Define fiscally and morally irresponsible? Malloy’s plan for older, retired teachers.

12 Comments

There are a lot of crazy, irresponsible and down-right mean things in Governor Malloy’s budget proposal, but his plan to totally eliminate Connecticut’s contribution to the retired teachers’ health insurance fund may very well take the cake.

For nearly sixty years, the State of Connecticut has been helping retired teachers acquire health insurance. 

Prior to 1986, active teachers did not pay into the Federal Medicare system, so when they retired, they didn’t qualify for Medicare, the primary health insurance system for older Americans. 

Furthermore, since teacher salaries were historically so low prior to the educational enhancement act of 1986, older teachers were retiring with very small pensions.  With no Medicare and limited incomes, few could afford the most basic level of health insurance coverage, without some type of subsidy.

For nearly 4 decades, the State of Connecticut utilized a variety of different mechanisms to help these older, retired teachers get some health insurance.  In 1991 it settled on the creation of the Retired Teachers Health Insurance Fund. 

To fund the program, active teachers contribute 1.2 percent of their income into the health fund.  This year that amounts to about $45 million.

The premiums that retired teachers pay for their insurance brings in about $37 million.

And state law required that the State of Connecticut contribute 33 percent of the cost of a Medicare supplement plan into the Insurance Fund.

Together these funds were used to help retired teachers get health insurance through the Teacher’s Retirement Board or through their last employing board of education.  The subsidy isn’t much, only $110 per month, and despite the massive increase in health insurance premium costs, the subsidy hasn’t been increased since 2000.  The Teachers Retirement Board has determined that the $110 subsidy “now covers “on average” only 14% of the monthly premium for the retiree, further eroding the value of the retiree’s pension.

But as bad as things have become, even the $110 helped a little as these retired teachers were forced to shell out of their own pockets an additional $500 to $900 a month to buy insurance through their former boards of education.

Meanwhile, some towns are engaging in a whole separate effort to change the rules and unfairly force teachers off their municipal plans, but I’ll cover that growing problem under a separate post.

In any case, for good or for bad, the present system has been functioning fairly well. 

And then to balance the state budget in Fiscal year 2010 and 2011, Governor Rell and the Democrats decided to insert language that allowed the state to forgo any contribution for two years.  The lack of funding created a situation that began to derail the financial stability of the Retired Teachers Health Insurance Fund. 

When Governor Malloy was sworn in, rather than recommit the state to the appropriate level of funding, he proposed shifting the burden onto the backs of the retired teachers.  The Legislature rightfully rejected the move, but “compromised” by agreeing to only allocate 25% of the value of a Medicare supplement plan rather than the 33% required by the law.

While the state did deposit $35 million in Fiscal Year 2012 and $18 million in Fiscal Year 2013, by refusing to deposit the appropriate amount the Fund was, yet again, undermined.

And then came this year…

Malloy went for broke and proposed simply making no payments what-so-ever into the fund.

Irresponsible
Outrageous
Inappropriate
Incredible
Breathtaking

This Governor, who ran on a platform of fiscal responsibility, proposing that the state simply forgo putting $70 million into the Retired Teachers Health Insurance Fund.

Here are the facts;

In 2012 the Teacher Retirement Board health plan was serving 18,804 retired teachers

In 2012, the Teacher Retirement Board was also paying the town subsidy on behalf of 16,725 retired teachers.

The average age of the retired teacher on the Teacher Retirement Board’s plan is 75 years old.

These teachers received a $0 cost of living adjustment in their pensions in 2010 and 2011.

The Governor’s plan is simply outrageous.

Oh, and by the way, the General Assembly’s Appropriations Committee is holding a public hearing today on Malloy’s Teachers Retirement Health Care proposal.

Appropriations Committee Public Hearing

Thursday, February 21
Elementary & Secondary Education (Room 2D)
2:00- 2:30 PM Teachers’ Retirement Board
2:30- 3:00 State Library
3:00- 4:30 Department of Education
Public Budget Hearings (Room 2C) 6:00 PM

Wyman Says: SustiNet is dead… Dead I tell you… DEAD!

20 Comments

Cross-posted from Pelto’s Point at the New Haven Advocate)

Think Charles Dickens’ The Christmas Carol;

“Marley was dead: to begin with. There is no doubt whatever about that. The register of his burial was signed by the clergyman, the clerk, the undertaker, and the chief mourner…You will therefore permit me to repeat, emphatically, that Marley was as dead as a door-nail…This must be distinctly understood…”

When Governor Malloy’s new Health Care Cabinet met earlier this week, Lt. Gov. Nancy Wyman, who had helped to lead the SustiNet effort and was once one of its greatest champions, took great pains to ensure that no one – no one – thought that SustiNet was anything but dead.

Wyman proclaimed that “SustiNets not around anymore, there is no SustiNet.”

In fact, Wyman and State Comptroller Kevin Lembo, who served as Connecticut’s Health Care Advocate at the time, were the co-chairs of the SustiNet Health Partnership Board of Directors that created SustiNet.

Their board worked for more than a year and a half developing what was recognized as a profound step forward in the battle to provide greater access to affordable, high quality health care in Connecticut.

When the SustiNet Plan was finalized last December, Lembo said that “this report provides the General Assembly with a roadmap for reform – and propels Connecticut to the forefront in addressing a nationwide health care and financial crisis.”

This extraordinary victory did not come easily.

The legislation creating the SustiNet Board of Directors and laying out the process for developing Connecticut’s healthcare reform plan was vetoed by Gov. M. Jodi Rell in 2009.

The Democratic Legislature took the unprecedented action of overriding that veto and setting in to motion the steps that would eventual lead to the SustiNet plan.

Last December, on the day the SustiNet Board was adopting its final report, a rally was held in Hartford.

Dan Malloy, then the Governor-Elect, spoke at the rally.  As he did during his campaign for Governor he credited his mother for his lasting commitment to universal health care.

Speaking to the crowd, Malloy said that “it was through her eyes and her advocacy that I think much of my commitment to making sure that all of our neighbors have access to quality health care really arouse.”

Surrounded by health care reform proponents and religious leaders, Malloy pointed out that SustiNet represented Connecticut’s move toward universal health care.  The Governor to be added “I’m not sure we’re at the top of the mountain, where we see the promise land but we know the promise land exists or at least a substantial portion of that which is necessary to provide the promise land is just around the corner,”

Speaker of the House Chris Donovan, another leading voice in the battle for SustiNet also spoke at the rally calling it “an impressive sight” and pointing out how much had changed over the last few years.

Pointing to the next governor, the next lieutenant governor and all the clergy and said “I remember a couple years ago when the clergy wanted to meet with the governor and the governor then refused,”

Now, 10 months later, SustiNet is dead….

Dead as a doornail.

At this week’s Health Care Cabinet Meeting, Dan Malloy’s special advisor on health reform, Jeannette DeJesús worked to put all that in the past saying “There’s a lot of new things happening that we need to consider, there are lots of new opportunities, and there are lots of people who want to play that have not participated in the past. Our goal is to really be inclusive at every turn.”

New things, new opportunities, lots of people who want to play a role?

But despite the thousands of hours spent developing the SustiNet plan, there was no discussion about what elements of the old plan were so terrible that the SustiNet plan needed to be trashed.

Was it the effort to leverage Connecticut’s tremendous buying power to lower healthcare premiums for people whose healthcare is funded by taxpayers?

Was it the effort to create a system in which municipalities, non-profit organizations and small businesses could buy healthcare at a lower cost?

Was it the focus on lowering costs for everyone by making greater use of electronic medical records, preventative treatment initiatives or promoting cutting edge care in patient homes?

Or was it the creation of a “public option”, which was scheduled to begin in 2014 and would have provided health care insurance for the tens of thousands of Connecticut’s uninsured residents- an option that would have be financed by premium payments and federal tax credits and would not have required significant state subsidies.

Everyone in the room knew, but few would say, that part of the problem was that the SustiNet plan had gotten caught up in the recent Malloy/SEBAC agreement when, as a result of poor communication by both the state unions and the Malloy Administration, opponents of the concession deal interpreted the proposed health care changes as part of a secret plan to use SustiNet to undermine the state employee’s
health care plan.

But of course, that problem could have easily been resolved.

What could not be easily resolved was the strong opposition from Connecticut’s health care industry.

And since that opposition was very real and politically significant, the Governor’s new Health Care Cabinet did what it had to do and simply skipped over the true reason SustiNet was killed.

In the end the real problem was that here, in what was once the “Insurance Capital of the World”, if the SustiNet System worked as it was designed to do then health care premiums would drop and if health care premiums dropped, insurance company profits might drop as well.

In a year when Dan Malloy gave Cigna Insurance company almost $50 million in public funds to “move” its corporate headquarters back to Connecticut and create at least 250 jobs, whacking the insurance industry’s bottom line was hardly the message some wanted to send.

And equally important was the fact that SustiNet would allow a variety of entities to buy their health insurance through one of the state’s pools or plans.  Many chambers of commerce, especially the Connecticut Business and Industry Association, make their money by selling insurance to their members.

Giving small businesses another option for getting insurance, even if it mean cheaper insurance for businesses and their employees would have had a devastating impact on the ability of business groups to fund their activities.

So yes, SustiNet is Dead.  It was killed by some of the very people who helped create it in the first place.

Go to CTNewsJunkie’s archives for a great set of stories describing the rise and fall of SustiNet:   http://www.ctnewsjunkie.com/ctnj.php/archives/taglist/SustiNet

When Will Consumers Learn – It’s not all about them!

3 Comments

Today’s leading Wait. What? story comes via CTNewsjunkie who cover the news that despite repeated requests from Connecticut healthcare advocates to make sure consumers are represented on the new and
powerful Health Insurance Exchange Board, neither the Governor nor legislative leaders saw fit to appoint even one consumer representative on the new 14 member board.

As required by federal health care reform (aka the Patient Protection and Affordable Care Act or ObamaCare) each state must set up a Health Insurance Exchange Board to coordinate the development of that state’s healthcare exchanges which are the mechanism to expand access to health care insurance starting in 2014.

As CTNewsjunkie explained “All of the 14 individuals are either members of Malloy’s administration, former insurance company executives, or individuals with political connections, none, aside from the non-voting state Healthcare Advocate, are consumer advocates.”

The fact that Connecticut’s elected officials included insurance industry executives but failed to put on a single voting healthcare advocate is particularly bizarre since the Patient Protection and Affordable Care Act expressly requires consumer representation and prohibits the appointment of exchange members who are affiliated with the insurance industry.

Governor Malloy had two appointments to the new exchange board and put on Lt. Gov. Nancy Wyman and Mary Fox (a retired Aetna executive).

Democratic Senate President Pro Tempore Donald Williams appointed Cece Woods, the former Deputy Chief of Staff and Research Director for the Senate Democrats.

Democratic Speaker of the House Chris Donovan appointed Bob Tessier, a former union organizer for SEIU-1199 and presently the director of the Connecticut Coalition of Taft-Hartley Funds which oversees health funds for unionized workers.

Senate Democratic Majority Leader Martin Looney appointed Dr. Robert Scalettar, who recently retired as medial director for Anthem Blue Cross Blue Shield and House Democratic Majority Leader Brendan Sharkey appointed Dr. Grant Ritter (an academic healthcare researcher who is also the spouse of State
Representative Betsy Ritter).

Republican Senate Leader John McKinney appointed Mickey Herbert, the retired president and CEO of ConnectiCare and Republican House Leader Larry Cafero appointed Michael Devine, CEO of Earth Energy Alliance (Perhaps Cafero thought it was the Energy Exchange Board he was making the appointment to and not the group responsible for developing a major piece of Connecticut’s healthcare reform effort).

Automatic members of the new board are Ben Barnes (OPM). Jewell Mullen (Commissioner of Public Health), Roderick Bremby (Commissioner of Social Services).

Non-voting members include Thomas Leonardi (Commissioner of Insurance), Vicky Veltri (Healthcare Advocate) and Jeannette DeJesus (Deputy Commissioner of Public Health and Malloy’s Healthcare reform Advisor).

While healthcare advocates expressed shock, anger and frustration the best quotes (or non-quotes) of the day came from those who made the appointments.

Jeannette DeJesus, Malloy’s point person on healthcare reform defended the governor saying that “he filled his positions based on the legislative requirements…He stuck to the letter of the law.”

In addition, according to the legislation, “McKinney was supposed to appoint an expert in health care access issues faced by self-employed individuals, and Cafero was to appoint an expert in barriers to individual health care coverage. Donovan was responsible for appointing a health care benefits plan administrations expert, while Looney was to appoint an expert in health care delivery systems. Sharkey was to appoint a health care economics expert and Williams was to appoint a health care finance expert.”

But when CTNewsjunkie looked for an explanation of how appointments could have been made that were so different from what was required “neither lawmakers or the administration were willing to comment.”

Meanwhile, one of Connecticut’s leading consumer healthcare advocates, Jennifer Jaff,  was quoted as saying “I am appalled that nobody thought to appoint someone who would represent consumers’ interests, especially in light of the express language in the federal regulations” adding that it is “Another example of Connecticut consumers getting the shaft when it comes to health insurance issues.”

Well said Jennifer.

Hooray for Transparency… Oh wait, not that kind of transparency….

1 Comment

(Cross-posted from Pelto’s Point at the New Haven Advocate)

Yesterday Democratic Legislative Leaders quietly announced that they had reached an “agreement” with the Malloy Administration on the bill that was once known as An Act Concerning The Rate Approval Process For Certain Health Insurance Policies.

Originally known as Senate Bill #11, the legislation passed the Connecticut State Senate 36-0 and the House of Representatives 131-14.

The bill established a public hearing process for when individual and small employer group health insurance companies and HMOs sought rate increases of 10 percent or more.

It required that Connecticut’s Healthcare Advocate and Attorney General be parties to any insurance rate increases hearings, increased the amount of time required before a new rate can take effect, mandated the Insurance Department post rate filings on its website and provided the public with a 30-day comment
period.

Supporters of the initiative included all the major Democratic Legislative leaders, Connecticut’s Healthcare Advocate, ConnPIRG, Citizens for Economic Opportunity, the Connecticut Citizens Action Group, the Connecticut Working Families Party, the CT AFL-CIO and the Connecticut’s leading advocate for those facing serious illnesses, a group called Advocacy for Patients with Chronic Illness.

Opponents included all the major insurance associations including the America’s Health Insurance Plans, the Insurance Association of Connecticut, the Connecticut Association of Health Plans, the American Council of Life Insurers and Anthem Blue Cross-Blue Shield (the entity that had sparked the need for the law when they had requested and almost got last year’s record-breaking premium increases).

But despite heavy lobbying, in the end, the Democrats (and Republicans) supported the transparency and consumer protection legislation.

And then Governor Malloy, who had strongly opposed the huge Anthem increase last year stunned the proponents and advocates by vetoing the bill.

At the time Malloy said, “The Connecticut Department of Insurance already conducts an objective actuarial analysis of each and every rate increase request… The current process fully protects Connecticut’s residents from excessive and discriminatory rate increases.”

For an earlier post on the topic see my blog on Malloy’s veto: http://jonpelto.wordpress.com/2011/07/05/the-power-of-vengeance%e2%80%a6malloy-strikes-back-at-the-unions-at-progressives-at-the-public/

Yesterday a press release from the Democratic leaders announced that rather than attempt to override the Governor’s veto, “the legislature and executive branch are working together to achieve a common goal – greater transparency and public input in the rate increase approval process for health insurance.

The agreement does allow the Healthcare Advocate (OHA) to request that the Insurance Commissioner hold a hearing on rate increases, but only if the increase is at least 15 percent or higher rather than the 10 percent threshold that was included in the legislation.

The agreement also appears to limit the number of hearings to no more than 4 a year.

While the press release is a bit short on details, the agreement appears to relieve the Insurance Commissioner from having to adopt any rules or regulations concerning the definition of when a rate increase is considered excessive or discriminatory.

Some other aspects of the legislation also seem to have disappeared.

The Governor’s website makes no mention of the agreement; however, the press release put out by the Senate Democrats does include the traditional array of self-congratulatory quotes.

Senate President Don Williams said “The General Assembly overwhelming approved Senate Bill 11 because its members believe in the importance of changing the way rate hikes are approved…The Governor shares our concerns and is working with us to immediately improve the process.”

House Speaker Chris Donovan said, “We passed this bill after hearing from thousands of residents facing unconscionable increases in their insurance premiums-small businesses, self-employed individuals and those looking for work-folks who have no leverage to negotiate with the big insurance companies. That is why I am pleased that Governor Malloy and Commissioner Leonardi have agreed to a compromise that will allow public hearings and the participation of the Healthcare Advocate in the rate approval process.”

And Governor Malloy concluded that “This compromise will ensure that consumers have a voice in proposed insurance rate increases without compromising the health and competitiveness of the state’s insurance industry.”

And with that, the drive for transparency takes another step forward followed by another step backwards.

The Power of Vengeance…Malloy Strikes Back (at the unions, at progressives, at the public?)

7 Comments

Governor Dan Malloy vetoes one of the more important Health Care Consumer Laws of the last decade.

SB 11: AN ACT CONCERNING THE RATE APPROVAL PROCESS FOR CERTAIN HEALTH INSURANCE POLICIES.

It was a powerful tool put forward last year by then Healthcare Advocate Kevin Lembo as a way to make sure the public interest was heard when insurance companies asked for rate increases of greater than 10 percent.

It required a series of public hearing when insurance companies sought approval for gigantic rate increases.

This year it passed the House 131 to 14.

It passed the Senate 36 – 0.

It passed the Appropriations Committee – with the Republicans voting no.

It passed the Insurance Committee – with the Republicans voting no.

It was sponsored by such notables as Senate President Williams and Senators Looney, Slossberg, Prague, Meyer and LeBeau, (some of the most moderate members of the Senate).

Other co-sponsors included Representatives Willis, Grogins and Nardello.

This year’s version had the strong support of Victoria Veltri, the Acting Healthcare Advocate, who took over when Kevin Lembo became State Comptroller.

State Senator Martin supported the bill saying “I believe that our state would benefit most if Connecticut’s rate review system met the federal requirements such that Connecticut would be permitted to perform its own rate review rather than having the reviews done by HHS.”

Other supporters included ConnPIRG, Citizens for Economic Opportunity, the Connecticut Citizens Action Group, the Connecticut Working Families Party, the CT AFL-CIO and the Advocacy for Patients with Chronic Illness – Connecticut’s leading advocate for those facing serious illness.

On the other hand, big business came out with all guns blazing.  The regional director of America’s Health Insurance Plans spoke against the bill (the nation’s primary lobbying entity for the insurance industry).

Other industry organizations against the bill included the IAC (Insurance Association of Connecticut), the Connecticut Association of Health Plans, the American Council of Life Insurers and Anthem Blue Cross-Blue Shield (who had requested and almost got last year’s record-breaking premium increases).

And then last Friday – hours before the long weekend was to begin – when media coverage was sure to be limited – Governor Dan Malloy came to the rescue of the insurance industry.  He took out his veto pen – for the first time – and used it to veto this important legislation ensuring his commitment to greater transparency was – once again – nothing but empty rhetoric.

Malloy’s rationale; “The Connecticut Department of Insurance already conducts an objective actuarial analysis of each and every rate increase request… The current process fully protects Connecticut’s residents from excessive and discriminatory rate increases.”

mmmm… I vaguely remember candidate Malloy trying to make a campaign issue of Anthem’s outrageous rate increase request last year…

More to come…

Yet Again – Connecticut Is Working Toward Its New Motto: Penny Wise and Pound Foolish

2 Comments

Arielle Levin Becker of the CTMirror had a “must read” story last Friday about the end of the State Medical Assistance Program for Noncitizens.

As she reports, two years ago the Connecticut State Legislature eliminated the program that provides health care coverage for newer non-citizen state residents who are over age of 21.

A subsequent lawsuit led to a court order stopping the State from implementing the new law but earlier this year the State Supreme Court reversed the lower court’s ruling and Connecticut’s Department of Social Services is now ending health care coverage for almost 5,000 Connecticut residents.

You can almost hear some people saying “That will teach those non-citizens a lesson.”

But before people breakout the champagne, remember that ending basic low-cost health insurance for 5,000 people will lead to two things.  First, since emergency rooms must legally treat anyone who walks in, some of these newly uninsured will end up going to emergency rooms where what would be a $25 clinic visit becomes a $500 ER visit.  Secondly, since many of these people will end up postponing treatment, some will not only end up in the emergency room but will then have to be admitted meaning thousands or even tens of thousands of dollars in additional costs.

So, as a result of the state’s uncompensated care payments to hospitals and the cost shift that takes place for non-state compensated care, proposals like these often cost society as much, if not more, than it would have if the government simply allowed people to get the community based clinic care they need.

The Malloy Administration points out that anyone losing their health care insurance can attempt to get coverage under the Charter Oak Health Plan, which former Governor Rell championed, but the premiums as so high that it is hard to believe that many of these 5,000 people will be able to get coverage.

And to those who say, “Hey, times are tough, budget cuts are needed, we simply can’t afford to spend money on  providing some type of health care to non-documented immigrants (aka non-citizen state residents) and Connecticut is not alone in cutting off care for these types of people, well, it is true that Massachusetts is now looking to follow Connecticut’s lead on this issue, but Vermont went in exactly the other direction and included non-citizen residents in their landmark health care reform law because they were convinced that not only was it the right thing to do but it was the economically correct thing to do as well.

But here in Connecticut, where pennywise and pound foolish is becoming the norm, we can feel like we really showed those immigrants a thing or two, even if we end up having to pay more for our vengeance.

Value Based Health Care….Rising from the ashes of Managed Care….

5 Comments

(Cross-posted from Pelto’s Point at the New Haven Advocate)

Will Value Based Health Care save American health care and the Connecticut budget?

Is what is being proposed really Value Based Health Care?

Is it a bit ironic that Anthem Blue Cross, the state’s primary health plan carrier, happens to be rolling out what it claims to be a Value Based Health Care Plan in the Northeast at the very same time?

When the news about the Malloy/SEBAC agreement started to trickle out, many people saw the proposed new “Value Based Health Care” as little more than a form of managed care on “steroids.”

But advocates for the coming changes say that, in fact, this new system is really one based on paying for performance (where the medical community is paid for keeping people healthy rather than the present fee-for-service system that pays doctors and hospitals for simply providing services, regardless of the actual outcome).

The new system is projected to be so much better that the Malloy administration and the State Employee Unions believe that, over the next two years, the state will be able to reduce its state employee health care spending by a quarter of a billion dollars.

Considering that the state will save about $140 million a year from the across-the-board wage freeze, the shift to Value Based Health Care will be the 2nd biggest element in the Malloy/State Employee Concession Package.

The proposed SEBAC agreement describes “Value Based Health Care” as a new system, in which employees will sign “a commitment form each year promising to get scheduled yearly physicals, age-appropriate diagnostics (such as a colonoscopy), and two free dental cleanings per year.  In addition, employees with one or more of the 5 listed diseases (Diabetes, COPD or ASTHMA, Hypertension, Hyperlipidemia (high cholesterol), and Heart Failure) which respond particularly well to disease management programs and which are a large part of total healthcare costs––must enroll and comply with the disease management programs.”

As a result of the free office visits and reduced pharmacy co-pays for any of the listed diseases, plus the other elements of the disease management program, healthcare costs for everyone will go down.

The stick to the carrot is that “Employees who after proper notice refuse to sign the commitment or fail to get their physicals (or if they have a listed
disease, refuse to participate in disease management), will have a premium increase of $100 per month, and a deductible of $350 per person per year.”

Finally, “current retirees will also have the option to participate in value based health care, while new retirees will continue to have a choice of free (the POE Plan) or nominally charged (the POS Plan) health care for life, but will be required to participate in value-based health care or pay the $100 per month extra premium.”

So, if the SEBAC Agreement is approved and adopted, state employees and anyone retiring after 9/1/2011 will be required to participate in the new “value based health care system” or pay an additional $1,200 a year and have an additional $350 deductible per person, per year, on top of their existing deductibles and co-pays.

Google “Pay for Performance” or “Value based health care” for some additional background on these issues, but apparently plans based on this type of reform were initially developed in California in early 2000s, and England adopted a more robust system using value based healthcare in 2004.

One of the questions that immediately surfaces is whether the Malloy/SEBAC agreement is a true change to a “value based health care system” or merely an expanded employee wellness program.  Employee wellness programs can be important for employees but do not fundamentally change the way in which health care is funded. Reading through the available literature on this topic, it appears that a true, value based health care system
(one in which doctors are paid for outcomes rather than services) might save money in the long run; but, according to experts, the “return on investment doesn’t start to really pay off for “several years.”

Another issue is question whether the large health insurance companies are really ready to oversee such an approach. They are only now gearing up to handle these new approaches to health care.

According to a report in the Crain’s Detroit Business journal last year, Anthem is offering a Value Based Health product in Colorado that “that guarantees up to a 3% reduction in subsequent-year premiums if plan members participate in screenings and health promotion programs that
lead to improvements in their health status.”

Crain’s also reports that an Anthem official, Greg Hughes, the company’s commercial product development director, said that the company was awaiting approval for a new “VBID product” that it planned to introduce in the U.S. Northeast.

To back up their claim that savings will be forthcoming, the Anthem official said, “the findings in the [research and medical journal] literature are very compelling. We’ve also had some pilot groups with outstanding results from both a clinical and financial perspective, generally in the [administrative services-only] space,” Mr. Hughes said also, “but if it works in the ASO population, it’s a natural fit to start doing it in the fully insured market.”

Interestingly, the description of the new Anthem plan is very similar to the language being used in the Malloy/SEBAC Agreement.   The Business Journal, quoting Anthem, said, “the product will attempt to remove the cost barrier to medication compliance by reducing copayments for high-value drugs and medical services while encouraging plan members to participate in the insurer’s condition management education programs…Initially, it will target five conditions: asthma, diabetes, coronary artery disease, chronic obstructive pulmonary disease and congestive heart failure.”

But unlike the win/win situation being projected in Connecticut (no increase in premiums and savings of a quarter of a billion dollars in two years” the report goes on to say that, “because of the additional cost of lowering or waiving copayments for prescription drugs and some services, the Anthem official explained, “The pricing is still being worked out…The promise of a value-based insurance design is to make an investment in your employees. When you do that, you are really looking at increasing the plan’s cost.”

In true health care industry fashion, another Anthem official said that it wasn’t so much about reducing premiums as about increasing employee
productivity.  “One thing fully insured clients will benefit from is the effect on overall productivity…when their employees are compliant and educated, they’ll see decreased absenteeism, disability costs and increased productivity.”

Good news about the increased productivity, since the Malloy/SEBAC plan also relies on more than 1,000 employees leaving state service and not being replaced next year.

Here is the link to the Crain’s story for those interested in reading more: http://www.crainsdetroit.com/article/20100315/HEALTH/100319908/fully-insured-market-has-yet-to-embrace-value-based-design#