Rep. Chris Donovan’s proposal to allow municipalities and small businesses to buy into the state employee plan passed the House and Senate easily. But proponents are concerned that the Governor will not sign the bill. The concept is that bringing thousands of municipal, small business and non-profit employees together with into the same health purchasing pool as the 200,000 state employees, retirees and dependents will achieve significant savings. Cities and towns could use that money to fill budget holes and reduce property taxes. Rep. Donovan has been visiting with city officials across the state to generate interest in the plan.
However, this year the state was very fortunate to negotiate no increase in rates with the three participating health plans that cover state employees when premiums are rising 6 % nationally. That $54 million in state budget savings would be threatened if this bill is signed into law, according to the insurers. Anthem says adding municipalities and small businesses would add “adversity in mix and utilization” and new administrative costs. Anthem will have to recalculate rates and expect an increase of $24 million under the proposal for the state employees they cover. OPM Secretary Genuario says that there is no time to re-bid the contracts as the old ones end June 30th and that with a projected $53 million deficit this year the state cannot afford to lose any savings. Upon researching the proposal, New Haven city officials didn’t find the promised $8.6 million savings, but rather that they would pay slightly more to cover city workers in the state employee pool than they are paying now.
Proponents have been holding several press conferences, featuring small businesses that would save money under the plan, calling on the Governor to sign the bill. The proponents argue that enlarging the state employee pool should reduce prices. Comptroller Nancy Wyman has called in top officials of the three state employee insurers, Anthem, HealthNet and United Health Care, to explain their claim that rates will increase. Today’s lead Hartford Courant editorial urges the Governor to veto the bill, noting that in addition to New Haven, Danbury also found that joining the state employee pool would cost the city $5 million rather than the promised $2.8 million savings. The legislature’s calculation did not include retirees, according to the city. When Massachusetts opened their state employee pool to municipalities few took advantage, finding it more costly. The Courant recommends that the state hire independent actuaries to determine the costs to the state and to cities and towns. The bill has not yet reached the Governor’s desk.