The Connecticut Partnership Plan 2.0, which allows municipalities to piggyback on the state employee health plan, had one of its best years on record, following pandemic-related losses two years ago that threatened the viability of the program.
The Partnership Plan, managed by the Office of the Comptroller, saw a 93.3 percent medical loss ratio (MLR), meaning the plan took in 6.7 percent more in premiums than it paid out in claims for the year, according to the FY 2024 annual report. The program’s Funds Awaiting Distribution (FAD) balance increased by nearly $13 million to $27.2 million, roughly 4.7 percent of claims, although that remains below the insurance industry’s standard for reserve funds.
The plan currently covers 167 groups with a total of 60,756 members, an increase from 2023 when the plan had 153 groups covering 52,250 members and dependents. Comptroller Sean Scanlon says the program provides municipalities “efficiency and predictability when local leaders need it most.”
“This year, the Partnership Plan added thousands of new members and strengthened our focus on proactive care and cost saving measures,” Scanlon said in a press release. “These efforts demonstrate our commitment to helping towns and cities manage budgets while also prioritizing employee health and wellness.”
Renewal rates for the program “saw minimal average increases of 2% for active employees and 3% for non-Medicare retirees, falling far below increases imposed on municipalities and boards of education by private insurers,” the press release stated.
The improved picture for the Partnership Plan 2.0 is a stark turnaround from two years ago when the program teetered on the brink of insolvency, posting a 108 percent MLR that year, losing members, increasing premiums, and its FAD balance dropping by tens of millions even after receiving an infusion of federal COVID dollars under Comptroller Kevin Lembo and, following his resignation, Natalie Braswell.
Following a steep drop off in claims associated with the pandemic, when many avoided going to hospitals, the plan saw a surge of claim payouts in 2022, ten percent more than anticipated, as people returned to hospitals and doctors’ offices. Actuaries wrote the increase was due to “COVID-related experience and for elective procedures due to pent up demand.”
The losses prompted a letter from Senate Republicans to the Comptroller’s Office questioning the viability of the Partnership Plan, and prompted some proposed fixes. The Partnership Plan 2.0 originally suffered MLRs of over 106 percent in 2018 and 2019 before implementing county-based premium rate setting.
Despite taking in more money than it paid out, the Partnership Plan’s rates are going to increase due to Aetna’s renewal with Medicare Advantage. “This renewal came with some unexpected challenges including CMS increased costs across all group plans as well as a rerate of our state and Partnership populations due to higher-than-expected claims experience,” the annual report said. “Combined these factors resulted in an increase of the per member per month premium of $160.53 PMPM.”
The Comptroller’s Office, however, said they are also saving significant amounts of money through contracting with PrudentRx, a specialty drug discount program which reportedly saved $6 million, along with procurement of a new pharmacy benefits manager “that is anticipated to save the state $50 million over the next year alone between the state employee plan and the Partnership Plan.”
Faced with rising health insurance costs in all sectors, the Partnership Plan 2.0 has previously been seen as a potential vehicle for a public option health plan, essentially opening up the Partnership Plan to small businesses and possibly individuals. The public option healthcare plan was pushed in the General Assembly for several years with ample pushback from the insurance industry before Gov. Ned Lamont withdrew his support.
The public option may come to the forefront again in the next legislative session, according to comments by Insurance and Real Estate Committee chair Sen. Jorge Cabrera, D-Hamden. Efforts by the Connecticut Business and Industry Association to allow businesses to join association health plans or create multi-employer self-funded health plans were also repeatedly shot down through lobbying efforts.
“While the healthcare market remains challenging at times, the Partnership Plan has provided efficiency and predictability when local leaders need it most,” Scanlon said. “My office remains dedicated to continued refinement and expansion of this critical resource to meet the needs of Connecticut’s municipal workforce.”
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