OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

sHB-5032

AN ACT REQUIRING HEALTH INSURANCE COVERAGE FOR BONE MARROW TESTING.

As Amended by House "A" (LCO 5981)

House Calendar No. : 46

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 12 $

FY 13 $

Comptroller Misc. Accounts (Fringe Benefits)

GF & TF - Cost

Potential

Potential

Note: GF=General Fund and TF= Transportation Fund

Municipal Impact:

Municipalities

Effect

FY 12 $

FY 13 $

Various Municipalities

STATE MANDATE - Cost

Potential

Potential

Explanation

As of July 1, 2010, the State Employees' Health plan went self insured. Pursuant to current federal law, the state's self-insured health plan would be exempt from state health insurance benefit mandates. However, in previous self-funded arrangements the state has traditionally adopted all state mandates. To the extent that the state continues this practice of voluntary mandate adoption, the following impacts would be anticipated.

It is estimated that the state employee health plan will incur a per test cost which could range from $40-$100, as this coverage is currently limited to members for which the procedure is deemed medically necessary. The bill requires coverage for all plan members and is not exclusive for those members for whom testing is medically necessary for matching purposes. The annual cost would depend on the number of tests administered.

To the extent that municipalities do not provide coverage for bone marrow testing, there may be increased costs to provide it. The impact on municipalities depends on how many municipalities provide this coverage and that cannot be determined at this time. The coverage requirements may result in increased premium costs when municipalities enter into new contracts for health insurance after January 1, 2012. Due to federal law, municipalities with self-insured health plans are exempt from state health insurance benefit mandates.

The state employee health plan and many municipal health plans are recognized as “grandfathered” health plans under the Patient Protection and Affordable Care Act (PPACA)1. It is unclear what effect the adoption of certain health mandates will have on the grandfathered status of the state employee health plan or grandfathered municipal plans PPACA2.

House “A” removes language which would require coverage for tests which are medically necessary. The change results in the fiscal impact identified herein.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

In addition, the federal health care reform act requires that, effective January 1, 2014; all states must establish a health benefit exchange, which will offer qualified plans that must include a federally defined essential benefits package. While states are allowed to mandate benefits in excess of the basic package, the federal law appears to require the state to pay the cost of any such additional mandated benefits. The extent of these costs will depend on the mandates included in the federal essential benefit package, which have not yet been determined.   Neither the agency nor mechanism for the state to pay these costs has been established.

1 According to the PPACA, compared to the plans' policies as of March 23, 2010, grandfathered plans who make any of the following changes within a certain margin may lose their grandfathered status: 1) Significantly cut or reduce benefits, 2) Raise co-insurance charges, 3) Significantly raise co-payment charges, 4) Significantly raise deductibles, 5) Significantly lower employer contributions, and 5) Add or tighten annual limits on what insurer pays. (www. healthcare. gov)

2 According to the PPACA, compared to the plans' policies as of March 23, 2010, grandfathered plans who make any of the following changes within a certain margin may lose their grandfathered status: 1) Significantly cut or reduce benefits, 2) Raise co-insurance charges, 3) Significantly raise co-payment charges, 4) Significantly raise deductibles, 5) Significantly lower employer contributions, and 5) Add or tighten annual limits on what insurer pays. (www. healthcare. gov)