Health Insurance Proposals Will Destabilize Market, Fail to Lower Costs

Legislation opening Connecticut’s state employee health insurance plan to small businesses and developing a public option for individuals will destabilize markets without addressing healthcare costs.
That was the warning CBIA president and CEO Joe Brennan gave members of the legislature’s Insurance and Real Estate Committee March 7.

“Looking for innovative ways to expand access to health insurance should be encouraged,” Brennan said.
“However, we believe that creating a buy-in to the state employee plan for small businesses would destabilize the health insurance market, require taxpayer subsidies to finance the program, and do little or nothing to reduce healthcare or premium costs—the biggest barriers to acquiring health insurance.”
Brennan also noted that government-run programs could undermine the state’s insurance industry, a key economic sector that accounts for over 60,000 jobs in Connecticut.
He was addressing two bills, SB 134 and HB 7267.

State-Run Programs

SB 134 allows small businesses to purchase health insurance for employees through the state employee plan managed by the state comptroller.
HB 7267 does the same, while also utilizing the Office of Health Strategy and creating an advisory committee to implement and administer a new state-run program dubbed “ConnectHealth.”
“With any new health insurance market comes the increased likelihood of destabilization because of potential changes in the risk pool,” Brennan said.

"The impact on premiums due to an influx of new members would need to be altered to reflect the changes to the risk pool."
If a disproportionate number of people with greater healthcare needs enroll in the ConnectHealth program, premiums could increase significantly and raise the state's costs by impacting state employee premiums, Brennan said.

More Financial Liability

But if people with lower health risks enroll in ConnectHealth, the market's remaining risk pool would be more unstable, putting pressure on exchange plans currently offered through AccessHealthCT, resulting in increased premiums in that market.
"These bills will not reduce the cost of insurance, and given the state's precarious financial condition, could exacerbate the situation by adding more risk and more financial liability on the state," Brennan said.
Brennan noted that the cost municipalities currently pay to buy into the state employee program—more than $10,000 annually per person—would have to be cut considerably, or less rich plans offered, to make it an affordable option for small business.

Businesses are also concerned with how the ConnectHealth program will be funded, Brennan said.
The bill calls for state-financed cost-sharing subsidies for enrollees who don't qualify for subsidies through the Affordable Care Act.
HB 7267 uses an affordability scale to determine rates based on an enrollee's household income.
But as Brennan noted, the bill's language "is silent as to how such funding will be attained."
A public health program would include significant costs to the state, he said, but ConnectHealth and its subsidies "create an even greater burden on a state that is fiscally deficient" without indicating who will pay for it.

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For more information, contact CBIA's Michelle Rakebrand (860.244.1921) | @MRakebrand