Felling the Charter Oak Health Plan

March 27, 2008

It all seemed so simple -- at least to the Rell administration.

In December 2006, Connecticut’s governor announced the “Charter Oak Health Plan,” a “public-private partnership” designed to “bring affordable coverage to uninsured adults of all incomes.” Those too young to qualify for Medicare (the federal program for the elderly), too old to qualify for HUSKY (the federal/state program for children), and not poor enough to qualify for Medicaid (the federal/state program for the indigent) would now have subsidized healthcare all their own.

The plan would not exclude those with preexisting conditions, the governor averred. Co-pays for generic drugs would be as low as $10. Lab work and x-rays would require only a 20 percent co-pay. And there’d be no annual limit on benefits.

Best of all, Rell claimed, such policies would be available for only “$250 a month.”

A year later, reality has prevailed over the Rell administration’s political naïveté and economic ignorance. The Charter Oak Health Plan is bogged down in an increasingly bitter battle between the executive and legislative branches, and insurers appear less than enthusiastic about running the program.

Rell’s first mistake was accepting the claim that the problem of the uninsured in Connecticut requires even more government meddling in a market over which the public sector already asserts far too much control. Estimates vary, but it is clear that lack of health insurance is a minor problem in the Nutmeg State -- a 2005 survey found that only 5.8 percent of residents had no coverage, a figure well below the national average.

Those who go without health insurance tend to do so for short periods. (Less than half will lack coverage a year from now.) And a large chunk of the uninsured are young people with few healthcare needs. “Most of them are healthy and know they can pay incidental expenses out of pocket,” explains Devon Herrick of the National Center for Policy Analysis. “Using hard-earned dollars to pay for health care they don’t expect to need is a low priority for them.” (The governor admitted as much when she announced the Charter Oak plan: “Many of the uninsured adults in Connecticut are college students, recent grads, people in their first jobs and part-time employees.”) Finally, a surprisingly high percentage of the uninsured live in relatively affluent households that could purchase health coverage, but for whatever reason, choose not to.

Having bought the dubious notion that state government must “do something” about the uninsured, Rell, as usual, ignored promising free-market reforms. (For example, lifting the dozens of mandates state pols have piled on insurance providers.) She went on to make the gullible assumption that the rapacious leftists who run Connecticut’s legislature would be satisfied with a plan that contained reasonable limits.

Not surprisingly, Democratic lawmakers and their army of activist allies assailed her proposal as inadequate. Monthly premiums would be too expensive. It wouldn’t cover enough people. Mental health “parity” wasn’t included. The cap on prescription-drug reimbursement was too low. It wouldn’t help sufferers of chronic diseases, such as diabetes and HIV/AIDS. The plan did nothing to address healthcare’s major cost drivers.

Rell quickly caved on some, but not all, of the complaints. And three months ago, the state’s Department of Social Services (DSS) put out a request for proposals for Connecticut’s newest subsidized healthcare program.

While it waits for insurance companies to respond, the Rell administration’s plan continues to suffer what one DSS official calls “incessant criticism.” Legislation awaiting Rell’s veto pen includes provisions to require mental-health parity, allow appeals to the Department of Insurance for denial of coverage, and split the administration-favored combined HUSKY/Charter Oak bidding process.

More trouble arrived on March 12, when insurance giant Anthem Health Plans, Inc. revealed it wouldn’t be submitting a bid to run the program. “Inadequate state funding” was one of its chief concerns, as was the requirement that companies comply with the state’s freedom-of-information law. (Final bids are due April 11, at which time we’ll find out how many insurers follow Anthem’s lead.)

Although the record isn’t encouraging, one hopes that the Rell administration has learned something from its Charter Oak Health Plan debacle. Perhaps it’s become a bit wiser about the grandiosity of the “universal healthcare” lobby, the venality of legislative Democrats, and simple economics. Maybe the governor’s experience will teach her that offering a Big Government “solution” to the problem of the uninsured isn’t “bold” leadership. It’s just more of the same kind of thinking that’s strangling Connecticut’s healthcare market.

D. Dowd Muska is a writer, commentator and public-policy researcher. He can be reached at muskacolumn@cox.net.

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