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May 27, 2024 Opinion & Commentary

Bordonaro: Lawmakers derelict in not addressing CT’s collapsing small group health insurance market

PHOTO | YEHYUN KIM/CT MIRROR A view of the House of Representatives chamber in the Connecticut General Assembly.

As is typical every year, Connecticut lawmakers in 2024 let many bills die before the end of the legislative session on May 8.

Greg Bordonaro

In some cases, that’s not a bad thing. Few businesses would complain about lawmakers not taking action on new proposed mandates or regulations that would make Connecticut less competitive.

However, one of the most egregious oversights by lawmakers was failing to address the state’s fully insured small group health insurance market, which has been in a steady decline for years.

Some might even describe the market, which serves businesses with 50 or fewer workers, as broken or collapsing.

Enrollment in fully insured health plans offered to Connecticut small businesses has shrunk by more than 50% over the last six years, according to my tally of industry data.

Insurers currently offering fully insured small group health plans in the state — Anthem, Cigna, Aetna, Oxford Health and UnitedHealthcare — covered 75,830 lives in 2023, down 51.5% from the 156,507 lives covered in 2018, according to data from the Connecticut Insurance Department.

That decline has come as the number of insurers offering small group coverage has also shrunk.

Over the last two years, Farmington-based ConnectiCare and nonprofit Harvard Pilgrim HealthCare both exited the fully insured market.

And earlier this month, Bloomfield-based Cigna Healthcare and New York-based insurance technology company Oscar notified policyholders nationwide that they will stop offering a small group plan they jointly launched just a few years ago.

The Cigna + Oscar small group policy debuted in Connecticut in 2021, and quickly gained significant market share, covering 20,599 lives, or 27.2% of the fully insured market in 2023.

As of March 2024, Cigna had 17,500 small group customers in Connecticut, accounting for approximately 20% of the market, according to more up-to-date stats from the Insurance Department.

In a recent earnings call, Oscar Health CEO Mark Bertolini, a well-known figure in Connecticut who formerly led Hartford health insurer Aetna, told analysts that his company was choosing to not renew the Cigna + Oscar plan because it struggled to make it profitable.

ConnectiCare and Harvard Pilgrim, a nonprofit insurer, cited a similar challenge when they exited the market.

Meanwhile, small businesses face consistent annual premium increases that typically outpace the rate of inflation, making it increasingly difficult for them to afford health benefits.

That has led some companies to forgo health insurance and push their employees onto the state’s healthcare exchange to find individual coverage, or join the growing trend toward self-insurance, which shifts the responsibility of paying for medical claims from the insurer to the employer.

Missed opportunity

So, what could lawmakers have done to address the issue?

There is no magic-bullet solution. There are many issues driving up healthcare costs for employers and individuals, including an increasingly consolidated provider market, higher care utilization and pharmaceutical prices, an unhealthy population, etc.

Small employers are at a particular disadvantage because they lack the scale to negotiate with insurers. At the same time, state lawmakers have added numerous coverage mandates over the years that have further driven up small employer premiums.

One option lawmakers should have moved forward with in 2024 was allowing association health plans, which would give qualifying chambers of commerce and trade associations the ability to act as one large employer and offer their members self-funded health insurance benefits.

At least 37 states allow association health plans, according to Bloomberg Law, and Connecticut lawmakers have debated the concept in each of the last two years.

An association health plan bill seemed to gain momentum in the 2024 session as it attracted some bipartisan support.

Proponents this year even beefed up coverage mandates in the proposal, requiring association health plans to offer benefits on par with the federal Affordable Care Act market.

That was meant to address the concerns of patient advocacy groups, such as the American Cancer Society and Leukemia & Lymphoma Society, which worry that such plans would allow employers to offer bare-bones coverage that drives up care costs for individuals.

(Self-insured companies are able to avoid many Obamacare and state insurance mandates that lead to higher premiums.)

However, even with the stricter requirements, the association health plan bill didn’t get to, or even near the legislative finish line. In fact, the bill didn’t even make it out of the Insurance and Real Estate Committee, which essentially punted on the 2024 legislative session by not voting on any legislation, an unprecedented move.

House Speaker Matthew Ritter (D-Hartford) in March blamed the inaction on “a byproduct of years of adversarial relationships that just keeps boiling over.”

It’s unclear exactly what’s driving the opposition. We do know some Connecticut lawmakers would prefer a single-payer health insurance marketplace controlled by state government.

But that won’t do much to control the underlying issues that are driving up healthcare costs, and risks putting state finances into further harm’s way.

Association health plans will help small businesses gain scale and better spread out risk, creating some of the advantages enjoyed by large corporations, which are traditionally self-insured.

If small businesses are truly the lifeblood of the economy, as politicians always like to say, there should be greater urgency in helping them access more affordable health insurance options.

Association health plans offer a free-market solution that’s worth trying.

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