Policy Documents

Obamacare for CT to Bust Budget

Marc Kilmer –
February 1, 2010

 

In 2009, the Connecticut General Assembly overrode a veto by Governor Jodi Rell and passed an ambitious health care proposal called SustiNet. The dramatic final vote came after a years long campaign funded by tens of millions of dollars by the Universal Health Care Foundation of Connecticut. The bill created a state commission to develop a plan to expand government health care and report back to the legislature in 2011.

SustiNet has two broad and laudable stated goals: to reduce the number of Connecticut residents without health insurance, and to reduce the growth of state health care costs.

This Yankee Institute study of the SustiNet proposal predicts that government-driven health care will likely succeed in reducing the number of state residents without health insurance, but that doing so as envisioned by SustiNet’s backers will cost Connecticut taxpayers billions in new government spending each year while doing little to reduce health care costs for those who currently have insurance.

• 90 percent of Connecticut residents have insurance coverage.

• Of the 343,000 people who do not have health insurance, 16 percent are eligible for existing

• Another 38 percent of the uninsured live in families above 300 percent of the federal poverty level ($54,930 for a family of three) and could likely afford some form of health insurance

• This leaves 158,000 people who are truly chronically uninsured, and even this figure includes

• Connecticut spends $4.1 billion a year on its existing taxpayer-funded state health care

• SustiNet will cost Connecticut taxpayers at least $2 billion more in new, annual government

• Underestimating the cost of expanding the HUSKY program;

• Understating the cost of subsidizing insurance;

• Ignoring “crowd out” effects, the tendency of taxpayer-subsidized insurance plans to cause some of those with existing private insurance to drop that coverage and switch to government plans;

• Ignoring “adverse selection,” by which new enrollees have higher medical expenses than current

government-sponsored health insurance programs considerable “churn” among people who may be without insurance for limited periods of a few monthsprograms, including Medicaid and three state health insurance programsspending SustiNet understates or ignores the higher costs that will come by:enrollees.