Legislature Fails to Act on Small Business Healthcare Costs

Despite bipartisan support from the legislature and the Governor’s office, a bill providing small businesses and their employees access to more affordable, high quality health options died during the session’s final last days.

HB 6710 authorized trade associations to sponsor self-funded and fully-insured multiple employer welfare arrangements.

The House failed to act on the bill, which was approved by the Insurance and Real Estate Committee and the Appropriations Committee earlier in the session with broad bipartisan support.

The bill represented months of negotiations between industry stakeholders and a diverse, bipartisan group of public officials, including the Connecticut Insurance Department, the Lamont administration, the Office of Health Strategy, the Office of the Healthcare Advocate, the Office of the Comptroller, as well as Republican and Democratic members of the House and Senate.

State Healthcare Advocate Ted Doolittle said the bill it was “a different kind of association health plan than has been passed in any other state. On balance, I think it’s a good thing.”

‘Landmark Proposal’

CBIA president and CEO called HB 6710 “a landmark proposal” that makes high quality health plans more affordable for small businesses and their employees, “along with unprecedented consumer protections that will be the strongest in the country.”

“Healthcare costs are a major challenge for small businesses and we had a broadly negotiated solution that is a game changer for small employers,” DiPentima said.

“Despite the negotiated agreement among all stakeholders, this bill was unfortunately compromised by a deliberate campaign of misinformation and falsehoods.

Disappointing this landmark legislation—a game changer for #smallbiz—was derailed by misinformation and misunderstandings. We appreciate the bipartisan group of lawmakers who supported it, and the leadership of Insurance Committee co-chair @kerryawood. https://t.co/dOIAXaKr1T

— Chris DiPentima (@ChrisDipentima) June 7, 2023

“When it became known that an agreement on this legislation had been reached, these groups attacked the bill before the final, negotiated amendment was even made public, and they have since been forced to retract many of their misstatements.”

DiPentima thanked Democratic and Republican lawmakers who led and supported the healthcare coverage bill.

“Those legislators went above and beyond in their support for small businesses and we are very appreciative of their efforts,” he said.

“However, it’s clear that we need more small business champions in the legislature. It’s not enough to say you support small businesses—words need to be followed up with action and policy must go above politics.”

Bipartisan Negotiations

Insurance Committee co-chair Rep. Kerry Wood (D-Rocky Hill) led bipartisan negotiations throughout the session.

HB 6710 allowed trade associations that meet federal Department of Labor rules regarding association membership composition to aggregate their members and purchase a large group, fully insured Affordable Care Act product directly from a state-licensed carrier.

The bill also allowed associations with significant scale to offer a self-funded health benefit plan subject to extensive oversight by the Connecticut Insurance Department and in compliance with key provisions of the ACA.

HB 6710 closely mirrored legislation that passed with bipartisan support in Virginia last year.

HB 6710 closely mirrored legislation that passed with bipartisan support in Virginia last year.

Under that bill, the legislature authorized the Virginia Chamber of Commerce to offer a self-funded health benefit arrangement subject to extensive oversight by the state’s insurance regulators.

The Virginia chamber is working with its third party administrator, to begin enrolling small employers.

Other states like Ohio, Missouri, Maine, Georgia, and Washington also allow similar arrangements.

‘Unique, Affordable’

As evidenced by a well-attended bipartisan press conference in February, the bill had immense support from businesses, trade associations, nonprofit organizations, and chambers of commerce. 

“This coalition here is forming a new option of plans for small businesses, plans that are unique and affordable and that will help create more competition in the market,” Wood said at the time.

“We need to stand behind those campaign promises and pass this bill that will expand and make health insurance more affordable for small businesses across the state,” added Rep. Cara Pavalock-D’Amato (R-Bristol.)

“This coalition is forming a new option of plans for small businesses, plans that are unique and affordable and that will help create more competition in the market.”

State Rep. Kerry Wood

The bill received a public hearing before the Insurance Committee with CBIA and dozens of organizations testifying in support.

The bill was overwhelmingly approved by the committee a month later with nine committee members from both sides of the aisle supporting it and three Senate Democrats opposed.

HB 6710 then cleared the Appropriations Committee on another overwhelmingly bipartisan vote of 44-9.

Negotiations

Following both committee votes, the final version of the bill was negotiated for over two months, with all parties signing off on final language two weeks ago.

Under the amendment, a robust regulatory structure for self-funded trade association health plans was established with input from the Insurance Department.

The bills also established first-in-the-nation guardrails for self-funded MEWA medical underwriting.

Under the bill, self-funded MEWAs would need to (1) be licensed as a domiciled insurance company; (2) have an initial combined capital and surplus of at least $4 million; (3) maintain a bond in an amount determined by CID; (4) be subject to risk-based capital requirements, financial solvency reviews, and market conduct examinations; (5) be subject to the same assessments self-funded plans are subject to today.

Self-funded MEWAs would also be responsible for reimbursing the CID for any costs associated with regulation.

The amendment also established first-in-the-nation guardrails for self-funded MEWA medical underwriting.

Renewal Rates

Despite current small business self-funded and level-funded plans not having a cap, trade association MEWAs were limited in how high or how low a group’s new business and renewal rates could be affected by medical experience.

At initial enrollment, the plan can charge sickest groups up to 30% more than the plan’s base rate, and can provide discounts of no more than 40% to the healthiest groups.

At renewal, plan can increase premiums for the sickest groups by no more than 25% over the plan’s base rate increase; this cap decreases as the size of the pool grows and becomes more credible

MEWAs were limited in how high and or low a group’s new business and renewal rates could be affected by medical experience.

MEWA would also be able to apply to CID for a variation if there are solvency and financial concerns.

Self-funded trade association plans would also have to offer health plans in compliance with Connecticut state benefit mandates and the ACA’s ten essential health benefits—both of which are not required for traditional self-funded ERISA plans.

Additionally, the MEWA must offer plans at an actuarial value of at least 60%, 68%, and 78%.

The bill also required trade association plans to implement value-based health benefit plan designs and value based contracting and report to the CID annually on the implementation and impact on healthcare pricing.

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For more information, contact CBIA’s Wyatt Bosworth (860.244.1155) | @WyattBosworthCT.