State Health Insurance Exchange Delays Costly Assessment Hike

Small Business

In a surprising move April 20, the state health insurance exchange delayed a controversial proposal increasing the assessment rate on fully-insured health insurance plans from 1.65% to 1.80%.

The proposed rate change will result in a $2.8 million increase on fully-insured health plans over the next two years, raising premium costs for small businesses and their employees.

CBIA was the only organization to submit comments in opposition to the proposed assessment increase.

Access Health CT board member and Office of Health Strategy executive director Victoria Veltri echoed CBIA concerns and asked to delay a vote.

Veltri requested that the board delay any action until a budget workshop can be organized to brief members on financial information that was not presented at the meeting.

‘Death Spiral’

Fellow board member, Department of Social Services commissioner Deidre Gifford, noted that the combination of fewer fully-insured lives and the proposed increased assessment could result in a “death spiral” and voiced support for a longer-term discussion on a stable funding source for the exchange.

The exchange’s finance committee, which recommended the assessment hike in its proposed fiscal 2023-2024 budget, justified the measure as assessment revenues have declined over the last three fiscal years.

The exchange’s operating expenses are projected to outpace revenues an average $2.8 million through fiscal year 2025.

At the same time, the exchange’s rising operating expenses are projected to outpace revenues an average $2.8 million through fiscal year 2025.

According to the exchange, shrinking revenues are caused by small group market contraction due to employers moving to self-insured products, as well as costly new requirements from the state, the Centers of Medicare and Medicaid Services, and the Internal Revenue Service.

CBIA opposed the proposed assessment hikes at the board of directors meeting April 20, warning that small businesses, under no obligation under the federal Affordable Care Act to offer health insurance to their employees, face ever-escalating premium increases.

CBIA Opposition

“Assessments and taxes continue to be a major driver in overall insurance costs for individuals and small businesses,” said CBIA’s Wyatt Bosworth.

“Recent data acquired from the health carriers shows that fully-insured plans incur $359.6 million in assessments, taxes, and fees annually; self-insured plans incur $74 million annually.

“This results in a per member cost in the fully-insured market of $591 annually, and $54 annually for the self-insured market.

“The proposed assessment increase before you today would add $2.8 million to the $359.6 million that fully-insured plans already pay.”

“The proposed assessment increase would add $2.8 million to the $359.6 million that fully-insured plans already pay.”

CBIA’s Wyatt Bosworth

The increase comes only months after the Connecticut Insurance Department approved average premium rate increases of 6.7% for the small group market, with some plans seeing 15% increases. 

The soaring cost of employer-sponsored healthcare has resulted in many employers shifting some costs to their employees, and in some cases, businesses simply stop offering coverage.

According to OHS, Connecticut worker contributions to employer-sponsored insurance premiums have grown two and a half times faster than personal income since the year 2000.

The assessment increase, if eventually passed, would go into effect Jan. 1, 2023 and result in a $1 per member per month increase on fully-insured health plans.

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


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