OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http: //www. cga. ct. gov/ofa

sHB-6600

AN ACT CONCERNING THE ESTABLISHMENT OF THE SUSTINET PLAN.

OFA Fiscal Note

State Impact: See Below

Municipal Impact: See Below

Explanation

SustiNet Board

This bill establishes the SustiNet Health Partnership board of directors. The purpose of the Partnership is to design and establish the Sustinet Plan, which is intended to provide health care coverage in the state. The Partnership, by law as proposed in this bill, is not to be construed as a department, institution, or agency of the state. The Partnership is required to submit a range of recommendations to the General Assembly concerning the implementation of the Sustinet Plan, including the creation of an agency having the power to operate as a quasi-public authority. These recommendations must be submitted as proposed legislation to the General Assembly by January 1, 2011. The Partnership is also required to establish several committees that are required to make recommendations in a variety of health care policy areas.

The bill establishes the Sustinet Health Partnership board of directors as a voluntary organization that is not a state agency and receives no appropriated funds. State agencies that are involved with the Board will incur minimal administrative expenses related to Board activities. Any potential costs associated with this organization would involve the implementation of the recommendations made to the legislature as outlined in the bill. However, as those recommendations are subject to approval by the legislature, any costs associated with them would be related to the implementation of that subsequent legislation.

Public Assistance Programs

The bill specifies that all uninsured individuals in the state with incomes under 300% of the Federal Poverty Level (FPL) are eligible to enroll in either HUSKY A or B, on or after July 1, 2012.

This programmatic expansion would increase quantifiable gross state costs by at least $530 million annually when fully implemented. This figure assumes that current levels of those with insurance are maintained. To the extent that employers or individuals currently insured opt to drop coverage to take advantage of the new eligibility levels, this cost could increase.

● Enrollment Increases

The bill allows anyone who is uninsured with an income below 300% FPL to enroll in the HUSKY programs. According to OHCA's Health Insurance Coverage Databook, it is estimated that in 2006 (the latest year for which data is available) there were 148,400 uninsured individuals below 300% FPL. Fully enrolling these uninsured individuals in HUSKY would cost approximately $480 million annually.

Since the time of the OHCA survey, the state has implemented the Charter Oak health insurance program. Therefore, some of the uninsured noted above are likely to already be covered in Charter Oak. Assuming that Charter Oak is subsumed by SustiNet, the $480 million cost noted above would be reduced by the estimated $40 million that the state is expected to pay for Charter Oak in FY12, resulting in a net cost of $440 million.

This estimate would also assume the enrollment of the current SAGA population in HUSKY. Currently, SAGA has a different benefit structure and payment mechanism than the HUSKY program. Therefore, enrolling SAGA clients in HUSKY would necessitate converting these aspects of SAGA to the HUSKY structure. The exact cost of such a conversion is not known. However, assuming that these changes add 40% to the FY12 current service cost for SAGA, an additional $90 million annual cost would result.

The above noted costs for enrollment increases assume that the rates currently paid for the HUSKY programs will be applied to the expansions. However, those rates are based on coverage mostly for women and children, who are a relatively low cost insurance group. Expanding this risk pool to include SAGA and other uninsured individuals may result in future actuarial increases in HUSKY rates.

● Federal Reimbursement

Generally, the state receives federal reimbursement for the HUSKY A (50%) and the HUSKY B (65%) programs. Additionally, the state receives a 50% match for hospital inpatient and outpatient costs under the SAGA program through the federal disproportionate share hospital program.

The bill directs DSS to take any steps necessary to secure federal reimbursement for the eligibility increases mandated by the bill. As the increases are outside the normal eligibility standards allowed by the federal government, there is no guarantee that federal reimbursement will be secured.

Other State Agency Impact

The bill has further requirements that may lead to additional administrative costs for the Departments of Public Health, Revenue Services, Labor, Insurance, and the Office of Health Care Advocate.

Task Forces

The bill establishes three task forces to study obesity, tobacco use, and shortages in medical personnel. Any state agencies that are involved with these task forces will incur minimal administrative expenses related to task force activities.

Sources:

Department of Social Services Caseload Information

 

Office of the State Comptroller

 

United States Census Bureau