Testimony of Speaker of the House Christopher G. Donovan
To the Insurance and Real Estate, Human Services and Public Health Committees
In support of House Bill 6582:
An Act Establishing the Connecticut Healthcare Partnership
March 2, 2009
Good morning Representative Fontana, Senator Crisco, Representative Walker, Senator Doyle, Representative Ritter, Senator Harris, and members of the Insurance and Real Estate, Human Services and Public Health Committees. Thank you all for coming together today for this joint hearing on many important healthcare proposals.
I appreciate the opportunity to express my strong support for House Bill 6582, An Act Establishing the Connecticut Healthcare Partnership. As you will recall, it passed both the House and the Senate last year, but was vetoed by the Governor. Many of you voted in favor of it and some of you even hosted me in your communities as I traveled the state promoting this proposal. Time and again I was met with enthusiasm and support by municipal officials, union leaders, small business owners and non-profit organizations—and that was before we felt the full impact of the economic downturn. Our state has experienced many changes in the past year, and I would argue that the need for this legislation has grown.
HB 6582 would open the state employee health plan to municipalities, non-profits and small employers on a completely voluntary basis. This proposal would streamline our healthcare system and provide financial relief to local governments, non-profits and small employers. These groups would be able to take advantage of the increased bargaining power and reduced administrative costs associated with the State plan, as well as the comprehensive benefits that state employees currently receive.
Recent proposals to create healthcare purchasing pools have generated significant attention. David Osborne, expert in budgeting and improving government performance, argues that because governments are such large players in the healthcare marketplace, they can get better care at better prices by creating large statewide healthcare purchasing pools and including both public and private employers. When health insurers compete for this market, the result is affordable high quality care.
The state employee health plan has been providing good benefits to our employees, while keeping cost increases to a minimum. Making these benefits available to non-state employees will stimulate our economy by allowing employers to stretch their dollars further, prevent layoffs and eventually attract talented people and grow their businesses. This would doubly assist the many non-profit providers the state depends on for health and human services, which have gone without adequate cost of living rate increases for several years.
The major change to the current proposal is that the state employee health plan will switch from fully insured to self-insured under an agreement between the state employees and the State. This will result in an immediate savings to the State equal to approximately two months of premiums. Under the self-insured structure, the State will pay actual medical claims directly to medical providers through an administrative services only (ASO) arrangement with a third party administrator. The savings are a result of the transition from paying monthly premiums (which include risk service charges) up front to paying the actual claims after they have been incurred
Most large employers self-insure because it costs less. A self-insured plan will allow the State to realize long-term savings by directly managing the medical claims and health service utilization. The State will be able to create real incentives for wellness and prevention and use scientific data for case management services to keep healthcare costs down.
I hope you will agree that this is an important step toward our goals of saving state dollars, providing relief to municipalities, and the small businesses and non-profits we rely on, and expanding access to high quality affordable healthcare options.
I urge your support for this important proposal.