Subsidy cuts boost Charter Oak Health Plan premiums

More than 9,500 people enrolled in the state-run Charter Oak Health Plan will see their premiums jump by at least 45 percent and possibly as much as 67 percent starting Sept. 1 as the state cuts its subsidies for the program.

The premium increases stem from the cost of health care claims in the program and the tight state budget, said David Dearborn, a spokesman for the state Department of Social Services. The current biennial budget prohibits the state from subsidizing the cost of covering any new or recent enrollees, requiring the plan’s premiums to reflect the cost of medical claims, which they currently do not. The budget also lowered the premium subsidies that some low-income enrollees receive in the program, which Gov. M. Jodi Rell launched in 2008 as a way to cover uninsured adults.

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“Since its beginning in 2008, Charter Oak has generally attracted an older population with more chronic health care conditions than originally anticipated, leading to higher-than-anticipated costs,” Dearborn said. “Consequently, premiums were adjusted for the higher program costs after actuarial analysis of service utilization data through claims.”

Charter Oak currently has 9,727 members. Of them, 5,060 will see their monthly premiums increase from $307 to $446 in September.

Another 4,667 receive state subsidies for their premiums and will continue to receive them, but at lower levels. The subsidized rates are offered on a sliding scale based on income level and currently range from $129 to $239. As of September, they will range from $215 to $369. Those earning below 185 percent of the poverty level–$20,146.50 for a single person–would face the highest proportional increase of 67 percent.

The subsidized premiums are only available to people who were in Charter Oak before June 2010.

DSS Director of Medical Care Administration Mark Schaefer said earlier this month that the new premiums will likely make the plan unaffordable to some current enrollees and potential new members. But he said the higher premiums were unavoidable.

The increased costs will come with some additional benefits. In the past, the plan came under fire for limiting coverage to $100,000 a year and $7,500 a year for prescription drugs. After September, the limits on annual coverage, prescription drugs and a $4,000 cap on durable medical equipment will all be rescinded. Members who get subsidies for their deductibles and co-insurance will also continue to get the same subsidies, Dearborn said.

The budget legislation also changed the eligibility rules for Charter Oak to prohibit anyone from joining who could qualify for the state’s Pre-Existing Condition Insurance Plan, or PCIP, a federally subsidized program created as part of the health reform law.

The state is trying to get more people to enroll in PCIP, which so far only has about 70 members.

One barrier to PCIP enrollment is that for anyone 30 and older, Charter Oak is less expensive–for now. PCIP premiums are based on age, and range from $242.66 to $893. But DSS is seeking permission from the federal government to make the PCIP premium a flat rate that would be more affordable to most enrollees. The department proposed charging $381 a month, although the figure could change based on what the federal government allows.

Another barrier to joining PCIP is that, under federal rules, people are only eligible if they have not had health care coverage in the past six months. People who meet the PCIP qualifications but have had health insurance more recently will still be allowed to join Charter Oak. But Charter Oak members who find the premium increases unaffordable would not be allowed to join PCIP, possibly lowering their premium, unless they first give up health insurance for six months. Since people eligible for PCIP have at least one medical condition, going without health insurance for half a year could be particularly problematic.

Rell last year tried unsuccessfully to get the federal government to drop the six-month requirement.