Gov. Ned Lamont unveiled two proposals Wednesday aimed at reducing the cost of health care: an annual assessment on insurance carriers that would bring in money for additional subsidies on Connecticut’s insurance exchange, known as Access Health CT, and a plan to limit yearly increases in the cost of prescription drugs.

Lamont proposed creating the “Covered Connecticut Program,” in which an annual fee would be levied on insurers, similar to the Health Insurance Tax created under the Affordable Care Act. Congress repealed the federal tax in 2019; the repeal took effect last month.

As part of his new, two-year budget proposal released Wednesday, Lamont recommended reviving a similar tax on insurers that could bring in as much as $50 million annually. The money would be used to support additional subsidies for people who purchase coverage through Access Health CT.

As of last month, about 70% of the roughly 100,000 people who bought their coverage through the exchange in Connecticut received subsidies, such as an advanced premium tax credit, to help pay for their plans. But many others don’t qualify for that aid and can’t afford the monthly premiums, proponents of the tax pointed out.

A similar measure was raised by Democratic lawmakers recently. As a part of a broad health reform effort that includes a public option for small businesses and nonprofits, Democrats also suggested reinstituting the tax on insurance carriers and anticipated it would bring in about $50 million annually.

The Democrats’ plan would direct that revenue to additional subsidies on the exchange, but also to subsidies for people in the state’s undocumented community who want to obtain coverage and to an expansion of Medicaid eligibility. Their plan would push the qualifying limit for HUSKY A — Connecticut’s Medicaid coverage for adults with children, pregnant women and others — to 201% of the federal poverty level. It is currently at 160%.

Under Lamont’s proposal, the Office of Health Strategy would manage the Covered Connecticut Program and determine if funds should be used for other causes, including an expansion of Medicaid or to create a reinsurance program.

To stem the soaring cost of prescription drugs, Lamont has also recommended capping annual increases in the price of pharmaceuticals. His proposal would limit yearly hikes to the rate of inflation plus 2%. Drug manufacturers that exceed that amount would get hit with a fine, and revenue from those penalties would also be used to support subsidies for health coverage.

“COVID-19 reminds us that health care is a human right and that we all have a stake in keeping our neighbors healthy,” Lamont said in his budget address Wednesday.

Susan Halpin, executive director of the Connecticut Association of Health Plans, which lobbies on behalf of insurers, said the industry is opposed to the assessment on carriers, but supports the cap on prescription drug costs.

“We’re pleased to see the governor go after pharmaceutical pricing, which is a big driver of health care premiums,” she said. “Like our position on [the public option bill], we question the wisdom of assessing some policy holders to pay for others despite how laudable the intended goal.”

No expansion of Medicaid

Lamont’s budget lacked one major component that many of his fellow Democrats in the state House and Senate were demanding: an increase in Medicaid income eligibility limits.

But the administration, which had to solve a nearly $2.6 billion projected deficit to balance its $46 billion, biennial state budget proposal, said hard choices had to be made.

Office of Policy and Management Secretary Melissa McCaw, Lamont’s budget director, also noted that Connecticut’s income limits already are the highest in the nation.

But critics counter that Connecticut also has one of the highest costs of living among all states, and that the pandemic exacerbated a huge health care access gap that already exists here.

Lamont conceded that last point in his budget address Wednesday.

“The pandemic drew into sharp focus our racial health disparities and educational inequalities, as well as the fragility of our families and small businesses where women, and especially women of color, took the biggest hit during this pandemic,” the governor said. “They were usually the first ones on the front lines taking care of our children, our parents, our sick, or just trying to keep their business going to keep employees paid and their families fed.”

Asset test would return

Lamont proposed state Medicaid spending of $2.7 billion for the upcoming fiscal year and $2.9 billion in 2022-23. This would go for nursing home care, health insurance for poor and disabled residents, and assistance for hospitals to support treatment of the uninsured.

But the state also would spend billions more each year in matching federal Medicaid assistance.

To help control costs, Lamont proposed revisiting a controversial asset test that caused panic among legislators three years ago.

“The COVID-19 public health pandemic has taught us how critically important it is for state health care funding to be provided to those in greatest need; services or eligibility are so much richer than other comparable states,” McCaw wrote in her budget introduction, adding that Connecticut is only one of nine states without an asset test under its Medicare Savings Program.

The MSP uses Medicaid money to help more than 100,000 low-income seniors pay medical expenses that Medicare doesn’t cover, such as premiums, deductibles and co-pays.

McCaw noted that while 38 states follow a minimum income standard recommended by the federal government, Lamont is proposing drawing the line at double that threshold.

That would mean individuals with resources exceeding $15,720, and couples topping $23,600, could face additional costs.

Legislators enacted an asset test for the MSP in October 2017 as part of a bipartisan budget package, then called themselves into special session the following January to repeal it by overwhelming margins amidst sharp criticism from advocates for the elderly.

Nora Duncan, Connecticut state director for the AARP, said administration officials need to remember why Connecticut doesn’t have an asset test.

State officials had considered imposing one in 2013, but instead closed an existing pharmaceutical assistance program and shifted the elderly into the Medicare Savings Program.

“With both of these rugs pulled out from under them, thousands of Connecticut seniors will no longer receive assistance paying for the medication they need to stay alive and healthy,” she said. “We have been down this road before.”

Another cost-saving measure in Lamont’s budget involves the hundreds of nonprofit agencies that provide the bulk of state-sponsored social services for the disabled, patients with behavioral health issues, and those struggling with drug addiction.

The governor’s budget includes no rate increase for these agencies, though it does include $26 million in the first year and $53 million in the second to recognize increased caseload demands.

The state has increased its funding for these agencies minimally over the past 20 years, and the CT Community Nonprofit Alliance estimates the industry would need another $460 million per year to recover what it lost over time to inflation.

Gian-Carl Casa, president and CEO of the alliance, said many nonprofit agencies won’t survive without more state assistance.

“The need for nonprofit community services have skyrocketed as families and individuals across the state cope with unemployment, food insecurity and the stresses on mental and physical health during the pandemic,” Casa said. “Providers are struggling to continue to deliver services while keeping staff and clients safe. People need help now.”

Modest funding increase for DPH

The governor’s proposal recommends only a modest increase in funding for the state Department of Public Health, Connecticut’s lead agency in the COVID-19 fight. Under Lamont’s plan, the agency’s budget would increase to $135.6 million in 2022, up from $132.7 million this year. The department would receive $138.6 million in 2023.

In a scathing report on the state’s response to COVID-19 in nursing homes — where more than 4,000 people have died — independent firm Mathematica said the state health department was unprepared to handle the outbreak. The firm pointed to a lack of staffing in key areas — six of the nine positions in DPH’s emergency preparedness unit were vacant in March — and to an archaic reporting system that was ill-equipped to track cases and deaths. At the beginning of the pandemic, the firm noted, the department relied on a fax machine to report cases in nursing homes.

McCaw said the state has used federal funds to conduct testing, contact tracing and other detection and mitigation efforts. It also has used that money to boost its information technology systems, she said.

“I do believe that with the federal resources that have been provided, we have adequate funding to support areas that need to improve within DPH,” she said.

Lamont has proposed flat funding Connecticut’s local health districts and health departments for the next two years, despite the agencies playing a key role in administering COVID-19 vaccines to the public. His budget keeps funding at $4.2 million per year.

McCaw said the health districts have received some money directly from the federal government, and the state expects to get more.

“We expect that there will be additional resources to support them,” she said. “Our team will be meeting with the health centers to understand what the needs are and the extent to which the federal programmatic support has or has not been adequate.”

Sen. Saud Anwar, D-South Windsor, criticized the governor’s funding for DPH amid an ongoing pandemic.

“The governor talked very eloquently about beating the pandemic, beating COVID-19, but then (did not adequately) fund the agency that is supposed to be addressing it,” he said. “This is something that is critically needed. This is an investment in saving lives since we are still in the middle of a pandemic.”

Jenna Carlesso, Keith M. Phaneuf and Dave Altimari are reporters for The Connecticut Mirror (www.ctmirror.org). Copyright 2021 © The Connecticut Mirror.