Will Rell’s Charter Oak Health Plan initiative survive when she leaves?

The Charter Oak Health Plan was one of Gov. M. Jodi Rell’s most prized initiatives, providing health coverage for uninsured adults.  But it’s not clear how long the program will last after Rell leaves office.

The program now includes just over 12,000 people, and Rell says it fills a critical gap. But candidates for governor have expressed skepticism about Charter Oak and its likelihood of continuing. Budget woes have already prompted the state to end premium subsidies for new members.

And federal health reform is poised to make one of Charter Oak’s key selling points–coverage for people with pre-existing conditions–a requirement for all insurance plans, while barring some of the limits Charter Oak imposes to remain financially viable.

“I think the federal health care program largely makes Charter Oak unnecessary, long-term,” Republican gubernatorial candidate Tom Foley said.

Foley said Charter Oak fills a need now, but that the rates it pays health care providers are too low, producing a cost-shift that raises costs for private insurance.

Democratic gubernatorial candidate Dan Malloy said Charter Oak seemed to have too few doctors participating and called it “an unworkable system.”

“Everything I’ve read about it leads me to the belief that it has been largely a failure,” Malloy said, although he added that he is not an expert on the program.

And Independent Party candidate Tom Marsh said he would not continue Charter Oak in its current form, which he called “just a bunch of window dressing.”

 

“I think it was developed with the best of intentions, but I think where we are right now is we have something that really isn’t much of a benefit to anyone and costs money,” he said.

Benefits and Limits

Since it opened to the public in July 2008, Charter Oak has drawn criticism from some state officials and patient advocates, who questioned the benefits the plan offered.

Some of the criticism centered on the coverage limits the plan imposed. Prescription drugs are limited to $7,500 per year, while patients have an annual benefit maximum of $100,000, and cannot receive more than $1 million in lifetime benefits

Annual and lifetime limits on health care coverage will be prohibited under the Patient Protection and Affordable Care Act. But Department of Social Services Commissioner Michael Starkowski said the requirement will most likely not apply to Charter Oak.

“It’s not considered an insurance program, at least as far as we know, under the new health care reform act, so we could still keep the limitations on the Charter Oak program,” he said.

The coverage limits were established to keep premiums affordable, Starkowski said, and removing them would require more state funding or a significant increase in premiums. He noted that the amount of medication or care covered by Charter Oak is more than what an uninsured person could get for the same cost because the health plan can obtain discounts on drugs and medical services.

When Charter Oak began, the state subsidized the premiums for people earning less than 300 percent of the federal poverty level. That changed with this year’s deficit mitigation act, which eliminated premium subsidies for new enrollees. All new enrollees now pay $307 per month, although those who earn less than 300 percent of the poverty level pay reduced deductibles and coinsurance.

Starkowski, for one, believes Charter Oak will continue.

“$307 to get that type of health insurance is still an affordable program and it’s still attractive to a lot of people,” he said.

Of the 12,086 people enrolled in Charter Oak as of last week, Starkowski expects about 2,000 to become eligible for a new Medicaid program for low-income adults, which requires no premiums.

Early struggles with provider participation in Charter Oak led to “bad press” early on, Starkowski said. Now, he said, the provider networks are “pretty robust,” and people in the medical community are increasingly aware of the program.

“We’ve had a reasonable response to Charter Oak,” Starkowski said. “It’s not a household name yet.”

DSS spokesman David Dearborn said Charter Oak was significant for offering affordable coverage to uninsured adults two years before health reform, and will continue be part of the “menu” of public health coverage in the state.

Filling a Niche

One of the plan’s selling points has been that it does not exclude people with pre-existing conditions. Beginning in 2014, all insurance plans will be required to do the same.

Because of that, Ellen Andrews, executive director of the Connecticut Health Policy Project, questioned Charter Oak’s role when federal health reform rolls out, particularly if the state does not subsidize premiums.

“I don’t really see a place for it,” Andrews said. But, she added, health reform is so complicated, there might be one.

For now, Andrews said, Charter Oak fills a small niche. One of her clients, a man with high prescription drug bills, finds the plan cost-effective: The cost of his premiums and copayments are less than the $7,500 worth of medication he can get through Charter Oak.

She also recommended Charter Oak as a possibility for a woman facing the loss of employer-sponsored coverage, who needs prescription drugs that cost more than $7,500 a year.

“There’s worse out there, but it’s not great,” Andrews said of Charter Oak. “It’s not what she used to have.”

As part of health reform, the state now offers an insurance program for people with pre-existing conditions. Dearborn said some people eligible for that plan might join Charter Oak because federal law requires people to go six months without insurance before joining the Pre-Existing Condition Insurance Plan, while Charter Oak has a similar requirement but with exceptions that the federal law does not have.

In a statement released by her office last week, Rell said Charter Oak fills “a critical gap,” removing barriers that kept people with pre-existing conditions from getting health care coverage and providing coverage to more than 12,000 people.

“That is an accomplishment worth celebrating,” she said.

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