Blog: Healthcare

Jobs & the Economy, Taxes & Government Spending, Healthcare

Unfunded Retiree Healthcare Liabilities Grew By $3.3 Billion From 2011-2013

  • Mar 26, 2014
  • by Ben Zimmer
Unfunded Retiree Healthcare Liabilities Grew By $3.3 Billion From 2011-2013

Connecticut’s unfunded retiree healthcare liabilities grew by $3.3 billion from 2011 to 2013.  A new actuarial report released last month valued the 2013 unfunded liabilities at $19.5 billion, while the previous actuarial report, released in April 2013, had valued the 2011 liabilities at $16.2 billion.

The following chart shows the changes in unfunded retiree healthcare liabilities from 2006 to 2013. 

In 2011 the state changed its accounting assumptions by raising the interest rate used to discount future payments to retirees from 4% to 5.7%.  This made the “present value” of those future payments – i.e., the state’s current liability – appear smaller on paper, but did not change the state’s actual underlying financial stability.  When consistent accounting assumptions are applied, Connecticut’s unfunded liability in 2013 was higher than at any point during the prior seven years.

This data reinforces the inaccuracy of the Malloy administration’s assertion that unfunded retiree healthcare liabilities fell by $15 billion during his administration.  For more on the problems with that assertion, see this earlier CPI post.   

About the Author: Ben Zimmer is the CPI's Executive Director

Jobs & the Economy, Taxes & Government Spending, Education, Healthcare

Analysis on Tax, Healthcare, Education Bills From First Week of CT legislative session

  • Feb 11, 2014
Analysis on Tax, Healthcare, Education Bills From First Week of CT legislative session

The 2014 CT legislative session opened last week with a flurry of proposed bills from legislators.  Most bills proposed in the first weeks of the session include very little detail about what they will actually do – rather, they serve as placeholders that are referred to committees where they may be fleshed out in greater detail.   But a few bills did include specific proposals – here are a few of the most consequential for economic and education policy, accompanied by brief policy analysis:

H.B. 5012 and 5021, proposing to repeal the state’s Business Entity Tax 

Connecticut’s business entity tax imposes a $250 biannual fee on any company doing business in Connecticut.  The tax is a major deterrent to small business creation in the state, forcing companies to pay a fee even if they are not yet turning a profit.  The tax is not a major revenue source for Connecticut, bringing in about $40M per year of revenue.  That’s or less than a quarter of one percent of overall state tax revenue.  Repealing it is good policy.

H.B. 5003, proposing to repeal the state’s Earned-Income Tax Credit (EITC)

The Earned-Income Tax Credit (EITC) is a federal program that provides a tax-credit to low-income workers.  For any Connecticut taxpayer eligible for the federal credit, Connecticut provides a state tax credit equal to 27.5% of the federal credit.  The EITC has generally drawn bipartisan support as a way to provide work incentives and keep low-income families out of poverty.  There have been a number of good proposals to simplify the administration of the tax credit, but repealing it is not good policy. 

SB 5, 8, and 10, proposing new coverage mandates for health insurance plans

As of 2012, Connecticut already imposed 65 mandates on health insurance plans, the fourth most in the country and well above the national average of 43. Connecticut’s large number of coverage mandates is one reason it trails only Massachusetts and Alaska in per capita healthcare costs.  At a time when health insurance premiums are already facing upward pressures and the state is struggling to grow jobs, adding yet more mandates may not be the best idea. At the very least, the legislature should carefully study the costs of these particular mandates before passing them.

H.B. 5005, proposing to increase state aid to towns that pay for inter-district magnet schools

When students choose to attend a magnet school in another district, the state provides a grant to that district to help defray the cost of the students’ education.  However, that grant does not fully compensate the receiving district for those costs.  The best way to address this challenge is to adopt a student-based funding model in which students “carry” an allotted per-pupil funding level with them to whichever school they attend. The allotted amount per student should be based on a weighted student formula that allocates more state money for students whose education is more costly, such as those in extreme poverty, English Language Learners, and special education students.  HB 5005 should be amended to enact student-based funding in Connecticut, which would improve equity and accountability in state-funded public schools.

Here is a full list of bills introduced so far in the CT Senate and House.

Taxes & Government Spending, Healthcare, Government Administration

CT Government Weekly Rundown -- November 4

  • Nov 04, 2013
CT Government Weekly Rundown -- November 4

CT Begins Collecting Taxes on Amazon.com Sales
On Friday Connecticut joined a growing list of states that tax Amazon.com sales within the state. 

The new tax is the culmination of several years of negotiation between the Connecticut government and Amazon.  In 2011, the Connecticut General Assembly passed a law requiring online retailers to collect state sales tax for purchases made within Connecticut.  Amazon refused to comply, citing federal laws that exempt online retailers from state and local sales taxes unless they have in-state brick-and-mortar operations.  The state and Amazon resolved this dispute in February -- the company agreed to begin collecting the sales tax and to build a $50 million distribution center in Connecticut, plans for which are underway in Windsor. In exchange, the state agreed to not pursue back taxes on past sales.  

The Department of Revenue Services estimates the new tax will generate $8M in revenue this year and $13-$15M in annual revenue going forward.  

What It Means For You: Connecticut consumers will see a larger bill when shopping online through Amazon.  But traditional Connecticut retailers will benefit from the change – they understandably felt online retailors' exemption from state sales tax gave online retailors an unfair competitive advantage.  As far as the state’s broader fiscal challenges go, $13-$15M in additional annual revenue won’t make a substantial impact.  

Audit Identifies Mismanagement in Dep't of Public Health

The state auditor released a report this week criticizing the Department of Public Health for widespread mismanagement, including mishandling of medical inventory and a failure to properly monitor service providers the department licenses.  The audit covered fiscal years 2010 and 2011 and included 33 recommendations for corrective action.  The Department issued a statement that it agreed with the recommendations and has already begun addressing them.

What it Means For You: This is the third audit report in the last few months identifying mismanagement at a CT government agency or department.

 

Healthcare, Crime & Public Safety, Regulation

CT Government Weekly Rundown -- October 28

  • Oct 28, 2013
CT Government Weekly Rundown -- October 28

Access Health Rollout Presents Some Cause for Celebration, Some Cause for Concern

As the federal Affordable Care Act healthcare exchange website faces increasing bipartisan criticism for its technical shortcomings, the independent firm Health Pocket has praised Connecticut’s exchange website for its ease of use.  Connecticut has not been completely unaffected by technical issues at the federal level, however, as outages in the federal data services hub this weekend have interfered with enrollment on Connecticut’s exchange, known as Access Health.

In spite of the relatively smooth technical rollout of Connecticut’s exchange, the early enrollment data presents some cause for concern.  Most of the early customers were ages 55 to 64, and, among enrollees under 35 the majority are enrolled in Medicaid coverage.   The private insurance plans offered on the exchanges will only be viable over the long-term if younger people enroll.  Younger participants on the exchanges pay relatively higher premiums than older participants given the amount of healthcare they generally consume.  It remains very early in the enrollment process, but if the current patterns continue, the private insurers will face pressure to raise premiums or leave the exchange.  

What It Means for You: Connecticut’s health exchange leadership deserves credit for overseeing a relatively smooth technical launch.  But the long-term success of the exchange remains up in the air.

State Legislature May Consider New Nightclub Regulations Following New Haven Club Shootings

Following a shooting this weekend at the Key Club nightclub in New Haven, New Haven Mayor John DeStefano has called for a series of new safety regulations at nightclubs.  Many of his proposals would require state legislative action, including allowing cities to levy fees for nightclubs in a district where heavy police presence is required and mandating that private security at nightclubs be licensed and trained by local Police Departments.

What it Means For You: Governor Malloy has said he will work with the legislature during the upcoming 2014 session to pass some of the Mayor’s proposals, though previous attempts to pass similar nightclub regulations have not been successful.



Taxes & Government Spending, Healthcare, Regulation

CT Government Weekly Rundown -- October 21

  • Oct 21, 2013
  • by Alexandra Forrester
CT Government Weekly Rundown -- October 21

New Executive Order Aims at More Efficient Regulation
On October 16th Gov. Malloy issued an Executive Order aimed at increasing regulatory transparency and efficiency. The order allows public comment on, and analysis of, state regulations four years or older. The agencies responsible for these regulations must then review these comments, conduct their own independent analysis, and submit a report on the results to the Governor’s office by February 14th of next year.

The order’s stated aim is to ease the “substantial burdens” that businesses face from state regulations.  In a Connecticut Business & Industry Association Survey 7 in 10 CT businesses said they believe that the state’s regulatory environment is more restrictive than other states.

The executive order is certainly a positive step, though where the rubber hits the road is in actually getting rid of counterproductive regulations.  For instance, the CPI’s recent report identifying some specific regulations where the costs exceed the benefits included environmental regulations that the Department of Energy and Environmental Protection itself has recommended repealing for several years.  But the legislature has yet to act on that recommendation.
It is also curious that the Governor is exempting from scrutiny any regulations passed under his watch.

What it means for you:  Anyone may comment on regulations passed more than four years ago until December 16th of this year.   You can email governor.regulations@ct.gov, or visit http://www.governor.ct.gov/regulations. 

Audit of UConn Health Center Reveals Overspending
An Audit of the UConn Health Center reveled fiscal inattentiveness, overspending, and a variety of other financial management problems with the state-funded health care and health research facility. Examples of mismanagement included overspending on legal fees, with billing rates as high as $820 per hour, and spending $73,000 on a sabbatical for an employee who never returned.

What it means for you: The dollar values at issue in the identified missteps are a small share of the Health Center’s budget.  But any mismanagement of the public fisc should be a matter of public concern.

About the Author: Alex Forrester is a policy analyst for the CPI