Connecticut's General Assembly is considering a proposal to implement the SustiNet program. It certainly has various worthwhile goals such as improved medical technology and wellness, however it will do little, if anything, to lower medical treatment expenses. Some points about health reform:
First - Medical insurance rates are high because over 85% of each premium dollar goes to pay for ever increasing and expensive medical treatment. Then too, 70% or more of these expenses can be directly connected to people’s lifestyle choices. Activities such as smoking and the big costs that come from obesity. Consequently, an important focus in health reform efforts in Connecticut needs to be on treatment costs.
Second - There are also important, but unanswered questions on how a public medical insurance plan can create affordable coverage. For example:
+ Some supporters have the perception simply bringing the state employee medical benefits and Connecticut’s Medicaid system (Husky) together and then providing access to more individuals will lower the cost of coverage. Facts tell us otherwise. Actuarial studies have shown creating a larger medical plan by combining groups does not result in lower costs. What usually happens is the kind of organizations inclined to participate tend to have high medical claims, which just creates higher costs.
+ The proposal would also use self insuring, which does nothing to lower medical treatment costs.
+ Individuals on Medicaid have, by federal/state regulations, extensive coverage but because of Medicaid’s very low payments have access to limited providers. A high percentage of providers are also not accepting new patients. State employees are offered several very expensive benefit options and we know from when the Municipal Health Insurance Plan started a few years ago regulations did not allow funds in this benefit plan to be co-mingled with dollars covering people outside this group. How can these two very different plans be managed to lower costs and at the same time develop coverage options for others?
Some other observations about this proposed approach:
+ Lower medical insurance premiums can only be created by getting individuals more involved in their medical treatment or by limiting coverage as was done with the Connecticut Charter Oak plan. It's efforts to offer a low premium were only achieved by limiting benefits to a maximum of $100,000 a year. Federal health reform requires extensive coverage and unlimited benefits so limiting coverage won't work!
+ An important point on Connecticut’s ability to afford a public run medical insurance plan: In a couple years, most of the cost of expanding Medicaid to more people, which the law calls "newly eligibles" will be picked up by federal funds. However, federal law does not allow any of these dollars, except for certain primary care services, to go toward increasing payments to providers. Thus, with Connecticut big deficit where is the money going to be found for a significant increase in provider reimbursement that is needed today so MDs are available to treat those on Medicaid. Then too, many more dollars will be needed in a couple years for all the additional people that will qualify?
+ An important point on how federal health reform will affect SustiNets efforts: The program wants to participate in the Exchange, which will be set up to operate beginning January 2010. However, to participate a health plan must meet requirements such as - be in good standing - be accredited on quality standards – be subject to state insurance regulations and not self funded - to have a state license. How can SustiNet with no history qualify? In addition, Connecticut regulations require a health plan, wanting a license, to have significant reserves. Where will these dollars come from?
Thursday, February 17, 2011
How can SustiNet provide affordable medical insurance?
Posted by John C Parker, RHU, LTCP at Thursday, February 17, 2011
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