Aetna Wins State Contract for Lower-Cost State Employee Health Insurance, Reducing Connecticut’s Huge Public Debt – Hartford Courant


HARTFORD — A contract with Aetna to become the state’s Medicare Advantage administrator for the state health plan that will save $400 million over three years is another blow to Connecticut’s massive debt load, Governor Ned Lamont said Wednesday.

The state faces significant challenges in reducing long-term debt guaranteed for capital projects, unfunded pensions and other benefits. Lamont, seeking a second term in November, used a press conference outside the state office building to announce the welcome cost savings.

The contract won by Aetna in a public tender covers 57,000 Medicare-eligible retirees and their dependents and is expected to reduce the state’s unfunded liability by $7.5 billion. Medicare Advantage is a popular health insurance plan that provides Medicare benefits through a private sector health insurer.

Lamont said he was “fixed” on fixed costs, such as debt that hinders economic growth which he likened to “racing the road with cement shoe covers.” The state pays off pension bonds and spends less as a percentage of the budget on bond debt, he said.

“One place where we struggled a bit was health care costs,” the governor said. “We don’t have as much control over health care costs.

He said his administration had reduced bond indebtedness and pensions “and to date we have made great progress on health care costs.”

Connecticut faces $30 billion in bond debt and $23 billion to $25 billion in unfunded pension liabilities, the governor said. Other post-employment benefits face a liability of $23.5 billion, which will be reduced by the agreement with Aetna. He called it a “red flag” because it stood out among other debt totals that went down.

The state last November announced a total debt of $95.4 billion, which is declining.

“We have a long way to go. Don’t underestimate this, but we have made progress,” Lamont said.

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The deal has yet to be negotiated with Aetna, the Hartford-based health insurance subsidiary of CVS Health Corp. It ensures that retirees covered by the state health plan “will continue to receive the care they need,” said state comptroller Natalie Braswell.

Retirees will pay Aetna a premium of $175 a month, up from more than $320 a month, state officials said.

The state used a reverse auction process, with each bidding company scored and ranked in several categories, including price and service commitments. After each round of scoring, companies were given the opportunity to improve their bids to rank higher, state officials said.

CVS chief executive Karen Lynch cited Aetna’s presence in Hartford dating back to 1853 as she celebrated the deal. CVS Health bought Aetna in 2018 for $69 billion, disappointing many people in Hartford and around the state as the insurer lost its independence and became a subsidiary of Woonsocket, RI-based CVS.

“Serving Connecticut retirees builds on our nearly two-century relationship with the state, where thousands of CVS Health employees call home,” she said.

The contract will come into effect on January 1, 2023.

Stephen Singer can be reached at [email protected]


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