As is common every year, in 2024 Connecticut lawmakers let many bills die before the end of the legislative session on May 8.
In some cases, that’s not a bad thing. Few businesses would complain about lawmakers not taking action on proposed new mandates or regulations that would make Connecticut less competitive.
However, one of lawmakers’ most egregious oversights was failing to address the state’s fully insured small group health insurance market, which has been in steady decline for years.
Some might even describe the market, which serves businesses with 50 or fewer workers, as broken or collapsing.
Enrollment in fully insured health plans offered to Connecticut small businesses has dropped by more than 50% over the past six years, according to my tally of industry data.
Insurers currently offering fully insured small group health plans in the state (Anthem, Cigna, Aetna, Oxford Health and UnitedHealthcare) covered 75,830 lives in 2023, down 51.5% from the 156,507 lives covered in 2018, according to data from the Connecticut Department of Insurance.
That decline came as the number of insurers offering small group coverage also declined.
In the past two years, Farmington-based ConnectiCare and nonprofit Harvard Pilgrim HealthCare have exited the total insurance market.
And earlier this month, Bloomfield-based Cigna Healthcare and Oscar, the New York-based insurance technology company, notified policyholders nationwide that they will stop offering a small group plan they jointly launched just a few years ago.
Cigna + Oscar’s small group policy debuted in Connecticut in 2021 and quickly gained significant market share, covering 20,599 lives, or 27.2% of the fully insured market in 2023.
As of March 2024, Cigna had 17,500 small group customers in Connecticut, representing approximately 20% of the market, according to the most up-to-date statistics from the Department of Insurance.
On a recent earnings call, Oscar Health CEO Mark Bertolini, a well-known figure in Connecticut who previously led Hartford health insurer Aetna, told analysts that his company had decided not to renew the Cigna + Oscar plan. because he had difficulty making it profitable.
ConnectiCare and Harvard Pilgrim, a nonprofit insurer, cited a similar challenge when they exited the market.
Meanwhile, small businesses face steady increases in annual premiums that typically outpace the rate of inflation, making it increasingly difficult for them to pay for health benefits.
That has led some companies to forego health insurance and push their employees to the state health care exchange to find individual coverage, or join the growing trend toward self-insurance, which shifts the responsibility of paying medical claims from the insurer. to the employer.
Lost opportunity
So what could lawmakers have done to address the issue?
There is no magic solution. There are many issues that increase healthcare costs for employers and individuals, including an increasingly consolidated provider market, increased care utilization and pharmaceutical prices, an unhealthy population, etc.
Small employers are particularly disadvantaged because they lack the scale to negotiate with insurers. At the same time, state lawmakers have added numerous coverage mandates over the years that have further increased premiums for small employers.
One option lawmakers should have pursued in 2024 was allowing association health plans, which would give chambers of commerce and qualified trade associations the ability to act as a large employer and offer their members self-funded health insurance benefits.
At least 37 states allow partner health plans, according to Bloomberg Law, and Connecticut lawmakers have debated the concept in each of the past two years.
An association health plan bill appeared to gain momentum in the 2024 session as it attracted some bipartisan support.
This year, advocates even strengthened coverage mandates in the proposal, requiring association health plans to offer benefits on par with the federal Affordable Care Act marketplace.
This was intended to address concerns from patient advocacy groups, such as the American Cancer Society and the Leukemia and Lymphoma Society, who fear that such plans would allow employers to offer basic coverage that would increase care costs for people.
(Self-insured companies can avoid many Obamacare and state insurance mandates that lead to higher premiums.)
However, even with the strictest requirements, the association health plan bill fell short of, or even close to, the legislative goal. In fact, the bill didn’t even make it out of the Real Estate and Insurance Committee, which essentially affected the 2024 legislative session by not voting on any legislation, an unprecedented move.
House Speaker Matthew Ritter (D-Hartford) in March attributed the inaction to “a byproduct of years of contentious relationships that continues to boil over.”
It’s unclear exactly what is driving the opposition. We know that some Connecticut lawmakers would prefer a single-payer health insurance market controlled by the state government.
But that will do little to control the underlying problems that are driving up health care costs and risk putting state finances in further jeopardy.
Association health plans will help small businesses gain scale and better spread risk, creating some of the advantages enjoyed by large corporations, which traditionally self-insure.
If small businesses are truly the lifeblood of the economy, as politicians always like to say, there should be more urgency in helping them access more affordable health insurance options.
Association health plans offer a free market solution worth trying.
Keynote USA
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