Report: More Connecticut Small Businesses Drop Health Plans

The percentage of Connecticut small businesses offering employees health insurance coverage has fallen almost 25% since 2009 according to a new report.

Connecticut’s decline is the largest in the country, as smaller employers battle rising costs, shrinking options, and legislative inaction.

Produced by services solutions company Take Command, the report found that only 30% of U.S. employers with less than 50 employees offer health coverage, down from 47% in 2000.

More than a quarter of the U.S. workforce is employed by firms with fewer than 50 employees, but only 30% of those businesses offer health coverage.

“For firms with fewer than 50 employees, offering health insurance has become significantly more expensive over the past decade, forcing many to reevaluate or eliminate this once-common benefit,” the report notes. 

Structural, Policy Factors

The report found that Northeast states experienced the largest declines in plan offerings, led by Connecticut.

New Jersey posted a 22.7% decline with coverage in Vermont shrinking 21.5%. New York, Rhode Island, and Delaware, also ranked among the states with the largest declines.

The report explains that the regional pattern “reflects a combination of structural and policy factors.”

“Northeastern states generally had higher small business coverage rates to begin with, leaving more room for declines,” it notes.

“Employers in the region also face some of the nation’s highest healthcare and business costs, which can make offering coverage more challenging to sustain.”

High Cost State

An analysis of industry data by the Hartford Business Journal shows that Connecticut enrollment in fully insured small business health plans declined more than 50% over a six-year period ending in 2023.

That analysis found that small businesses pay twice as much for employee health coverage as larger firms.

Businesses with less than $600,000 in revenues spent almost 12% of payroll on health benefits, while companies with over $2.4 million in revenue spent 7%.

State mandated benefits and subsidies add more than $2,000 annually to the cost of health insurance premiums in Connecticut.

The Office of Health Strategy’s annual Cost Growth Benchmark Initiative Report, released in March, showed Connecticut healthcare spending increased 7.8% in fiscal 2023.

The OHS report warned that current cost containment strategies “do not appear to be working, or working sufficiently, to bring down the growth in spending.”

State mandated benefits and subsidies for the state-run health insurance exchange also add more than $2,000 annually to the cost of health insurance premiums in Connecticut.

State Legislature

The legislature’s Insurance and Real Estate Committee approved HB 6895, which required a review of proposed mandated health benefits earlier this legislative session.

However, it was later referred to the Appropriations Committee, which failed to act on it before its deadline.

Multiple bills regulating stop-loss policies used in conjunction with employer-sponsored, self-funded health plans—an alternative given the lack of fully insured options—are being considered this session.

SB 10 and SB 11 both place mandates on self-funded health plans and significantly increase the amount of medical risk faced by small businesses. 

Lawmakers failed to act on transformational, bipartisan legislation that promised to expand access and lower costs for hundreds of thousands of small business employees.

SB 7 establishes a study on the feasibility of regulating stop-loss policies coupled with self-funded plans as fully-insured plans. 

In 2023 and 2024, the state legislature failed to act on transformational, bipartisan legislation that promised to expand access and lower costs for hundreds of thousands of small business employees.

CBIA president and CEO Chris DiPentima cited the negative influence of a small number of special interest groups as a significant contributing factor to the lack of action on the measures.

Last year, CBIA launched a program for small and medium-sized businesses through its Health Connections suite of employee benefit solutions that is designed to address the growing market gap.

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For more information, contact CBIA’s Grace Brangwynne (860.244.1163).