OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

sSB-21

AN ACT CONCERNING HEALTH INSURANCE COVERAGE FOR ROUTINE PATIENT CARE COSTS FOR CERTAIN CLINICAL TRIAL PATIENTS.

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, self-insured health plans are exempt from state health mandates, however in previous self-funded arrangements the state has traditionally adopted all state mandates. To the extent the state continues this practice of voluntary mandate adoption, the following impacts are anticipated.

According to the state employee and retiree health plan, services associated with or as follow-up to use of any experimental or investigational treatment are not covered, unless approved by the plan provider on a case-by-case basis. The state employee and retiree health plan currently provides coverage for routine patient costs in association with cancer clinical trials. The bill expands this coverage to include multiple sclerosis, Parkinson's disease, amyotrophic lateral sclerosis, AIDS and muscular dystrophy. As it is not possible to determine which routine services or off label prescription drugs may or may not be provided and authorized for the diseases specified, the fiscal impact to the state cannot be determined.

To the extent that fully insured municipalities do not provide coverage for routine care or off label prescriptions for insured participants in clinical trials for the diseases specified, there may be an increased cost to provide the coverage mandated. The coverage requirements may result in increased premium costs when municipalities enter into new health insurance contracts after January 1, 2012. Due to current federal law, municipalities with self-insured plans are exempt from state health insurance 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.

The Out Years

As previously noted, the future fiscal impact to the state cannot be determined as it is not possible to assess which routine services and off label prescriptions may or may not be provided and authorized for the diseases included in the bill. Those mandated services not currently covered will result in a cost to the state employee and retiree health plan and municipalities. The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

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 Grandfathered plans include most group insurance plans and some individual health plans created or purchased on or before March 23, 2010. Pursuant to the PPACA, all health plans, including those with grandfathered status are required to provide the following as of September 23, 2010: 1) No lifetime limits on coverage, 2) No rescissions of coverage when individual gets sick or has previously made an unintentional error on an application, and 3) Extension of parents' coverage to young adults until age 26. (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)