Estimated costs of SustiNet options described

Stan Dorn of the Urban Institute outlined the estimated costs of six SustiNet coverage options at yesterday’s Board meeting. Under any of the options Connecticut’s uninsured rate drops by more than half, the state budget deficit is improved, small businesses save (mainly by reducing the number of workers they cover), SustiNet grows into a significant, but not dominating, market presence (which can be leveraged to drive important reforms) and there is little impact on household incomes.

The estimates are based on economic modeling by Jonathan Gruber from MIT, and are estimated for 2017 when implementation should be complete. The committee was given two scenarios -- one extremely conservative that assumes no savings due to delivery system reforms already occurring in CT such as patient-centered medical homes, and another, more likely, scenario that still conservatively estimates those savings to only reduce skyrocketing cost increases by 1%. (Other researchers estimate that delivery system reforms could save twice that much. Below are the more modest 1% savings estimates.)

· Just including state employees and Medicaid in SustiNet saves the state $371 million, saves employers $485 million and covers 620,000 people in SustiNet by 2017.
· Adding the Basic Health Plan option to the model, taking advantage of a federal option to cover people under SustiNet to higher income levels with better coverage, lower costs to families and saves federal dollars, covers 650,000 state residents, saves the state $418 million, and saves employers $459 million.
· Also allowing small employers, nonprofits and municipalities to buy into SustiNet brings coverage in SustiNet up to 815,000 people, saves the state $425 million and employers $466 million.
· Opening SustiNet to everyone covers 1 million people, saves the state $427 million and employers $498 million.
· Raising provider payment rates to private pay levels covers the same 1 million people and saves employers the same $498 million but reduces the state’s savings to a still respectable $244 million. (Note: this option does not include any potentially significant savings from reductions in private pay rates as there will be no need to cost shift to cover Medicaid underpayments and that increasing rates will attract more participating providers, keeping HUSKY families out of expensive emergency rooms.)
· The last option expands HUSKY to higher income adults before national health reform’s schedule which would cover 600,000 people in the program, save employers $217 million but costs the state $103 million. (This is the only option under which the state doesn’t save money).

The Board will consider the options next month and make recommendations to the General Assembly in January.
Ellen Andrews