Malloy embraces health reform, but cautious about SustiNet

The Malloy administration says it’s fully committed to health reform, with work underway to meet the requirements of last year’s federal reform law and capture as much federal money as possible.

But Gov. Dannel P. Malloy is taking a more cautious approach when it comes to SustiNet, the proposed state-run health plan that has in many ways galvanized more support and opposition in Connecticut than federal reform has.

Malloy addresses SustiNet supporters in December

Administration officials say they share the goals of SustiNet, which was created to produce universal health care and is now being pitched as a public insurance option that could promote delivery system changes and reduce health care costs. But they say they’re looking to the federal reforms to achieve those goals, and say SustiNet needs to be re-examined in light of the federal law.

“The goals haven’t changed,” said Roy Occhiogrosso, a senior advisor to Malloy. “But the mechanisms for getting there have been altered by what happened in the federal government.”

Unlike his predecessor, who vetoed the bill that created SustiNet, Malloy’s position may be more a difference of approach than policy. Some of his early policy choices align with goals in the SustiNet proposal, including embracing the use of medical homes for Medicaid patients and moving the HUSKY health plan, which serves mostly low-income children and their parents, out of managed care.

But SustiNet supporters say it’s not enough to rely on federal health reform and a series of gubernatorial policy decisions. SustiNet offers something else, they say: A large insurance pool that small businesses, nonprofits and individuals can buy into and a coordinated plan for delivery system changes–in effect, the “public option” that never made it through Congress.

Juan Figueroa, president of the Universal Health Care Foundation of Connecticut, which developed the original plan for SustiNet, said the federal law was a compromise, with states meant to play a role in taking the reforms further.

“SustiNet and the exchange and federal health care reform are totally intertwined,” he said. “They don’t exist separately, nor was that the intent in the [SustiNet] legislation.”

Support, Opposition and Questions

That’s not how the administration sees it. In testimony on the proposed SustiNet bill, budget director Benjamin Barnes raised concerns about how it could affect the effort to implement federal health reform.

The proposed bill would establish a quasi-public SustiNet Authority to oversee state-administered health plans that cover state workers and retirees and people in public programs like HUSKY and Medicaid. A premise of the plan is that having a common authority overseeing the health plans and a large insurance pool would provide the leverage to save money and produce delivery-system changes.

SustiNet coverage would be offered to municipalities, small businesses and nonprofits as soon as next year. Ultimately, anyone in the state would be allowed to buy into the plan.

The concept has drawn passionate support, including from clergy, small business owners, patient advocates, doctors and people who have struggled to get or afford health insurance. Supporters, many of whom have become a frequent presence at the Capitol in red “healthcare4every1” T-shirts, have spoken of the need for affordable insurance and an alternative to for-profit insurers.

SustiNet supporters at a public hearing this month

But the proposal has also drawn many skeptics and opponents with strong reactions to the proposal, if not the same visible presence. Insurance and business groups have warned that SustiNet could pose a risk to the state budget and suggested that creating a public option would send the wrong message to insurance companies at a time when the state is seeking to grow jobs in the industry. Others have questioned the feasibility of a state-run insurance plan that competes with private insurers and its ability to lower costs.

In written testimony, Barnes warned that provisions of the bill could weaken the executive branch’s authority and have unintended effects on the effort to implement federal reform.

The quasi-public SustiNet agency would get too much authority over state employee benefits, negating the administration’s authority to negotiate with state workers’ unions, Barnes wrote. The bill also calls for any savings the plan achieves to go into a SustiNet account, which could be spent at the authority’s discretion.

“These provisions could have a significant and dramatic impact on the state budget based on decisions made by a quasi-public agency, not the state itself, and would effectively tie the hands of the elected-and-accountable executive and legislative branches with regard to fiscal decision-making,” Barnes wrote.

Barnes also raised concerns about the effects the proposal could have on the exchange, the marketplace for individuals and small businesses to buy coverage beginning in 2014. The bill allows the SustiNet authority to change the state’s definition of small employer from a company with fewer than 50 employees to one with fewer than 100–a decision Barnes said should fall to the exchange.

“Our primary focus must be to ensure that the state’s health insurance exchange is viable and functions optimally to provide adequate and affordable health insurance coverage for all Connecticut residents,” he wrote. “Unfortunately, [the SustiNet bill] could have serious, but perhaps unforeseen and unintended impacts on how the exchange will be able to succeed by impacting the insurance marketplace.”

Still, Barnes wrote, “The Malloy administration fully supports the goals of SustiNet–to promote access to high-quality health care that is effective, efficient, safe, timely, patient-centered and equitable.”

Making Federal Reform Work

Although federal health reform doesn’t fully take effect until 2014, the law leaves considerable responsibility to the states. So while lawmakers and advocates debate SustiNet, Jeannette DeJesús, the governor’s special advisor on health care reform, is focused on getting the state ready for federal reform.

Much of the work involves the exchange. It’s meant as a one-stop-shopping market for insurance, and will provide information for comparing plans similar to a travel website like Orbitz.

But the exchange will also have considerable data collection and reporting responsibilities, including certifying and rating insurance plans, ensuring that quality and satisfaction are being measured, tracking which employers do not offer insurance to their workers and coordinating with public insurance programs like Medicaid.

Jeannette DeJesús tells legislators about the exchange

To move forward, the state needs more information on how the reforms and the exchange could impact businesses and communities, said DeJesús, who is also a deputy commissioner of public health. The administration is using federal funds for the analysis, which will also examine the feasibility of creating a state insurance program for low-income adults who fall slightly above the income threshold for Medicaid, an option under federal reform. The SustiNet bill would require the state to create such a plan.

Given the state’s fiscal situation, federal funding will drive health care reform, DeJesús said. And part of the work to get ready for 2014 involves building relationships with federal health officials and reversing Connecticut’s track record of losing out on federal funds. She said the effort is beginning to pay off. Last week, Connecticut and other New England states were awarded a $35.6 million “early innovator” federal grant to design and implement the information technology necessary for the exchanges.

DeJesús was involved in the SustiNet planning process, leading a task force on smoking cessation policies. The work done on SustiNet will inform the administration’s work going forward, she said. But she said it’s important not to make policy decisions that will limit the state later on, or to enter into obligations that the state might not be able to meet.

“Having broader conversations and including other ideas does not mean closing the door on what happened before,” she said.

SustiNet’s future

Legislators leading the push for SustiNet say they’re hopeful the administration’s concerns can be resolved.

House Speaker Christopher G. Donovan, D-Meriden, said the specific details of the proposal are not as critical as achieving the goals, and said there are “a lot of different tools to do that.”

“The goal is to have an affordable health care plan available,” he said. “So we’ll talk and we’ll work out something.”

Donovan is also pushing for a pooling bill that would allow municipalities, small businesses and nonprofits to purchase coverage through the state employee health insurance pool.

But Donovan and Public Health Committee Co-Chairwoman Rep. Elizabeth B. Ritter, D-Waterford, cautioned against slowing down the process for state-level reforms or giving up on particular SustiNet goals, such as giving small businesses another option for health insurance before 2014.

“We need to move quickly because there are people who are having problems affording health care right now,” Donovan said. “The sooner we do this the better.”

Ritter said small businesses and nonprofits are “crying out” for SustiNet, and said to not make the state-run plan available to them “kind of dilutes the power of the reforms.”

“If we want to provide a way to bring high quality health care to more people in the state of Connecticut while looking at the things that enable us to do it more efficiently and with less dollars, we have to take these steps,” she said.

Figueroa said he’s not disheartened by the administration’s position so far.

“It would have been nice to have heard a clear and stronger commitment to SustiNet,” he said. “However, I don’t read the absence of it necessarily as a statement that they lack a commitment to it.”

Some of the goals of SustiNet could be achieved through other means, he acknowledged, but he said it’s not the best way to go.

“To us it has to be within a framework that has a clear long-term goal with some benchmarks for results that make sense so that you know that you’re headed in the right direction,” he said. “Otherwise I think it becomes problematic if you start piecemealing it.”