor) about the state's budget and the death penalty dwarfed discussion of substantive healthcare reform initiatives, but several proposals gained traction toward the end of the session. Two significant healthcare reform bills passed the state's General Assembly and are awaiting the Governor's decision. It is not yet clear whether the Governor will sign these bills, as her office indicated some concerns about both pieces of legislation during the process. The two bills are summarized below.

Connecticut Health Partnership

The Connecticut Health Partnership has been debated for the last several legislative sessions and was passed by the General Assembly in 2008 before being vetoed by the Governor. Hoping that the third time is a charm, House Speaker Chris Donovan (D) leads the effort to get the Partnership passed in the 2009 session. The Partnership would allow small businesses, nonprofits, and municipalities to purchase healthcare benefits for their employees through the state employees' plan. According to advocates, self-insuring the state employees' plan would provide millions in savings, and having small businesses and nonprofits to "pool" with the state plan would allow them to leverage the clout of the large state plans and achieve lower prices in negotiating with insurance companies.
H.B. 6582 has passed both houses of the General Assembly, but it is not clear whether the Governor will sign it this year. Her signing statement on last year's veto indicated general support for the principles behind such "pooling" bills, but her Budget Secretary voiced concerns about the bill when it was up for debate in the Senate.

SustiNet Plan

The SustiNet Plan (named after the Latin word for "sustains" and adopted from Connecticut's state motto, Qui Transtulit Sustinet) was proposed by the Universal Health Care Foundation. In its original form, the SustiNet plan was quite ambitious. It was billed as a "high quality public health insurance plan." The plan would start initially with a self-insured pool consisting of state employees and retirees, and beneficiaries of the state's general assistance and S-CHIP programs. Added to that pool would be categories of individuals without affordable healthcare coverage and eventually employers. Employers could choose to enroll their employees in SustiNet, but the plan included disincentives for "dumping"—a 4% payroll tax on employers that didn't offer healthcare coverage at all. The SustiNet plan included some unique features that are designed to reduce costs and improve efficiencies: automatic enrollment for certain populations, use of "medical homes" to coordinate care and provide follow-up, promotion of electronic medical records, and use of quality standards and outcome-based measures. Importantly, the bill included a requirement that SustiNet payment rates "ensure sufficient compensation to cover the reasonable cost of furnishing necessary care." The plan would be governed by a "SustiNet Authority" consisting of nine members, seven of which were to be appointed by various elected officials.

Some Republicans and business groups opposed to the SustiNet plan cautioned against acting at a time when healthcare reform was likely to occour at the federal level, and advocated for a "wait and see" approach. Proponents of the plan argued that the SustiNet bill would make Connecticut "Obama ready," as its goals and structure were consistent with many ideas being considered at the federal level by the Obama Administration and the Senate Finance Committee. In fact, some argued that the SustiNet plan could serve as the local "public plan" option in a federal reform package, if lawmakers agree to include such an option in any federal healthcare reform package.

The Universal Health Care Foundation estimated that SustiNet would cost $950 million to fully implement (including increased provider payments and subsidies for low-income individuals), of which $800 million could come from increased federal matching funds (some of which would come from federal stimulus funds). The state's Office of Fiscal Analysis predicted higher costs, however, and some industry groups pegged the true cost at closer to $1.75 billion. In light of the state's fiscal situation, that price tag began to look exceedingly high. Faced with likely defeat, the plan's proponents and legislative leaders re-tooled the SustiNet legislation to create a SustiNet Health Partnership Board of Directors that must make "recommendations" on the details and implementation of the SustiNet plan by 2011. The revised bill, H.B. 6600, creates a fourteen-member board that must design and establish procedures for implementing the SustiNet plan, and submit them as recommended legislation to various legislative committees. H.B. 6600 also creates a number of task forces addressing various public healthcare challenges such as obesity and tobacco use.

H.B. 6600 was passed by a large margin in both the state House and Senate, and is awaiting the Governor's signature. At this point, the Governor has not indicated whether she will sign the legislation. Whether SustiNet will actually be implemented as proposed at any point in the future will depend largely on whether the state's economic fortune improves in the next year and a half.

*We would like to thank Jennifer Willcox, Esquire (Pullman & Comley LLC, Bridgeport, CT) for providing this email alert.

The Healthcare Reform Educational Task Force is a joint endeavor of the Healthcare Liability and Litigation; Hospitals and Health Systems; In-House Counsel; Payors, Plans, and Managed Care; Physician Organizations; Regulation, Accreditation, and Payment; and Teaching Hospitals and Academic Medical Centers Practice Groups.
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