Study: Health Insurance Industry’s Major Impact on State’s Economy
Connecticut’s health insurance carriers play a major role in the state’s economy, responsible for tens of thousands of jobs and billions of dollars in economic output according to a new study.
The Connecticut Economic Resource Center study found the private sector health insurance industry supported 48,560 jobs and generated $15.5 billion in direct and indirect economic activity in 2018.
However, the study warns that the industry “remains in a state of change” because of national and state-level policy shifts.
In Connecticut—”the Insurance Capital of the World”—the industry’s economic impact is threatened by legislation implementing a state-run healthcare program, or public option.
The legislation opens Connecticut’s state employee healthcare plan to small businesses, although there are few—if any—companies that can afford its steep price tag based on a comparison with private sector plans.
State Plan Shifts Costs
To compete, the state-run plan will have to raise taxes, reduce benefits, or cut provider payments, ultimately shifting costs to employers and taxpayers.
Subsidizing the state-run plan creates an uneven playing field, putting insurance companies at a disadvantage that will play out with the loss of private sector jobs and economic losses.
The CERC study projects that a 10% decline in size of Connecticut’s health insurance sector will result in the loss of 4,855 jobs and siphon $1.6 billion from the state’s annual GDP.
CERC forecasts that a 50% decrease in the industry will cost the state more than 24,280 jobs and $7.7 billion in economic output.
“A public option poses a significant risk to Connecticut’s economy,” says CBIA president and CEO Joe Brennan.
“That’s not a risk worth taking for a state-run healthcare program that will neither lower premium costs nor improve the quality of care while further burdening taxpayers and small businesses.”
Kentucky abandoned its state-run healthcare program in 1999 after five turbulent years that drove 40 insurance companies out of the state and saw premiums rise between 36% and 165%.
Connecticut cannot afford to repeat Kentucky’s mistakes.
Nine-plus years after the end of the 2008-2010 recession, we’re one of just a handful of states yet to recover all jobs lost in the economic downturn.
The state’s economy has expanded just twice in the last 11 years, and continues to trail the region and the country in growth.
State-run healthcare will not reduce the cost of health insurance for small businesses, but it will further damage Connecticut’s struggling economy.
Connecticut will be far better served if lawmakers tackle the real healthcare cost drivers—including legislative mandates—rather than expand government, increase taxes, and threaten one of the state’s critical economic sectors.
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