Agencies welcome chance to join state health plan–at the right price

State leaders are poised to allow nonprofits to buy insurance through the state employee health plan, and the agency Patrick J. Johnson Jr. runs is in many ways an ideal candidate.

The agency, Oak Hill, serves people with disabilities and has faced double-digit premium hikes in recent years. Its benefits package is considered high-end for nonprofits, Johnson says, and its cost–about $7,000 for an individual and $19,000 for family coverage–is close to the average cost of a state employee plan.

But it won’t be for long.

“We can’t afford to continue what we’re doing,” Johnson said. “So we’re going to be cutting back.”

Many nonprofit leaders are in a similar position. They have lobbied for the chance to buy their health insurance through the state employee and retiree plan, hoping that it would give them another coverage option. Being part of a larger risk pool could remove the fluctuations in cost that can occur when even a few employees in a small pool have major medical problems, they say.

But many nonprofits pay less than the state employee plan costs–$5,320 to $9,928 for an individual and $14,364 to $26,807 for a family–and don’t have the money to pay more. The nonprofits that would be allowed to buy into the state employee pool are those that contract with the state, and their state funding has been flat for the past three fiscal years, with no increase expected for the next two.

“I can’t imagine how many nonprofits would be able to buy in at the full cost of what currently is being paid for state employees. I don’t know how people would do that,” said Gary Steck, CEO of Wellpath, which provides mental health services to children and families. “We love the level of care and the depth and richness of the benefits, but I just think it would be impossible.”

The details of the plan, part of a compromise on the proposed SustiNet state-run health plan, are still being worked out. Under the agreement, municipalities would be allowed to buy into the state plan beginning July 1, and the nonprofits would be allowed in a year later.

One possible option is to offer multiple plans, allowing nonprofits to buy in at lower rates. Gov. Dannel P. Malloy endorsed that concept when running for governor, citing the rape crisis center his wife runs.

“They’d never be able to afford the standard state employee package,” he said during an August interview. “So giving a not-for-profit like that access to that pool doesn’t do them a lot of good. So we really have to think about this outside the box.”

This week, Malloy spokeswoman Colleen Flanagan said the governor supports eventually offering multiple plans through the state employee pool so nonprofits could have options beyond the existing plan.

Malloy’s budget director, Ben Barnes, said last month that there could be alternative plans offered under the agreement, and acknowledged that doing so could be necessary for some communities to buy in.

“The more you do that, though, you dilute the bulk purchasing qualities of this,” Barnes said. “So I think that’s something that the comptroller’s going to have to work out.”

Terry Edelstein, president and CEO of the Connecticut Community Providers Association, which represents nonprofits that contract with the state and supports the pooling concept, described the chance to buy into the state employee plan as “one of a number of options” that would be available to the agencies.

“It still has to be affordable,” she said.

Although the state employee plan costs would not be feasible for every nonprofit, Liza Andrews, public policy director for the Connecticut Association of Nonprofits, cheered the agreement as a way to help some.

“We’re excited that it’s an option,” she said. Referring to lawmakers, she said, “They’re going to hear from nonprofits who aren’t going to benefit from it. There are a lot out there who will.”

Several nonprofit leaders said they liked the idea of being able to buy into the state employee plan. But they said their participation would depend on the cost. The average cost of a state employee plan is $7,009 for an individual and $18,925 for a family, according to the legislature’s Office of Fiscal Analysis.

Like many nonprofits, Wellpath, which has 195 employees, has struggled to negotiate insurance rates. For a high-deductible plan, the agency pays $4,700 for individuals and $15,500 for families.

“The overall concept of us collectively buying is a good one,” Steck said. “But only if the thing that we’re purchasing is cost-effective.”

Barry M. Simon, executive director and CEO of Gilead Community Services, would like to buy in to the state employee plan if possible. Gilead, which provides housing, support services and treatment to people with mental illness, has 200 employees and has faced health insurance premium increases between 12 and 30 percent in recent years. Simon sees buying into the state employee plan as a way to minimize the yearly increases.

“If it’s at all viable or within reach, then it would be great to get in,” he said.

Because the agency gets 95 percent of its funding from the state, it has had to cut back on health benefits and cut staff to absorb the premium hikes. Gilead also changes carriers frequently, Simon said.

The agency switched to a high-deductible plan last year, which helped reduce a premium increase from 30 percent to about 10 percent, Simon said. For an individual, the coverage costs $5,700. An employee and one other person costs $11,900, and family coverage costs $16,100.

Many nonprofits have struggled in recent years as state funding has remained flat while costs, including health insurance, rise. A report released in March by a state commission on nonprofit health and human service providers warned that many are in precarious financial situations. While state payments to providers rose by 21.7 percent from 1999 to 2009, health care premiums increased 135 percent, according to the report.

Leaders of nonprofits say they’re particularly vulnerable to increased health care costs because their insurance pools are relatively small, and having one or two employees with high medical claims can drive up their premiums.

Dr. Stephen Becker, president and CEO of Harc, which serves people with intellectual disabilities, said few health insurance carriers are willing to bid for their contract. Although the workers are generally young and healthy, he said that if someone gets a serious or costly illness, the agency “gets slammed” in costs.

“We need to be part of a larger plan,” he said.

Harc has about 300 employees. The state employee and retiree insurance pool covers more than 200,000 people.

“I think that the downside might be is if we had to purchase the level of health care that the state employees are getting, that might be too rich for anyone’s blood, no matter how many lives we’re insuring,” Becker said.

At Harc, he total premium for an individual ranges from $4,884 and $6,473, and Harc pays between 69 percent and 89 percent. For families, the total cost is $17,543, and Harc pays 46 percent. The premiums rose 26 percent last year, on top of a 16 percent increase the year before, Becker said. Some employees were unable to afford the increased costs and dropped coverage, and Becker said some might have relied on HUSKY, the state program for low-income children and their parents.

“It’s heartbreaking,” he said.

Johnson said anything that gives nonprofits access to a larger insurance pool and helps to spread the risk among a broader group would help nonprofits, and could potentially help keep down premium increases.

“If they have more affordable options, then we would be very interested,” he said.