What Can Obama Learn from Connecticut?

by Tim Foley

categories: Public Plan, State and Local Efforts

Published May 22, 2009 @ 10:43PM PT

Four months ago, I wrote about a movement in Connecticut to support a new public insurance option at the state level.  Called “Sustinet” aftet the state motto, the plan was designed not just to compete with private insurance, but to use economies of scale to deliver a significantly higher performing heath care system in the Nutmeg State.  It’s time to check back in on “Sustinet,” which on Wednesday definitively passed the state House of Representatives.  But are its political success or its policy problems a greater predictor for the public health insurance option being discussed at the federal level?

For a quick review, take the existing state-run public plans for state employees, retired state employees and children (through SCHIP), mix them together into one giant pool, and then allow municipalities to buy into it for their city workers, small businesses to buy into it for their employees, and individuals to buy it for themselves, and you have Sustinet.  At a minimum of 200,000 people, Sustinet would be the largest insurance pool in the state several times over (#2 would be Foxwoods Casinos with 13,000, and #3 would be, ironically, Aetna) and be able to provide tremendous economies of scale.  Although the recent House votes only allow for the creation of this mega-pool, the architects of Sustinet also have their designs on having the entire system run on the medical home model, both for cost efficiency and higher quality.

Stop me if this sounds familiar.  Wednesday’s vote was lopsided – 107-35 – but it was also polarized with Republicans unanimous in their opposition.  The insurance industry has been fighting it every step of the way.  They support the creation of a mega-pool like this, but insist that people in the pool should be forced to buy comprehensive plans through private insurance which the state negotiates the rates for – that there’s no need for a public plan like Sustinet if private insurance is at the ready to rip people off provide services.  Unlike their federal government counterparts, there’s no call for stronger regulation from the CT insurers, just a “Oh, we’ll take care of these customers! Trust us!” attitude.  The House Democrats shoved this plan through on a party line and strong grassroots support, but the bill still has a long way to go before it becomes law.

But even if it makes it, there are big questions of how much this can help those without insurance, and how soon.  For starters, Sustinet will reduce administrative costs both by being public and through its sheer economy of scale, but that’s not projected to lower the premiums enough for someone who can’t currently afford insurance right away.  By yielding a much better product through the medical home model, the plan should save money over time and yield better results, particularly for small businesses (under 50 employees) who are currently getting screwed on costs and quality through lack of leverage.  But Sustinet is sketchy on what-if questions of cost – what happens if those savings are slow to materialize?  Will it cost more to induce providers to provide care through the medical home model of coordinated care?  How does this help an uninsured person working for a large company that just doesn’t give benefits to some or all of its employees, an increasingly frequent situation?  In theory, the costs for the state employees, retirees and children won’t change, and the unsubsidized small business and individuals will be self-sustaining in their costs – but there doesn't seem to be a safety net, and a $9 billion state budget deficit makes the creation of one unlikely.

Still, Sustinet is worth watching as a mid-point experiment between San Francisco on the one end and the Obama-Baucus plan on the other.  So far, we’re learning it’s fairly easy to pass something with unclear costs on the promise of future savings that, yes, includes an expansion of public health coverage but doesn’t address fundamental systemic problems.  But we’re also learning that doing so is a polarizing affair.

(Photo credit:  healthcare4every1 on Flickr.)