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CONNECTICUT HEALTHCARE PARTNERSHIP

Overview:

The Connecticut Healthcare Partnership proposal will open the State Employee health plan and allow Municipal Employees, Small Businesses and Non-Profits to join voluntarily.

• State Employees will agree to open their contract with the State and switch to a self-insured plan, which will bring short and long-term savings to the State.
• Municipal employees, small businesses and non-profits will be able to take advantage of the increased bargaining power and reduced administrative costs associated with the State plan.
• By opening the State plan to these groups, many Connecticut employers and their workers will gain access to the same comprehensive benefit package that state employees currently receive. This will permit employers to stretch their dollars further, provide a boost to our local economy, and help determine whether the State plan could be successful if expanded further.

Key Points:

Self-Insuring

• The State Employee Health Plan will switch from a fully insured plan to a self-insured plan with an agreement between State Employees and the State.  Under the self-insured structure, the State will pay the actual medical claims as they are accrued. Claims will be processed and paid through a third-party administrator under an Administrative Services Only (ASO) arrangement.

Large Short-Term Savings

• By switching to a self-insured plan, the State will see an immediate savings approximately equal to two-months of premium costs.  This savings is a result of the natural transition from a fully insured to a self-insured plan.  Under a fully insured plan, the premiums, which include a risk service charge for the insurance provider, are paid up front.  However, a self-insured plan only requires payment for actual claims after they have been incurred.

Participation Will Be Voluntary

• Municipalities, small businesses and non-profits will have time to evaluate the State Employee health plan and determine on their own whether it is in their best interest to join.  Municipalities will be able to join by making an agreement with their municipal employees.  The advantages of a large purchasing pool can provide immediate cost-savings to small organizations.  Larger municipalities that already self-insure can benefit by long-term stabilization.

Long-Term Savings through Medical Management

• A self-insured plan will allow the State to see long-term savings by directly managing the medical claims and health service utilization.  The State will be able to create true incentives for healthy lifestyles and use scientific data for case management services that will provide direct savings to State funds.

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Self-insuring the State Employee Plan

• The legislature's Office of Fiscal Analysis estimates that the state will save over $70 million from transitioning the plan from fully-insured to self-insured.

• More than half of Connecticut workers who have employer-sponsored insurance receive it under a self-insured plan.

• Connecticut's Largest Municipalities Self-Insure
  Nine out of Connecticut's 10 largest municipalities self-insure all or part of their health plan, including Bridgeport, New Haven, Hartford, Stamford, Norwalk, Danbury, New Britain, West Hartford and Bristol.

• Connecticut's Largest Employers Self-Insure
  Large private employers that self-insure include United Technologies, Foxwoods, Wal-Mart, General Dynamics Electric Boat and AT&T.

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STATE PLAN

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For comparison purposes, below are the current options and associated premiums for the State Employee medical and dental plans. The premiums include both the portions paid by the employer and by the employee. The rates for the July 1, 2009-June 30, 2010 period have yet to be made available.

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