Connecticut: Comptroller claims Cigna has already blackmailed state into dropping the "Connecticut Option"

Welp. That didn't take long...just a week ago, Connecticut Governor Ned Lamont announced that he and the state legislative leaders had put together a robust package of impressive healthcare reform bills, including:

  • expanding subsidies to at least some of those eanring more than 400% of the Federal Poverty Level (like California is in the process of doing)
  • expanding Medicaid up to 170% FPL (it used to be 201% FPL but was dropped down to 155% a couple of years ago)
  • reinstating the ACA's individual mandate penalty (similar to what Massachusetts, New Jersey and DC have done and what California is in the process of doing)
  • implementing a state-level reinsurance program (as over a half-dozen states, including several GOP-controlled ones, have done)
  • contractually tying contracts for coverage of state employees to participation in the state ACA exchange
  • empowering the state Office of Health Strategy to monitor health care spending growth and establish an annual cost growth benchmark
  • petitioning the federal government to allow the state to import prescription drugs from Canada (at a lower price, of course)
  • add a small tax on prescription opioids to help restore Medicaid to some parents (see above)

...all of which sounds fantastic. Oh, yeah, and there was just one more thing on the list:

  • Establishing a state-based Public Option healthcare plan for individuals and small businesses

The proposed "Connecticut Option" would basically involve having the existing healthcare plan utilized by Connecticut state employees offered side by side with other private ACA exchange policies and let residents and small businesses buy into it if they want to.

As I noted last week:

Back in the days when the ACA was being developed, I recall there being a lot of discussion about simply taking the existing Federal Employee Health Benefits Program (FEHBP), which provides coverage to around 8 million federal employees and their dependents, and opening it up to the public. It's important to note that, like the state-level plan described here, the FEHBP is still largely administered by private insurance carriers...but it's a stable existing infrastructure which also has the benefits of economy of scale, etc.

So far this sounds like a smarter version of the just-signed Washington State public option, which also involves the state contracting with a private carrier to administer the program but which isn't coupled to the state employee agency plans.

Yeah, well, that was then; this is now (via Stephen Singer of the Hartford Courant):

Legislation to establish government-subsidized health care in Connecticut is dead following a threat by the chief executive officer of Cigna Corp. that the Bloomfield insurer would leave Connecticut if lawmakers and Gov. Ned Lamont enact the measure, Comptroller Kevin Lembo said Wednesday.

Whoa. I mean, not that shocking, really, but still.

A spokesman for Cigna said the insurer lobbied hard against the bill, but denied that any threat was made.

And two top legislators negotiating details of the so-called Connecticut Option legislation would not confirm or deny that Chief Executive Officer David Cordani threatened to take Cigna out of Connecticut. But they said strong opposition from the industry, particularly Cigna, may force lawmakers to strip out from the legislation the public option portion, a major part of the legislation establishing a state program offering insurance.

Lembo told The Courant that Cordani threatened to send a public letter to Lamont that if the public option bill moves forward, “they would reconsider where they’re domiciled."

Yikes. Whether or not Cigna actually threatened to bail, the article makes it clear that they've definitely been putting tremendous pressure on the Governor and state legislators to kill the PO...along with other things...hoping to run out the clock on the whole thing:

Lembo said a representative of Cigna spoke with the governor’s office Wednesday and said, “'Well, you know, if you change this and you change that and you change this and you change that, maybe if we have time to analyze that we might be able to not oppose it as strongly,’ knowing full well that we’re out of time,” Lembo said.

The health insurance legislation would have to begin its trek through the General Assembly Wednesday or Thursday at the latest if it is to be approved by the House and Senate before adjournment June 5.

In any event, according to this article from the CT Mirror by Jenna Carlesso and Mark Pazniokas, it sounds like the CT Option isn't the only part of the package likely to be scrapped:

New, state-sponsored plans for individuals and small businesses, which would have been rolled out in 2022 if the legislation succeeded in its latest form, are expected to be removed from the bill, along with a provision to re-establish an individual mandate, its proponents said.

Cigna has no customers on the small group or individual markets in Connecticut. When asked why the company had raised such strong objections, Henry replied: “Generally speaking, this is something that would not be helpful to businesses that provide health insurance.”

Wait, what's that? Yes, sure enough, here's the approved 2019 Individual and Small Group Market rate change filings from last fall. Take a look at the insurance carriers:

Individual:

  • Anthem Health Plans
  • CTCare Benefits Inc.
  • CTCare Inc.
  • CTCare Insurance Co.

Small Group:

  • Aetna Life Insurance Company
  • Anthem Health Plans
  • CTCare Benefits Inc.
  • CTCare Inc.
  • CTCare Insurance Co.
  • Harvard Pilgrim Health Care of CT
  • HPHC Insurance Company, Inc
  • Oxford Health Plans (CT), Inc.
  • Oxford Health Insurance, Inc.
  • UnitedHealthcare Insurance Co.

Notice anyone missing? That's...kind of an important point. Cigna isn't threatening to bail because of any threat to their existing business in Connecticut...they're threatening to bail because if a public option proves successful in Connecticut, it's more likely to catch on in other states (remember, Washington, Colorado and New Mexico are already well along the path of establishing their own POs, although WA, at least, would still be contracting with a private insurer to administer theirs).

So what does this have to do with reinstating the individual mandate penalty?

To help pay for [the Connecticut option] that, lawmakers wanted to re-establish the penalty for failing to comply with the federal health coverage mandate. The bill would effectively reverse – in Connecticut – Congress’ decision to remove the edict in the Affordable Care Act that all adults have health insurance, either through their jobs, Medicaid or by purchasing it directly.

Proponents had estimated the mandate would raise $25 million annually in penalties paid by those who didn’t comply with the requirement.

Well, there you go. The mandate revenue would also presumably go to cover a chunk of the proposed subsidy expansion, and perhaps the state's portion of the reinsurance funding, although I can't see how $25 million/year could be expected to pay for more than one of the three proposals.

So, what'll be left in the package? The Mirror article doesn't end on a very confident note:

...Lesser and Scanlon said Wednesday that some of the bill’s critical aspects will remain intact when it comes up for a vote. The opioid tax and drug importation plan are expected to remain in the measure, and the HUSKY A expansion could be rolled into a budget implementer.