Connecticut cities and towns might have a new option for saving health insurance dollars as they finalize their budgets for the coming fiscal year.
State Comptroller Nancy Wyman has announced that a cooperative program allowing towns to pool together and purchase private coverage at prices negotiated by the state is ready to go, after two years of development.
The program, which has earned endorsements from two major municipal coalitions and already has legislative approval, is being launched at the same time that House Majority Leader Christopher G. Donovan, D-Meriden, is trying to build support for his own municipal insurance pool, and could prove to be a political obstacle.
“This plan is a creative and bold step that addresses the most critical budget issue facing our cities and towns and their taxpayers,” Wyman, a Tolland Democrat, said. “It is not just a proposal or a concept, it is a working plan that saves real tax dollars at a time when many municipalities are in dire need of relief.”
The program is founded on the negotiating power of state government, which provides coverage for roughly 200,000 state employees, retirees and their family members.
Leverage Savings
Because of the large pool size and the influence of state government in general, Connecticut is able to leverage big savings on quality health insurance plans.
The program Wyman is launching offers towns an array of plans and prices negotiated by state officials.
Communities aren’t obligated to join, and both local governments and local municipal employee unions would have to endorse membership before they would join.
Wyman’s proposal also stipulates that dividing the cost of insurance premium — how much the town pays and how much the employees pay — must be determined through negotiations between the local parties.
The plan would be overseen by a private administrator, sparing the state any cost.
The comptroller’s office estimates, based upon average insurance costs facing municipalities, that a Connecticut town with 1,000 employees — that’s including its teachers — could save $720,000 a year.
Gian-Carl Casa, director of public policy for the Connecticut Conference of Municipalities, said the plan has merit not only because of the potential savings, but because no community would be forced into the program.
Multiple Endorsements
Wyman’s plan also earned endorsements from the Connecticut Council of Small Towns and from two of the largest public employee unions: the Connecticut Education Association and Council 4 of the American Federation of State, County and Municipal Employees.
“The comptroller’s plan couldn’t be timelier as a solution to providing quality health care at a lower price, and as proof that risk-pooling works for everyone’s benefit,” said Salvatore Luciano, executive director of AFSCME Council 4.
Wyman said her plan will need at least 20,000 participants to get off the ground and probably more to be financially stable over the long haul.
Small Biz Proposal
Donovan said today he remains optimistic his municipal pooling bill will become law before the regular 2008 General Assembly session ends on May 7.
Donovan’s plan would bring all cities and towns, along with small businesses and nonprofit groups, directly into the state health insurance programs — rather than through a separate plan with prices negotiated by state government.
Though that bill still is being negotiated, some municipal leaders have expressed concern that their towns could be forced to enter. For example, if town officials think the state plan is too costly but a union wants to join, could the matter be referred to binding arbitration? If so, the town or union hypothetically could be forced into the plan over the other side’s objections.
Wyman’s program doesn’t allow membership to be decided by an arbitrator, and only occurs if both labor and management agree.
Donovan said he’s uncertain, though, whether Wyman’s plan will generate sufficient numbers to be cost efficient.
