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March 21, 2023 Other Voices

Opinion: A CT public health insurance option will harm small businesses 

Tim Phelan is the president of the Connecticut Retail Network, an association that represents the state’s retailers. 

Now that the 2023 legislative session is underway, politicians in Hartford are once again debating health care under the gold dome.  

Some have continued to float the idea of creating a state government-controlled health insurance system, commonly referred to as a public option. 

This one-size-fits-all system is bad news for Connecticut small businesses and residents.

For our retail businesses across Connecticut, a public option would likely lead to increased costs and taxes, which would directly impact their business operations and the healthcare costs of our employees.  

That’s why in our pre-session “CT Retail Network Issues Roundtable” discussion series with state legislative leaders, we pressed them to ensure that productive healthcare policy reform is at the top of their agenda.  

A public option would create higher premiums and decreased access to the affordable, high-quality care Connecticut retailers rely on.

During our roundtable interviews, I was greatly encouraged by lawmakers’ focus on examining the full costs of the healthcare system and using this data and information to help make informed policy decisions.  

Gov. Ned Lamont has also broadened his approach to healthcare policy reforms by looking to undertake a full review of systemic policies and costs to drive innovative employer and employee healthcare improvements.
Healthcare industry experts have asserted that existing state revenue from premium taxes and health insurance assessments could fall by as much as $120 million under a public option. 

In order to make up for the lost revenue, the state would likely have to increase taxes and assessments on health insurance providers, or raise taxes on businesses and individuals. 

Whether it is increased premiums or additional taxes for residents and small businesses, the result is unaffordable costs.

Small- and medium-sized retail businesses are a pillar of the state’s economy. Ninety-eight percent of all retailers in Connecticut — comprising almost 42,000 establishments — employ fewer than 50 people. 

In recent years, small businesses have had an especially hard time hiring the employees necessary to run their businesses. And record-high inflation has drastically increased costs across the board. 

The last thing Connecticut small businesses need is increased taxes as they grapple with additional challenges and costs. Businesses that provide health insurance could be forced to make the difficult choice to pass increased premium costs on to their employees and families.

Under a government-controlled public option, all residents would likely face higher costs and decreased access to the high-quality care they depend on. The state would likely need to raise premiums or cut provider reimbursement rates to ensure the financial security of a public option.  

All we have to do is look to the Connecticut Partnership Plan to understand that the state has no business running a health insurance program. The Partnership Plan, a state government-controlled public option available to some municipal employees, is infamous for its financial insolvency. 

Described earlier this year as a “fiscal titanic,” the plan faced another deficit in fiscal 2022, collecting $622 million in premiums while paying out $659 million in claims. The plan has also relied on millions of dollars in federal COVID-19 relief funds to stabilize its solvency.

Forcing this flawed plan on the entire state would go as poorly as you’d expect. 

Small businesses and residents do best when private insurance providers work together with commonsense public policy and programs to build on and improve Connecticut’s current health insurance system to expand access to affordable, high-quality coverage for every Connecticut resident. 

Tim Phelan is the president of the Connecticut Retail Network, an association that represents the state’s retailers. 

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