SustiNet compromise passes House with both sides declaring victory

A compromise bill on the controversial SustiNet state-run health plan passed the House Friday, and it drew praise from both supporters and opponents of the original proposal–albeit for different reasons.

SustiNet supporters say the bill represents concrete steps toward their ultimate goal, offering a state-run insurance plan to the public.

Opponents of the original proposal, meanwhile, said the compromise rightly focuses the state on implementing federal health reform, not the so-called public option that SustiNet backers sought.

SustiNet House debate 5-27-11

SustiNet supporters watch the House debate

The bill, which passed 88-48 and will now go to the Senate, calls for allowing municipalities to buy insurance through the state beginning in 2012. Nonprofits that contract with the state would be allowed to buy in in 2013. It would not offer state-run insurance to small businesses or the public, as the original SustiNet proposal called for.

But the bill creates an advisory board, called the SustiNet Health Care Cabinet, that would make health care policy recommendations and develop a business plan that evaluates “private or public mechanisms that will provide adequate health insurance products”–including alternatives to private insurance. The cabinet would make implementation recommendations for the governor’s consideration.

The bill also establishes an Office of Health Reform and Innovation within the lieutenant governor’s office to coordinate state and federal reform efforts. It would be headed by Jeannette DeJesús, the governor’s special adviser for health care reform and a deputy commissioner of public health.

Although the bill does not commit the state to a public option, Juan A. Figueroa, president of the Universal Health Care Foundation of Connecticut, called it “a major piece of health care legislation.”

“Nobody ever thought we would have a perfect plan this year,” he said.

The bill includes steps toward the “SustiNet vision,” Figueroa said, including establishing the infrastructure to oversee health reform efforts and assigning the creation of a business plan to examine alternatives to private insurance.

“This bill has concrete steps toward charting a clear course for a home-grown, affordable nonprofit health care option for individuals and small businesses,” he said in a statement released after the vote.

In recent weeks, after Gov. Dannel P. Malloy expressed concerns about SustiNet and Democratic legislative leaders agreed to a deal with the administration that did not include the public option, some said SustiNet was dead. Figueroa said he’s been telling people that the bill that passed Friday–the product of an agreement between SustiNet supporters and the Malloy administration–represents a “SustiNet rebirth.”

Keith Stover, a lobbyist for the Connecticut Association of Health Plans, which opposed the original proposal, described it differently.

“The bill moves the state, in our opinion, in the right direction when it comes to the implementation of federal health care reform,” he said. “We have a great deal of confidence in the administration’s ability to pull this off in a rational way that is fair and affordable.”

As for the requirement to create a business plan for alternatives to private insurance, Stover said, “I think you can call it a plan, you can call it an analysis, you can call it a PhD thesis, you can call it what you want.”

But, he added, there are three facts to remember: Federal health reform doesn’t have a public option. Actuarial data indicates that the public option is very costly. And, he said, “I don’t think there is any desire among the rational thinkers on this issue to deliver a blow to the groin of an industry that employs tens of thousands of people in Connecticut.”

Much of the discussion during the four-hour debate Friday focused on the details of offering state-run insurance to municipalities and nonprofits, and on separate insurance reforms that were wrapped into the bill.

The bill requires the state comptroller to establish a “partnership plan” that would offer health insurance to municipalities and other non-state public employers, and to nonprofits that contract with the state. Each group could also cover their retirees through the plan. The partnership plan’s risk pool could be joined with the state employee and retiree health insurance pool, although the comptroller could also run it without doing so.

The SustiNet cabinet would be charged with advising the governor and Office of Health Reform and Innovation and would address multiple health policy issues, including the feasibility of offering a state-run health plan for low-income adults who don’t qualify for Medicaid under federal reform, identifying opportunities, issues and gaps created by federal health reform, examining ways to ensure an adequate health care workforce and coordinating health care delivery system reforms with the Office of Health Reform and Innovation.

The cabinet would include representatives appointed by the governor, legislative leaders of both parties and the chairs of the board that developed the SustiNet proposal. Lt. Gov. Nancy Wyman, who co-chaired the board, would lead the cabinet.

SustiNet was originally proposed as a plan for universal health care in 2009, before Congress began work on federal health reform. After the federal reform law, SustiNet supporters pitched their plan as a way to go beyond the federal plan by creating a public option and controlling health care costs.

The original bill proposed this session called for joining the health plans the state already pays for, including Medicaid and the state employee and retiree health plan, under a quasi-public authority. The authority would then offer health insurance to municipalities, small businesses, nonprofits and, ultimately, the public.

Supporters, usually wearing red “healthcare4every1” t-shirts, became a frequent presence at the Capitol and at the town hall meetings Malloy held across the state to pitch his budget proposal. The network of supporters was built on several years of organizing–much of it supported by the Universal Health Care Foundation, which grew out of a foundation established with money from Anthem Health Plans as part of a settlement when it merged with the nonprofit Blue Cross Blue Shield Health Plan–and included many people who said federal health reform did not go far enough because it did not provide an alternative to for-profit insurance companies.

But the proposal also drew strong opposition. Insurance companies opposed it and business groups warned that it would send the wrong message to the insurance industry at a time when the governor wants it to grow jobs in the state. Critics also warned that it could cost the state millions of dollars, a contention backed up by cost projections from the legislature’s nonpartisan Office of Fiscal Analysis.

Malloy said repeatedly since taking office that he shares the goals of SustiNet supporters, but had concerns about giving control over more than $5 billion in state health care spending to a quasi-public agency. He also indicated that he does not think a public option is a viable idea this year.