AN ACT ESTABLISHING THE STATE HEALTH INSURANCE PURCHASING POOL PROGRAM.

This bill establishes the State Health Insurance Purchasing Pool (SHIPP) program and requires state residents to enroll in it if they are under 65 and do not have employer-sponsored health insurance coverage.

The bill requires the state comptroller to contract with insurance companies and health care centers (HMOs) to provide insurance polices for SHIPP. The comptroller must administer all aspects of the program including:

1. making available a choice of health insurance policies that meet the requirements under the bill and are affordable to most state residents;

2. enrolling eligible residents in an insurance plan if the individual does not select one;

3. implementing a health consumer assistance program to counsel people about SHIPP health insurance options; and

4. paying for the cost of SHIPP program reinsurance premiums.

The bill creates a sliding scale of premium contributions for enrollees. The poorest enrollees make no contribution and those with incomes above 300% of the federal poverty level pay 30% of the premium. It is not clear on who pays the balance of the insurance premium.

The bill specifies that the comptroller will pay the costs of reinsurance premiums related to the program. Reinsurance costs are a portion of the premium that the insured pays.

The bill requires that the comptroller collect fees from all employers equivalent to 11% of their payroll. It does not indicate how the comptroller will bill or collect from the more than 96,000 employers in the state. It requires the comptroller to adopt regulations specifying the procedures and standards for collecting the fees.

It does not create or indicate into what fund the comptroller will deposit employer fees and employee premium contributions (see COMMENT).

The bill requires the comptroller to adopt regulations to implement and administer SHIPP.

It requires the Department of Social Services (DSS) commissioner to (1) screen every program-eligible person for HUSKY eligibility and (2) apply for a Medicaid waiver to use federal funds for certain individuals not currently HUSKY- eligible. The bill increases HUSKY income eligibility limits.

EFFECTIVE DATE: July 1, 2008 for the comptroller to procure health insurance policies, voluntary and mandatory enrollment, employer fee, consumer assistance program, reinsurance payments, Medicaid and HUSKY eligibility screening and income limit provisions, and upon passage for the comptroller to adopt regulations implementing the bill.

The bill requires the comptroller to establish SHIPP within her office to provide health insurance policies that ensure affordable health care for eligible individuals. “Eligible individuals” are state residents, as defined in federal regulation, who are under 65 and are not covered by employer-sponsored insurance. Eligible individual does not include an individual who has been a state resident for less than six months and lives in a household that does not have any family member who is employed full-time.

The comptroller must make available to each eligible individual seeking to enroll in SHIPP a choice of health policies, affordable to most state residents, offering a wide range of benefit options including at least one benchmark policy. The bill does not define “affordable to most residents. ”

It does not prohibit an employer or an individual from purchasing or providing health coverage in addition to that provided through SHIPP.

1. arrange and procure health insurance policies for SHIPP enrollees,

2. negotiate and contract with insurance companies and HMOs authorized under state law to engage in insurance business in the state to provide SHIPP health insurance policies, and

3. approve these policies in accordance with state insurance law. (It is unclear whether the bill gives the comptroller authority to approve the policies, as only the insurance commissioner can do currently, or if it means the comptroller will seek approval under state law, i. e. , from the insurance commissioner. )

The provision authorizing the comptroller to procure insurance policies is not effective until July 1, 2008, and the bill requires that SHIPP be available for enrollees on that same date (see COMMENT).

The bill requires the comptroller to provide education on SHIPP to all state residents and, in a separate provision, create a health consumer assistance office to counsel individuals and enroll them in SHIPP.

The comptroller is authorized to educate state residents about the policies available through SHIPP by:

1. preparing educational materials and conducting information sessions and workshops,

2. contracting with nonprofits and community-based organizations for outreach to hard-to-reach populations, and

3. consulting with, and reimbursing, licensed health insurance brokers for help in educating residents.

A separate provision requires her to establish a health consumer assistance program to counsel potential enrollees and enroll them in SHIPP. It authorizes her to establish the consumer assistance program within her office or contract with a nonprofit organization to operate the program. The nonprofit organization must (1) be financially independent from all insurance companies and HMOs providing SHIPP policies and (2) not receive any financial benefit, direct or indirect, from an enrollee's choice of any insurance policy under the program.

The bill establishes a number of requirements for every health policy under SHIPP and requires at least one benchmark policy to be provided that has an actuarial value that is at least equal to the average actuarial value of employer-sponsored plans in New England.

1. be in compliance with the provisions of state insurance law governing health insurance (CGS Chapter 700);

2. cover preexisting conditions (this may conflict with provisions of Chapter 700c, which requires such coverage but allows for a 12- month waiting period before coverage kicks in);

3. guarantee issue;

4. require payment of the same premium for each “class of coverage”;

5. cover, without cost-sharing, examinations for every adult and child, including all screenings and immunizations that are appropriate to the individual's age, gender, culture, race and ethnicity; and

6. treat each designated provider as a preferred provider to which the insurance policy's lowest schedule of primary care copayments or coinsurance applies, except that an insurance policy need not extend this status to a designated provider if the Public Health Department (DPH) certifies that the policy provides alternate arrangements for primary care that do not reduce primary care access for the policy's enrollees living in the provider's service area.

The bill defines class of coverage to mean single adult coverage, two adult coverage, and variations of coverage with children as approved by the comptroller. This apparently means that the premium would be the same under a given policy whether an enrollee is seeking coverage for a single adult, a couple, or a family.

All policies must treat designated providers as preferred health care providers. It defines designated provider as a:

1. federally qualified health center (FQHC);

2. health center the comptroller, in conjunction with the public health commissioner, determines to be substantially similar to an FQHC;

3. school-based health clinic; or

4. primary care clinic or other primary care provider DPH designates as comprising such an essential part of a local community's available primary care that, without it, members of the community would not have sufficient access to primary care.

The comptroller must make available at least one benchmark policy which meets specific requirements set in the bill that are in addition to the requirements stated above.

The benchmark policy must have an actuarial value that at least equals the sum of the actuarial value of (1) all coverage, excluding dental coverage, for average New England enrollees in employer-based insurance during the previous year, and (2) dental coverage for average New England enrollees in employer-based insurance during the previous year. The commissioner must survey employer-based health insurance coverage in New England to determine the actuarial value of benchmark policies and must annually adjust the actuarial value to reflect increases in health care. The bill does not define “average New England enrollee. ”

The benchmark policy must also include coverage for the following: office visits; inpatient and outpatient hospital care; mental and behavioral health care, including substance abuse treatment; prescription drugs, including brand name and generic drugs; maternity care, including prenatal and postpartum care; oral contraceptives; durable medical equipment; speech, physical and occupational therapy; home health care; hospice services and extended care as alternatives to institutionalization; preventive and restorative dental care; basic vision care; and, as prescribed by a physician, personalized nutrition and exercise plans and smoking cessation services.

The comptroller must require each insurance company and HMO providing SHIPP health insurance to operate an electronic health record system, certified by the comptroller, no later than October 1, 2008. She must promote the use of information technology by these insurance providers, and by individuals applying to, enrolled in, or seeking information about SHIPP; and she must arrange for training, assistance, and technical support to assure the effective use of such a system.

The bill states the comptroller must certify that the electronic record systems meet the interoperability standards she establishes by regulations adopted under the bill for such systems. But the rest of the bill, including the regulations section that this provision refers to, does not include anything about interoperability standards.

Eligible individuals can enroll in SHIPP starting on July 1, 2008 with their premium contribution established on a sliding scale based on income level. Those who do not meet the definition of eligible individuals may also enroll starting on that date, but they must pay 100% of the premium. It is unclear if those who are not eligible for the program, due to living in the state for less than six months must still pay 100% of the premium once their state residency passes the six-month mark.

Under the bill, a person may enroll through the comptroller's office or the Department of Social Services (DSS).

Any eligible individual who is not enrolled in SHIPP on or after July 1, 2008 will be enrolled by default when:

1. either the revenue services or labor department receives a report of the person's income,

2. a state income tax form is filed and the person is listed as a member of the household, or

3. the person seeks health care.

The bill does not indicate how revenue services or labor department officials will determine if a person is already in SHIPP and by what means they must use to contact the comptroller regarding a person's SHIPP status. When an uninsured person seeks health care, it is also unclear how that will be communicated to the comptroller.

Eligible individuals enrolled by default are issued a fee-for-service insurance policy until the individual chooses a health policy offered under SHIPP. Once enrolled, the bill gives such enrollees a reasonable amount of time, not to exceed 30 days, to choose a SHIPP plan. If the person does not make a choice within that time, the comptroller must select a SHIPP benchmark policy for him or her.

1. maximizing the enrollee's continuity of care;

2. keeping family members within a single plan; and

3. supporting benchmark plans with the best performance as determined by low premiums and high-quality care or positive outcomes for individuals who were mandatory enrollees.

The bill establishes a sliding scale of premium contributions for enrollees. (see Table 1).

For individuals who would qualify for Medicaid, HUSKY, or state administered general assistance (SAGA) under state law in effect October 1, 2006, the bill requires that the premium not exceed the amount permitted in the particular law. The bill permits increases in the following years based on changes in the per capita income among state residents with incomes at or below 300% of FPL (unless such averages are not available, in which case any increase in premium must be based on average per capita income changes for all state residents). Under current state law, there is no premium for HUSKY A or for SAGA. Under HUSKY B premiums are permitted only for recipients who earn at least 235% of the FPL.

The bill provides that, for a SHIPP policy with a premium higher than the benchmark policy premium, the enrollee must pay what would be due under the applicable formula already described plus the difference between the benchmark premium and the higher premium.

Under the bill, enrollee contributions will be deducted from the enrollee's gross income for state and federal income tax purposes, except as required under Section 125 of the IRS Code (which allows employees to place pre-tax dollars into certain types of health plans).

COMPTROLLER AND DRS DUTIES RELATED TO EMPLOYEE CONTRIBUTIONS AND TRANSMITTAL TO POLICY PROVIDERS (§ 10 (D) & (E))

The comptroller and the revenue services commissioner must establish an automated payroll deduction system for enrollee payments to SHIPP. Automated payments must be sent to DRS, which must forward them to the comptroller. Enrollees participating in the program may opt out of payroll deduction and establish with the comptroller an alternate means of making payments to SHIPP.

The comptroller must adopt regulations establishing when (1) enrollee payments must be made to the comptroller for transmittal to the health insurance companies or HMOs providing SHIPP insurance policies and (2) enrollee payments must be made directly to such insurance companies or health centers.

The bill requires that the comptroller collect fees from all employers equivalent to 11% of their payroll. The payroll fee will be imposed on employers regardless of whether they provide health insurance to their employees and what kind of per-employee contribution they make.

It does not indicate how the comptroller will bill or collect from the more than 96,000 employers in the state. It requires the comptroller to adopt regulations specifying the procedures and standards for collecting the fees.

It does not create or indicate into what fund the comptroller will deposit employer fees and employee premium contributions (see COMMENT).

The bill requires each employer in the state to designate (1) the comptroller as the employer's health plan administrator and (2) SHIPP as the employer's employer-sponsored group health plan, in accordance with federal tax law.

WHEN AN EMPLOYEE IS NOT CONSIDERED COVERED UNDER AN EMPLOYER'S HEALTH PLAN (§ 13)

Under the bill, each employee, and his or her dependents, who works for an employer who offers employer-sponsored health insurance will be deemed to be covered under that insurance except in the following situations:

1. If the employee, or his or her dependent, is a child who qualifies for HUSKY, the child will not be considered covered under the employers plan. The child will be considered insured if his parent or legal guardian consents in writing to the employer-sponsored insurance.

2. If the employee receives offers of employer insurance from more than one employer, the employee (or the parent or guardian if the employee is a child) may choose to accept one of the offers. In cases where the employee does not accept either offer, the comptroller must establish guidelines, adopted in regulations, to govern enrollment into employer-sponsored plans for such employees.

3. Any former employee offered employer-sponsored health insurance under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) by a former employer will not be deemed insured under employer-sponsored health insurance. The former employee is considered so insured only if he or she consents in writing to the COBRA insurance.

4. If an employer offered health insurance to its employees on or before October 1, 2006 and the per-employee cost of the current insurance is at least equal to the employer's per-employee cost on or before October 1, 2006 (adjusted for the medical care component of the CPI), an employee or dependent of such employee can decline an offer of employer-sponsored health insurance and will not be deemed to be insured under such insurance. This provision appears to allow insured employees to compare the cost of their employer plan to what they would pay in a SHIPP plan and choose the less expensive plan.

If an employee is not considered covered under his or her employer's plan, then the employee is eligible to join SHIPP.

The bill permits an individual or an employer to purchase or provide health insurance or health care services in addition to those provided through SHIPP.

In order to compensate for varying risk levels for enrollees under different policies, the comptroller must prospectively adjust payments to each SHIPP health insurance policy. The payments will compensate for any difference between the average risk level of a policy's enrollees and the state's nonelderly population.

The bill requires that payments made to SHIPP be used to pay for the reinsurance costs of the insurance providers. (Reinsurance is insurance for insurance companies, i. e. , it helps spread the risk thus lessening the liability for the primary insurer. )

The bill permits the comptroller to subsidize, during the first three years SHIPP is implemented and within available appropriations, the cost of reinsurance for the insurers. Any reinsurance cost not covered by appropriations will be paid for by payments made to the program on behalf of enrollees. For subsidized reinsurance, the comptroller must establish risk corridors and coinsurance percentages based on best practices from other states (i. e. , terms of reinsurance).

The comptroller is required to issue a report, by January 1, 2011, containing recommendations on the future financing for reinsurance to the Insurance and Real Estate Committee. This provision also requires that, if the General Assembly does not take action to the contrary by the end of the 2011 regular session, reinsurance premiums must, for the third and each subsequent year, be paid entirely by payments made to the program by or on behalf of enrollees. But this appears to have incorrect timing as the bill requires SHIPP to be available for enrollees (and therefore fully implemented) by July 1, 2008. This makes the report from the comptroller (due January 1, 2011) arrive at the legislature during SHIPP's third year, and the legislature has until the end of the session to act on the report. At that time, the third year of the program is nearly over. It is unclear how the comptroller could delay paying for reinsurance costs until the year is almost over.

The bill requires DSS to screen each person eligible for or purchasing coverage in SHIPP for Medicaid or State Children's Health Insurance Program (SCHIP) eligibility. The screening will also be used to determine income for purposes of establishing premium payments under SHIPP. It requires individuals (presumably only those who qualify) to enroll in one or the other public program, unless he or she objects to doing so.

The bill requires relevant information to be obtained through state-maintained or state-accessible data and through the individual's self-attestation to the maximum extent feasible.

The bill requires the following information to be made available to DSS and the comptroller for purposes of Medicaid or SCHIP eligibility and establishing SHIPP's premium payment:

1. eligibility and enrollment information for individuals enrolled in means-tested assistance programs other than HUSKY;

2. new hire information and quarterly reports provided to the Labor Department;

3. information showing individuals' U. S. citizenship, including information obtained from birth certificates and other vital records; and

4. federal information about new hires, quarterly earnings, Social Security numbers, immigration status, and other data pertinent to income or other components of Medicaid and SCHIP eligibility.

The bill requires the comptroller and DSS commissioner to enter into agreements with other state agencies providing or receiving information for the SHIPP program. The agreements must require that:

1. the information is used only to verify or establish income or eligibility for matching federal Medicaid or SCHIP funds and

2. each agency providing information train and monitor staff and contractors who have access to the information and inform them of all applicable state and federal privacy and data security requirements.

The bill requires the DSS commissioner, within available appropriations, to develop and operate the information infrastructure needed to conduct the screenings, and take all feasible steps to maximize federal funds for this purpose. The comptroller, in consultation with data privacy and security experts, must develop and implement policies and procedures that maintain data security and prevent inadvertent, improper, and unauthorized access to or disclosure, inspection, use, or modification of the information.

The bill gives individuals about whom information is provided the right to (1) obtain, at no cost, copies of all information that must identify the agency that released the information and (2) correct any misinformation or complete any incomplete information. Individuals must be promptly informed (it is not clear by whom) if any breach of privacy occurs including any rights and remedies available as a result of the breach.

By July 1, 2009, the bill requires the DSS commissioner to submit to the federal Centers for Medicare and Medicaid Services a Medicaid State Plan amendment to increase the income limits for Medicaid coverage for adults. DSS must extend coverage to parents, guardians, and caretaker relatives with incomes up to 300% of the FPL. Currently, parents and caretaker relatives of children receiving HUSKY A (Medicaid) qualify for Medicaid with income up to 150% of the FPL. (The bill does not specify that these adults must be caretaker relatives of HUSKY A children. )

The bill also requires DSS, as part of the State Plan amendment, to extend Medicaid coverage to any other individuals between the ages of 19 and 64 up to this same income level who can be covered, at state option, through the amendment. Currently, only a limited number of non-elderly adults can receive Medicaid coverage, and the income limit is far below 300% of the FPL (about 56%).

Also by July 1, 2009, the bill requires the commissioner to apply for a Section 1115 Medicaid waiver to authorize the use of Medicaid funds for individuals between ages 19 and 64 with incomes at or below 185% of the FPL who are not otherwise eligible for Medicaid, either “under mandatory eligibility or at state option through state plan amendment. ”

The bill allows the state to meet federal budget neutrality requirements (necessary for all Section 1115 waivers) by claiming unspent uncompensated care payments to hospitals or taking other measures. But these measures may not result in the following for individuals who would have qualified for Medicaid, HUSKY, or State-Administered General Assistance (SAGA):

The bill provides that if budget neutrality prevents the bill's coverage up to 185% of FPL, the coverage should be available at income at the highest possible percentage less than 150% of FPL.

The bill requires the DSS commissioner to cover individuals over age 18, including pregnant women, if necessary to access all Medicaid funds allotted to the state. He must do this even if these individuals are not eligible for Medicaid. (Federal Medicaid funds are not allotted to the state. Rather, the federal government reimburses the state for 50% of what it spends on Medicaid recipients. )

Currently, the state uses SCHIP funds to cover children in families with incomes between 185% and 300% of the FPL (HUSKY B), as well as 18- and 19-year-old children (HUSKY A, which is part of the Medicaid program) with incomes up to 185% of the FPL. Younger children in families with incomes below 185% are eligible for HUSKY A, and their parents or caretaker relatives qualify for HUSKY A if their income is less than 150% of the FPL. Likewise, pregnant women are eligible for HUSKY A coverage with incomes up to 185% of the FPL.

It appears that the bill would require DSS to cover pregnant women with higher incomes under the HUSKY B program using SCHIP funds, which federal law allows. It is not clear how high the federal government would allow the state to set the income limit for this group.

SUPPLEMENT COVERAGE FOR MEDICAID- AND HUSKY-ELIGIBLE INDIVIDUALS (§§ 13 (B) & 14)

The bill provides that employees who qualify for Medicaid and are in an employer-sponsored health insurance plan must receive “supplemental” coverage under Medicaid. Likewise, it requires employees who are eligible for supplemental coverage under Medicaid or HUSKY (it does not specify whether it is HUSKY A (Medicaid) or HUSKY B (SCHIP)) to receive it.

Under the Medicaid program, enrollees who have employer-sponsored coverage can get help paying the premiums for that coverage, as well as supplemental coverage for any gaps in the employer plan.

Since the HUSKY B program is available only to children whose parents are not enrolled in an employer plan (federal SCHIP law prohibition), the bill's provision could not be implemented unless DSS received a federal waiver. The bill does not direct DSS to seek this waiver.

The bill requires the comptroller, in cooperation with the DSS commissioner to develop integrated procedures to ensure enrollees receive this coverage.

Section 13 refers to a provision in Section 13, which appears to be a mistake. Section 14 is the correct reference.

The comptroller must adopt regulations to implement and administer SHIPP, including addressing (1) how enrollee payments will be made to the comptroller for transmittal to insurance companies and (2) procedures and standards for the collection and deposit of employer fees paid to the comptroller.

No Fund Named or Established for Mandated Fees and Premium Contributions (§ 11 & 12)

The bill does not create new fund or account or indicate what established fund into which the comptroller will deposit employer fees and employee premium contributions. Collecting a fee of 11% of all employers' payroll will produce a very significant amount of revenue (see Fiscal Note).

The bill specifies that the comptroller will adopt regulations that “specify procedures and standards for the collection and deposit of contributions” by employers in the state. Usually, when any funds are raised for a specific reason, the legislation either creates a specific account or fund for it or directs what existing fund the money will be deposited in.

Required SHIPP Availability Date and Comptroller's Authority to Procure Insurance (§§ 2, 6 &7)

The bill requires that SHIPP be available for voluntary and mandatory enrollees on July 1, 2008. Yet the provision authorizing the comptroller to procure insurance policies for SHIPP does not take effect until July 1, 2008.

Several legislative committees have favorably reported bills broadly addressing health care access that contain provisions similar to those in HB 7314. They are:


Enrollee's Family Income Level	Premium Contribution (based on benchmark policy premiums)
At or below 150% of federal poverty level (FPL)*	No contribution
At or above 150% to 300% of FPL*	Between 0% and 30% of the premium as listed on comptroller's schedule
Above 300% of FPL	30% of the premium
*These two tiers overlap in the bill as those whose earnings are equal to 150% of FPL are in both tiers.
FPL: 100% of FPL for 2007 is $ 10,210 for an individual and $ 20,650 for a family of four.

Bill Number	Committee
SB 1	Public Health
SB 3	Human Services
SB 70	Insurance
SB 1127	Human Services
SB 1371	Insurance
HB 6158	Children
HB 6652	Insurance
HB 7375	Human Services