OLR Research Report



The legislature created the Connecticut HealthFirst Authority in 2007 to evaluate alternatives and recommend ways to finance affordable health care coverage; contain health care costs; and improve health care quality for Connecticut residents. Among the recommendations the authority is considering is the establishment of a “quasi-public trust” to administer various state health insurance programs like the state employees' and Charter Oak health care plans and, potentially, Medicaid and State Administered General Assistance (SAGA). The authority must submit its recommendations to the General Assembly by December 2008.

Three states currently use public authorities to administer one or more state insurance programs and other health-related programs, two use such agencies as regulatory bodies, and several states have recently considered this approach. This backgrounder outlines these agencies' structure, funding, and responsibilies.


The term “quasi-public” has a particular meaning in Connecticut law; authorities in other states are not Quasi-Public in this sense.

Quasi-public agencies operate outside the normal state government structure. Their status exempts them from the personnel requirements and spending controls Executive Branch agencies must follow. This freedom, in theory, allows them to respond to problems and opportunities faster and more efficiently than a comparable state agency. The Connecticut legislature has created 11 quasi-public agencies in areas ranging from health care facility and business financing, to student loans, to waste management.

Most of these agencies also operate outside of the normal state financial structure. The legislature has given them independent sources of revenue, typically the ability to issue their own bonds. This frees them from executive and legislative control over their budgets.

But all quasi-public agencies must still comply with certain state laws, like freedom of information and ethics. The state auditors must annually audit each agency to determine whether it has complied with its own policies and procedures concerning affirmative action, personnel practices, purchasing, distribution of funds, and use of surplus funds. And each agency must report annually to the governor, the auditors, and the legislature's Program Review and Investigations Committee. The report must include, among other topics, (1) a list of all outside individuals and firms receiving more than $ 5,000 in loans, grants, or payments for services; (2) a balance sheet showing all revenues and expenditures; and (3) its affirmative action policy statement and descriptions of its workforce composition and affirmative action efforts.


Five states— Kansas, Maryland, Oklahoma, Washington, and West Virginia—have established “health authorities or commissions” to administer one or more state-funded insurance and other health-related programs. Four of the entities are governed by an appointed policy-setting board much like Connecticut's State Board of Education sets policy for the State Department of Education. In Washington, an appointed board governs the authority's insurance function but not its other functions. In Maryland, Washington, and West Virginia, the governor appoints all board members; in Kansas and Oklahoma, the governor and legislative leaders each make appointments

None of these agencies are quasi-public as the term is used in Connecticut, particularly in terms of fiscal independence. All are executive branch agencies funded mainly by state general fund appropriations. Washington's authority also receives alcohol, tobacco, and insurance premium tax revenues while in Maryland and West Virginia, hospital assessments go into the general fund for appropriation to the authorities.

Kansas's authority, which is the newest, has the widest range of responsibilities. It administers Medicaid, children's health insurance, state-funded insurance for adults (like SAGA), and the state employees' health insurance and workers compensation programs. It is also responsible for implementing a statewide community health records program and for making grants to small employers to establish Section 125 cafeteria plans (which permit their employees to purchase benefits with pre-tax dollars) and organize insurance-purchasing associations. West Virginia's authority does not administer insurance programs at all; it conducts certificate of need reviews, approves hospital rates, conducts state health planning, and coordinates state agency health data collection. The responsibilities of authorities in Maryland, Oklahoma, and Washington fall between these poles. Table 1 outlines the authorities' governance structures, funding, and responsibilities.

Table 1: State Health Authorities


Kansas Health Policy Authority

Maryland Health Care Commission

Oklahoma Health Care Authority

Washington Health Care Authority

West Virginia Health Care Authority

Location in state government

Independent state agency

Independent agency in Health & Mental Hygiene Dept.

State Agency

State Agency

Autonomous division in Health & Human Resources Dept.

Date Created







9 voting members: 3 appointed by governor, 6 by legislative leaders

Members to be knowledgeable in various fields, including health, insurance, business, IT, economics

8 state agency commissioners and authority director as ex-officio, nonvoting members

15-member board, appointed by governor

9 public members with no connection to providers or payers

2 physician representatives, 2 payer representatives, 1 nursing home administrator, 1 nonphysician provider

7-member board: 3 appointed by governor, 2 each by speaker and president pro tempore

4 of the member are consumers, the others have experience in medical care; health care services or delivery; insurance or managed care

9-member Public Employee Benefits Board within authority designs and approves private insurance plans for state employees

8 members appointed by governor, plus authority exec. director

4 members represent state and school district employees, 4 have experience in benefit management and containment

3-member board appointed by governor

1 member knowledgeable in health care finance or economics, 1 experienced in human services or business, 1 health care consumer


General Fund (GF) appropriations

Federal funds

Hospital assessment

GF appropriations

Hospital assessment

Health care provider assessments

GF appropriations

Federal funds

Tobacco taxes

GF appropriations

“Health Services Account” funded by insurance premium and alcohol and tobacco taxes

Federal funds

GF appropriations

Hospital assessment


$1.832 billion (FY 09)

$19.6 million (FY 07)

$3.562 billion (FY 07)

$637.7 million (FY 08-09 biennium)

$18.3 million (FY 08)

Employees (FTE)







Develop and maintain a coordinated health policy agenda that combines effective purchasing and health care administration with health promotion- oriented public health strategies

Plan for health system needs

Promote informed decision-making, increase accountability

Improve access in a rapidly changing health care environment by providing timely and accurate information on availability, quality, and cost

Purchase state and federally funded health care in most efficient and comprehensive manner possible

Study and recommend strategies for optimizing health care quality & accessibility

Leader in health care policy,

Purchase quality health care and other benefits

Provide excellent service for its programs

Constrain rising health care cost

Assure reasonable access to health care services

Prevent unnecessary duplication of health care services through rate setting, certificate of need, and state health planning.




Purchase insurance and coordinate planning for:

Medicaid (with some exceptions), including drug formulary, utilization review, and management information system


MediKan (like SAGA)

State employee health and workers' comp insurance

Insurance for people with disabilities in federal Ticket-to-Work program

Make grants to small employers to establish Section 125 cafeteria plans

Make start-up grants to small employers to organize insurance-purchasing associations

Audit and investigate Medicaid, MediKan, and SCHIP through an inspector general office

Regulate standard benefit plan for small group market

Assess financial, medical, and social effects of insurance mandate proposals


Medicaid (managed care and FFS)

State-funded insurance programs (“Insure Oklahoma”) for small businesses and uninsured employees


Basic Health Plan (state-funded coverage for low-income adults and children)

Managed care and self-insured preferred provider plans for state and participating school district employees and retirees

Prescription drug program for Medicaid recipients, participants in state employee self-insured plan, and state residents without drug coverage

Health Insurance Partnership, which provides small employers access to lower cost coverage and provides premium subsidies for employees (begins 1/09)


IT/Health Data

Implement a statewide community health records program

Develop statewide medical care data base using payer information

Report on performance quality of hospitals, nursing homes, HMOs, and ambulatory surgical facilities

Establish performance standards for private electronic health networks and certify compliance


Make grants to health care providers to install IT systems

Fund statewide collaborative claims and performance data collection

Coordinate state agency health data collection

Community Health


Fund community health clinics

Make grants and loans to rural health care facilities


Coordinate planning for the insurance programs it administers

Participate in developing state health facilities and services plan


Develop state health plan (last plan appears to have been completed in 2000)

Rate Review


Review hospital rates

Certificate of Need


Conduct certificate of need review & approval


Conduct certificate of need review and approval



Determine if health services used by state government are safe and effective



Recent Proposals

Like Connecticut, several states, including Colorado, Maryland, New Mexico, Ohio, and Oregon, have recently convened expert panels to examine issues of health care access, cost, and quality. Two of these—New Mexico and Oregon—called on their legislatures to create health care authorities whose functions would include managing or making policy for state health insurance programs. Table 2 outlines their proposed structure and functions. (The panels in Colorado, Maryland, and Ohio recommended creating an insurance exchange commission similar to the Massachusetts Connector).

Table 2: Proposed State Health Care Authorities



New Mexico

Location in State Gov't

Not specified

Not specified


Option 1: Public utility commission with limited number of full-time, paid commissioners appointed by gov.

Option 2: Citizen board appointed by gov., with strong executive manager

Both models call for members to have demonstrated leadership skills in their professional and civic lives

Both models use existing Health Policy and Research Office for administration and operations

8 public members, appointed by governor, 4 from lists submitted by legislative leaders

Public members to have at least 3 years experience in various health care delivery, finance, management, or policy functions; business management or finance; insurance; labor, or consumer advocacy

3 state agency commissioners


Not specified

GF appropriation




Undertake joint contracting for public (state & local) employer health coalition health care services

Collaborate with public employee and teacher benefits boards for coordinated health care purchasing policies

Establish policies, standards, and performance criteria for various state health insurance programs

Make policy for development of uniform, statewide health care quality standards for all purchasers, 3rd party payers, and providers

Make policy for development of clinical standards and guidelines for providers and insurers

Develop and implement health insurance exchange for individual market

Manage and consolidate public sector insurance pools and programs, including state and local gov't employees, high-risk pool, state-sponsored small employer, and state –funded uninsured adults

Set benefit and plan performance standards

IT/Health Data

Make policy for and govern health care data collection program that includes providers, state agencies (including Medicaid), and 3rd party payers

Not specified

Disease Management/ Chronic Diseases

Make policy for and oversee Public Health Division activities concerning behavioral risks (e.g., smoking, obesity) and chronic diseases

Perform cost control activities such as pay-for-performance, disease management, quality data reporting, collaborative purchasing

Develop plan for health care cost, quality, and access that addresses chronic disease and disease management


Convene council to investigate new ways of paying providers

Determine health care workforce needs and development strategy

Study feasibility of consolidating actuarial pools and developing insurance exchange

Study feasibility of including Medicaid and SCHIP in consolidated insurance pool

Previous Connecticut Health Care Authority Proposals

Health care system reform was a major issue in Connecticut and the nation in 1994 and 1995. The Public Health Committee raised bills in both years to create new entities to administer state insurance programs, provide for private insurance, collect health care data, and promote preventive medicine, among other activities.

Bills in both years called for creating a quasi-public Connecticut Health Care Corporation funded by assessments on employers and individual insurance providers (SB 263, 1994 and SB 2, 1995). The corporation and trust fund were to be governed by a 10-member board appointed by the governor.

The legislation called for the corporation, among other activities, to:

1. restructure the state's responsibilities and functions to provide adequate, affordable, cost-effective health care for state residents;

2. create a data collection system to facilitate planning;

3. use a trust fund capitalized by the employer and insurer assessments to provide (a) guarantees, reinsurance, or similar approaches to decrease insurers' risk on high-risk policies and (b) coverage for uninsured and unemployed people;

4. reduce the state's Medicaid costs by monitoring rate setting and overseeing medical services; and

5. establish education programs promoting preventive care.

The committee also raised bills in both years to establish a Connecticut Health Care Authority. In contrast to the corporation, the authority was to be a state agency governed by an 11-member board composed of gubernatorial and legislative appointees and state agency heads. It was to be funded through the General Fund (HB 5546, 1994 and HB 6130, 1995).

The authority's mission was to implement comprehensive health system reform, establish a statewide health insurance purchasing cooperative and a comprehensive health care data collection system, and plan for consolidating state health regulation and financing. The bills set goals for the health system reform that included:

1. enrolling all state residents in health plans the authority certified as providing a “comprehensive benefits package,”

2. providing all state residents access to appropriate and timely health care,

3. regulating certified health plans,

4. consolidating state government health spending, and

5. establishing effective cost containment and quality assurance.

The legislation also set goals for the data collection system the authority had to establish. These were:

1. maintaining a statewide database of all inpatient and ambulatory care encounters,

2. tracking health care expenditures and outcomes,

3. developing baselines on (a) state health care spending and (b) costs, cost distribution, and performance reviews and outcomes; and

4. evaluating and distributing information on certified health plans and their providers.

All of these bills died in the Public Health Committee following public hearings. But many of the corporation and authority's proposed responsibilities were assigned to the Office of Health Care Access when it was created by PA 94-3, June Special Session.






West Virginia: