As Public Option Dies, No Clear Direction on Healthcare Costs


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The death of the Democrats’ public option bill has left a large question mark around what the state legislature will do to address healthcare costs before the legislative session closes in a week. 

The session started out with three distinct plans: a public option, which would have allowed small businesses to purchase insurance through the state, Gov. Ned Lamont’s $50 million tax on private insurers that would have gone toward subsidies for people who buy insurance on the state exchange, Access Health, and the Republicans’ proposal of reinsurance and benchmarking, which they say would drive down costs. 

In March, State Rep. Kerry Wood, D-Rocky Hill, co-chair of the Insurance Committee, amended the public option so that it would be regulated under the state Department of Insurance, a move that critics say limited the cost savings that the original bill would have provided for individuals and small businesses. 

The public option died three weeks ago after Lamont said he would not support the bill if it came to his desk to be signed. 

Lamont’s proposal for a $50 million tax is still on the table. However, business leaders have strongly opposed the tax, saying that it will inevitably trickle down to consumers. Additionally, Wood said in April that she did not see the need to divert $50 million toward helping individuals afford healthcare when the federal government had given the state $85 million for the same purpose.  

In a press conference on Wednesday, Republican leaders gave another pitch for their plan, which they say could lower premiums by 30 percent and reduce the cost of healthcare procedures by creating a target number for how much healthcare costs should grow annually overall.  

Even less affordable

State Sen. Matt Lesser, D-Hartford, said in a statement that the reinsurance idea had merit before President Biden passed the American Rescue Plan Act, which closed the “subsidy cliff” that left a certain segment of individuals ineligible for subsidies. Lesser said that since these individuals were now eligible for subsidies, reinsurance is no longer needed.

“Implementing it now would reduce federal subsidies for families in Connecticut buying individual coverage making their coverage even less affordable than it is now,” said Lesser.  

Ellen Andrews, the director of the non-profit Connecticut Health Policy Project, expressed other concerns. She warned that reinsurance, by directing the state to set aside funds that the insurance companies could tap into if they reached a certain threshold, would take away the incentive to reduce the cost of care. In fact, she said, it could increase costs. 

“If they know that after x amount they get paid, why would they release you?” she said. She also said it could disincentivize hospitals from seeking out services for homeless individuals who use emergency rooms to get warm, given that the additional cost could be taken care of by the state. 

She also disagreed with the idea of benchmarking, which she said could incentivize hospitals to reduce services in the areas that generate the least amount of profit, such as emergency rooms and psychiatric wings. 

Kelly agreed this was a legitimate concern, and that it was important to make sure that difficult or chronic cases didn’t end up marginalized. 

“What you want to make sure happens is that we not only have … the efficiency, but we also maintain quality of care” he said. “That is one of the promises of the Affordable Care Act, was quality as well as accessibility and affordability.” 

Prescription drugs and regulation

Andrews identified two ways that she believed the state could make a difference in the cost of healthcare: lowering prescription drug costs and regulating the practices of hospital conglomerates. 

Both Lamont and the Republicans include measures addressing prescription drug costs in their proposals. The Republicans want to import drugs from Canada at a lower cost — a proposal which the federal government would need to approve. 

Andrews has in the past suggested using a model similar to the state of Massachusetts, which places an 80 percent tax on drug companies for the sale of drugs that are determined to be unnecessarily expensive. Lamont’s proposal, which would limit prescription drug increases to 2 percent yearly plus the rate of inflation, also includes this tax. 

She said the state should also consider how it regulates hospitals, particularly around mergers and no-bid contracts, which she said allowed hospitals to increase the price of services that they provide without improving the quality of the care.  

“It’s a lose/lose for everybody,” she said. 

Andrews said there needed to be transparency around contracts made between healthcare providers and insurers. Testifying to the Insurance and Real Estate Committee in March, she said that the state should consider legislation that would eliminate contracts forcing insurers to work with only specific providers as a way of excluding competition and forbidding the use of “gag clauses” that stop providers from disclosing what is in their contracts. 

Andrews also advised the removal of non-compete clauses, which limit doctors’ ability to leave a healthcare system and practice medicine elsewhere, reducing competition and reducing their ability to start their own private practices. 

Dr. Gregory Shangold, president of the Connecticut State Medical Society, said that the medical society believed that the state’s current agreement around non-compete clauses, which he said was “minimal,” was the correct way to go. 

Shangold said that rather than tightening regulation for mergers or preventing physicians from selling their practices, he thinks the legislature should create incentives for physicians to stay in private practices. 

He said that the high-deductible health plans that the state offers make it very difficult for private physicians, who are responsible for collecting the deductible from individuals who don’t always know that they are responsible for a large chunk of the cost of their care. He added that it also causes people to forgo care. 

“Those really do interfere with people accessing healthcare when it’s important,” said Shangold.

Kelly said at the press conference that he believed the benchmarking would also help private physicians who had their own practices, since it would lower the cost of healthcare overall.

“We would share information with them to bring better practices, to delivery of medical goods and services, which reduces cost in the long run,” said Kelly. 

Kelly said that there had not been any discussions with Democrats about their bill. However, he said that the federal money coming into Connecticut would give them the ideal two-year window to set up their plan.

“If there was ever a time to act and to work on behalf of Connecticut families the time is now,” said Kelly.

Emilia Otte

Emilia Otte covers health and education for the Connecticut Examiner. In 2022 Otte was awarded "Rookie of the Year," by the New England Newspaper & Press Association.