SustiNet Forces Swing Back

Proponents of state-level health-care reform are pushing back against a nonpartisan cost estimate released by an arm of the General Assembly.

Supporters of the SustiNet plan said the analysis, issued Monday by the legislature’s Office of Fiscal Analysis, has ​“serious errors and discrepancies,” including overestimating the expense of one key part of the plan.

SustiNet would eventually create an optional government-backed ​“public option” health insurance plan for people who need it, while also cutting costs through efficiencies, digitzation of records, and so-called ​“medical homes.”

With Gov. Dannel P. Malloy’s enthusiasm for the idea at its lowest ebb — a spokeswoman said Tuesday that Malloy doesn’t consider the existing bill ​“the right vehicle” for reform in Connecticut — the battle is already an uphill one.

Opponents of the legislation, including the state’s big insurers, say the plan would be too expensive for an already cash-strapped state.

Keith Stover, a lobbyist for the Connecticut Association of Health Plans, said he hoped the OFA analysis would allow lawmakers to move past the SustiNet idea and begin focusing on how the state can make progress through the federal health-care reform bill passed last year.

“I’m hopeful that a fiscal note that I think makes it an impossibility to implement something like SustiNet would really mark a new beginning,” he said.

But SustiNet supporters remain determined. The Universal Health Care Foundation of Connecticut issued a rebuttal to the OFA’s analysis, known as a fiscal note, on Tuesday. The foundation’s report was authored by Stan Dorn, a senior fellow at the Urban Institute and a consultant to the group on SustiNet.

Dorn’s analysis says that OFA’s numbers involving a ​“basic” health plan that will come in as part of the federal health-care reform bill passed last year are flawed, because they overstate the costs to the state of coverage as well as the number of people who will enroll.

The OFA said the basic plan would eventually cover 101,250 people, including 16,000 parents of HUSKY-eligible kids whose coverage is now paid for by the state. Adding those people to the state’s rolls would add between $222.8 million and $478.6 million in new annual costs, according to the OFA’s report.

Dorn claims that the OFA made three mistakes: underestimating the amount of federal subsidies the state will be eligible for per person; overstating the cost of covering each person; and assuming everyone who is eligible will enroll. Dorn’s estimate is that only 12,000 of the HUSKY parents will enroll, plus, another 33,367 adults, for a total of 45,367.

“It is unfortunate, because it looks like a sincere effort was made to capture the financial impact of SustiNet,” Juan A. Figueroa, the foundation’s president, said in a statement. ​“But the analysis misstates facts and figures in key areas of the plan, which involve significant savings and costs.”

Dorn’s analysis also said administrative costs for the proposed quasi-public authority that would run SustiNet, estimated at $4 million in the first year and $6 million in subsequent years by the OFA, were too high. That’s because for at least two years, all the authority will be doing is handling state workers, Medicaid and HUSKY, which is already being paid for in the state budget.

Separately Tuesday, the RAND Corp. released a new study examining the impact of the federal health-care reform package on four states, including Connecticut. According to the study, by 2016, 95 percent of state residents will have insurance, up from 89 percent now. About 170,000 more people would have coverage.

In addition, because of incentives and subsidies in the federal bill, the state’s spending on health care will drop by 10 percent, or about $2.7 billion, between 2011 and 2021. Most of those savings, the report says, will happen because the state is generous in providing insurance to lower-income adults who make too much to qualify for Medicaid. The federal government will pick up most of the tab for those people once the national reform legislation takes full effect.

Supporters of SustiNet had anxiously awaited the OFA analysis, in large part because Malloy had said repeatedly that he wanted to see the cost estimate before committing to support the legislation.

In the spring of 2007, the financial estimate for a similar universal coverage plan was a whopping $11.8 to $17.7 billion. While supporters challenged the estimate, it effectively doomed the proposal.

Malloy spokeswoman Colleen Flanagan said Tuesday that Malloy ​“has been clear that he supports the goals of SustiNet, but does not think this particular piece of legislation is the right vehicle, in part because of the cost associated with it, but also because he has serious concerns about handing over decision-making responsibility for the state’s healthcare obligations — about 12 percent of the state budget — to a quasi-public authority that has almost no accountability to taxpayers.”

Others, including Comptroller Kevin Lembo, have expressed concerns about creating a separate authority to run SustiNet.

State Rep. Elizabeth B. Ritter, a Democrat and a staunch supporter of the SustiNet proposal, said she was still absorbing all the details of the cost estimate. But she said the report was ​“gratifying” and should be seen as an incentive for lawmakers to keep pushing forward.

Ritter said formal negotiations with Malloy and others, over issues such as whether SustiNet should be governed by a separate authority or overseen by Lembo’s office, haven’t started. She expects the legislation to change as a result of those talks.

“I think there’s room for a lot of discussion on that,” she said of Malloy’s concerns about the authority. ​“It’s absolutely fair.”

The OFA report is largely silent on the projected costs of offering coverage to the uninsured, other than noting that the legislation requires that it be funded by premiums.

“The methods, and associated costs, by which the Authority may seek to provide coverage for the uninsured are not known. However, should these methods result in additional clients enrolling in state subsidized health care, including Medicaid, HUSKY, Charter Oak, the Basic Health Plan and the State Employee Plan, additional state costs would result,” the report says.

The report also doesn’t get into much about the large-scale savings — more than $200 million per year — often touted by proponents of the bill, who say improving the delivery of health care will help make it cheaper.

The basic idea behind SustiNet is to save money by dramatically expanding the number of people insured by the state, and by mandating broad reforms in how medical care is delivered.

The state’s insurance coverage is now a patchwork of plans covering state workers and retirees and includes Medicaid and HUSKY, the state’s program for poor children. Under the SustiNet proposal, over time the state would offer insurance to employees and retirees from cities and towns across the state, people from small businesses and non-profit organizations, and finally anyone who wanted to buy the coverage.

For supporters, a key provision is a true ​“public option,” which would presumably be sold on the insurance exchanges that must be created by each state under the federal heath-care reform law that passed last year. That option wouldn’t be available until 2014, and perhaps later.

Supporters say that the state can save big money by pushing maintenance care as a way to avoid the bigger, much more expensive illnesses. It remains unclear, the report says, what kind of savings are possible, although the estimate notes that even a 1 percent drop in expenses would amount to $56 million to $58.5 million each year by 2014.

(Note: Universal Health Care Foundation donates money to Online Journalism Project, a not-for-profit that publishes the Independent.)