Charter Oak health plan enrollment falls as premiums rise

More than 1,150 people dropped out of the Charter Oak Health Plan when premiums rose this month, largely because of legislation curtailing state subsidies for the program, and participation could fall even further in the coming months.

After lawmakers raised concerns about the declining enrollment Friday, a top official at the state Department of Social Services said the department will consider ways to ease the premium costs, which rose by at least 45 percent and as much as 67 percent for the nearly 8,200 people still in the program.

Sen. Edith Prague (l) and Rep. Vickie Nardello: Concern at people dropping out of health plan after state ended subsidies

But the options for making the plan more affordable to low-income residents are likely to be limited. The premium increases stem from legislation passed this year that prohibits the state from subsidizing the cost of the program for anyone who joined after May 31, 2010. That means that without new legislation, the state can’t chip in to cut the cost.

“This is the only game in town for people” to buy affordable insurance, said Sen. Edith G. Prague, D-Columbia. Prague was a co-sponsor of the bill that cut the subsidies, although she was absent for the final vote on the measure. “All of a sudden we have pulled the rug out.”

Prague asked the department to consider setting premiums on a sliding scale by income. If people lose coverage, she noted, “We pay one way or the other.”

DSS Director of Medical Care Administration Mark Schaefer noted that premium subsidies were available for low-income members in the past, but lawmakers closed them to new members last year. Having higher-income members subsidize those with lower incomes “would be perhaps a hard sell,” he said. Schaefer said he would present to the Malloy administration the possibility of restoring the premium subsidy for low-income Charter Oak members.

Jeff Walter, president and CEO of Rushford and a member of the Medicaid oversight council that met Friday, offered another option. In the private sector, he said, many employers have raised copayments and deductibles as a way to keep employee premiums down, meaning that plan members pay more when they use medical services but not for simply keeping coverage.

Schaefer said that could be an option to consider going forward. He noted that the current copayments in the program–$25 for a primary care visit, $35 to see a specialist–are already fairly high, but said the department could look at an increased deductible as a way to relieve premium increases. Still, he said, if the goal is to help low-income members by lowering their premiums, raising the deductibles would also affect them.

Monthly premiums in Charter Oak rose from $307 to $446 as of Sept. 1. Prices also went up for members who receive premium subsidies. Copayments and deductibles did not increase.

Enrollment fell by 12.4 percent this month, to 8,190, but could have fallen even further. The number of people dropped from the program for not paying their premiums rose by 35 percent–449 more people–in September. Steve Mackinnon, site operations director for Affiliated Computer Services, which handles enrollment, said twice as many could have been cut from the program, but DSS had given instructions not to drop any members who made partial payments in September. ACS was told to reach out to those members and make sure they understood the new rates.

DSS has said the price increase stems from legislation passed this year as part of the current biennial budget that prohibits the state from subsidizing the cost of Charter Oak for new and recent enrollees, requiring the premiums to reflect the cost of the program.

Former Gov. M. Jodi Rell began the program in 2008 as an affordable option for adults without health insurance. But it attracted an older, sicker population than state officials had anticipated, leading to higher-than-expected costs.

Charter Oak is currently run by three managed care companies, who all reported losing money on the program because the cost of medical claims exceeded the premiums paid.

Rep. Vickie O. Nardello, D-Prospect, asked what would happen to people who dropped Charter Oak coverage.

Schaefer said he expected that some would forgo necessary care, while others would get care from health care providers who write it off as bad debt. Others could take a hit to their assets if they get care they must pay for out-of-pocket.

Ellen Andrews, executive director of the Connecticut Health Policy Project, said many, including the department, appeared to be unhappy that the state can’t afford to subsidize the program. At her suggestion, the Medicaid oversight council passed a motion recommending that as soon as revenues become available, restoring funds will be a priority.

The legislation that led to the increased Charter Oak premiums also tightened eligibility for new members, prohibiting anyone who qualifies for the state’s Pre-Existing Condition Insurance Plan from joining Charter Oak. Schaefer said no longer accepting people with pre-existing conditions could change the actuarial profile of the program in the future, potentially lowering its costs.

Other changes to the plan are still to come.

Beginning in January, Charter Oak, like the state’s HUSKY program for mostly low-income children and their families, will be moved out of managed care; instead, the state will pay the cost of claims and hire a company to administer the program.

When that happens, the network of health care providers who accept Charter Oak will be the same as those who treat Medicaid patients, Schaefer said.

Schaefer said Charter Oak is expected to end when federal health reform rolls out in 2014. Current members would either be covered by Medicaid, which will be available to more state residents than it is now, or be able to buy coverage through the state’s health insurance exchange, a marketplace for buying coverage. Those earning up to 400 percent of the poverty level will get federal subsidies to buy coverage.