The Connecticut Comptroller’s Office is proposing a fix for its Partnership Plan 2.0, which allows municipalities to piggy-back on the State Employee Health Plan, after the Partnership Plan experienced a difficult year paying out more in claims than it received in premiums and significantly drawing down on its reserve funds.
The proposed fix will mean adjusting premium rates for municipalities based on their historical experience. Group plans will be set according to low, standard and high risk, with low-risk groups paying less in premiums and high-risk groups paying more, according to a slide presentation from the Comptroller’s Office.
The proposed change comes after the Partnership Plan experienced a medical loss ratio (MLR) of more than 108 percent over the course of fiscal year 2022 and its reserve fund decreased from $54 million to $22 million, even after the plan received a $40 million windfall of American Rescue Plan dollars and raised premium rates by 10 percent. The losses leave little wiggle room moving forward if claims continue to outpace premium collections.
Comptroller Natalie Braswell blamed on “market forces” including inflation, staffing shortages and “a significant increase in high-cost claimants.” At least eight municipalities and Boards of Education have exited the Partnership Plan, according to minutes from the Health Care Cost Containment Committee (HCCCC)
The presentation indicated that it was “uncertain” whether the Partnership Plan can cover its costs in fiscal year 2023. “Currently the Partnership population is seeing higher claims costs relative to premiums collected compared to the State plan.”
The Comptroller’s Office highlighted some of the Partnership Plan’s difficulties in the presentation, saying the plan suffers from adverse selection in which healthier groups leave the plan, able to secure better rates through traditional insurance coverage, while less healthy groups remain in the plan, benefitting from premium rates that are pooled with Connecticut’s existing state employee plan.
“By statute the premiums are set based upon the combined experience of the State and Partnership population,” according to the presentation. “These populations, though similar, will never be identical therefore the premiums set will be too high for one group and too low for another.”
The presentation did say the “combined plan” – meaning the Partnership Plan and the State Employee Health Plan – will cover their losses through increased premiums. The MLR for active and retired state employees was 98.7 percent and 95.1 percent respectively, but the combined experience with the Partnership Plan put the total MLR for active employees at 100.3 percent and 97.9 percent for retirees.
The proposed fix, which would require a vote by the General Assembly to change state statute, would allow the Comptroller’s Office to “Create three levels of premium rates (standard, high and low)” and partners will be charged the premium that corresponds to their MLR experience.
The Comptroller’s Office says the change will help ensure premiums can cover total claims and reduce adverse selection by incentivizing healthier groups to remain in the plan because the plan would become more competitive with the market.
It would be the second such adjustment needed for the plan to prevent losses.
The Comptroller’s Office under former Comptroller Kevin Lembo previously required a statutory change to allow premium rate adjustments by region, resulting in partners in Fairfield County, for instance, having to increase their premium payments. The fix was supposed to prevent future losses for the Partnership Plan.
News of the Partnership Plan’s rough year in 2022 prompted a letter by Senate Republican leadership to Braswell chastising the Plan for repeated “taxpayer bailouts” and requesting an immediate update to the legislature on the Plan’s viability.
The Partnership Plan remains the vehicle by which some lawmakers seek to establish a “Public Option” health plan, which would allow small employers, labor unions and individuals to join the State Employee Health Plan.
There have been several attempts to pass a public option health plan at the legislature, but it has been met with resistance by insurance companies, Gov. Ned Lamont and Republicans in the Senate and House of Representatives.
Braswell had taken over as acting comptroller after Kevin Lembo resigned early in 2022. Former state representative from Guilford, Sean Scanlon, was elected Comptroller during the 2022 election and was sworn in yesterday.