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What is a public option?
What is a public option?
At its core, a public option proposal aims to enroll businesses and individuals for health care coverage under a new state government-run program. Like Medicaid and Medicare, it is premised on a reduced provider fee schedule that, if passed, will destabilize the current health care system, require a cost shift to private purchasers of health care, and/or result in increased taxes and fees.
Imagine that the state offered every resident a mid-sized Ford sedan for $100 a month. The price of the Ford subsidized by 1) a reduced charge from Ford in return for volume and 2) a surcharge (cost-shift) on other dealerships like Chevy, Buick, and Dodge. Fast forward, and it is only a matter of time before the other dealerships listed are priced out of the market because they can’t compete with a $100 Ford. In response, the subsidized cost of the Ford skyrockets to $1,000 a month and consumers are left with no other choice but to pay the huge new price tag because the rest of the market has evaporated. That is public option in a nutshell.
Health insurance carriers welcome competition if the rules are the same for everyone. Despite rhetoric to the contrary, the private market has responded to the need for affordably priced products structured around innovative, value-based benefit designs. There are fixed costs, however, like taxes and assessments levied on fully insured policies that inflate the cost of premiums — costs the Comptroller doesn’t have to pay on his Partnership Plan.
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A Risky Plan: Connecticut’s Public Option Proposal
Connecticut’s Partnership Plan 2.0, the basis for the public option, is a health plan run by the state comptroller that piggybacks on the state employee health plan network to provide comparable benefits to local government employees. But premium and claims data show it has operated at a significant loss, engaged in predatory pricing to capture market share, and used premiums from new enrollees to conceal red ink. Had such unsavory tactics been attempted by a private insurer, the state Insurance Department likely would have shut down the plan years ago.
A Risky Plan: Connecticut’s Public Option Proposal
What’s being done to drive affordability for Connecticut consumers
What’s being done to drive affordability for Connecticut consumers
Premiums are a reflection of underlying health care costs. Coalition members agree with the need to reduce the cost of health care services and therefore the cost of health care coverage, but such measures need to be undertaken in a deliberate and thoughtful manner.
First – do no harm. Connecticut policymakers must refrain from adopting new mandates and policies that add to the bottom line of health care costs and therefore health care coverage premiums.
Member carriers are in discussions with the Office of Health Care Strategy on implementation of Executive Order #5 establishing a new health care cost benchmark growth target. The benchmark process has been proposed to ensure access to quality, affordable, health care coverage that builds upon the strong foundation of the Affordable Care Act without undermining its underpinnings.
Working Group To Study Payments by Insurance Companies for Deposit into the Insurance Fund
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The Insurance Matters to Connecticut Coalition opposes proposed state government-run public option legislation.
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