While the business community commends the state comptroller for attempting to tackle health insurance costs in the small group market, the numbers do not add up.
The comptroller is promoting public option legislation that would open Connecticut's state employee healthcare plan to small businesses.
Outside groups such as municipal employees already access that plan through a program administered by the comptroller's office.
It's known as the partnership plan. And there are few—if any—small businesses that can afford its steep price tag based on a comparison with private sector plans.
Take Anthem's average per-member, per-month costs for an individual Affordable Care Act plan and a small group ACA plan, which are $671 and $638, respectively.
The average PMPM in the state partnership plan is $762, or 14% to 19% more expensive than the Anthem plans.
Not to mention that even with those higher premium costs, the state partnership plan lost over $10 million last year.
There are reasons for the price differences between the private and public sector plans.
One is that the state employee plans offer rich benefits. In order to make these plans affordable for small businesses, the comptroller would have to offer much skimpier benefit packages.
In addition, market premiums are lower because of the risk adjustment and reinsurance payments available through the ACA (state-run plans do not have the same access to federal ACA dollars). These payments are built into premium rates.
Private insurance carriers use available federal dollars to reduce premiums, while the state will have to raise taxes, reduce benefits, or reduce provider payments.
This would ultimately shift costs to employers and taxpayers.
'Check the Math'
To avoid shifting costs through new taxes, assessments, and fees, the comptroller would have to set premiums at a level to adequately cover the costs of the program and claims of the participants.
But this would mean premiums would still be significantly more costly than private insurance, attracting only high risk groups to the state market to further increase costs and destabilize the insurance pools.
It's time for legislators to check the math.
The public option will not make health insurance more affordable for small businesses.
It does not address the underlying factors driving costs—chief among them government regulations and mandates.
And it cannot compete with private sector offerings without shifting costs to employers and taxpayers.