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January 18, 2022

Study: ‘Public option’ could lead to higher premiums, taxes

Photo | CNN
By Zachary Vasile

An expansion of state-controlled health insurance — sometimes labeled the “public option” at the state Capitol — could lead to higher taxes and premiums as well as a decline in the quality of patient care in Connecticut, according to a study released Tuesday.

An analysis by KNG Health Care Consulting, a health economics and policy consulting group, concluded that a proposal to expand access to a state-administered insurance plan to small businesses, nonprofit organizations and multiemployer groups — introduced to the legislature last year as SB 842 — would likely force the state to raise taxes on health insurers and residents, increase premiums and possibly increase the number of uninsured people.

The study was supported by Connecticut’s Health Care Future, a project of the Partnership for America’s Health Care Future, which represents hospitals and health insurers. The group has opposed initiatives it sees as supporting a single-payer health platform.

The report found that state revenue from premium taxes and health insurance assessments could fall significantly, by between $71 million and $122 million by 2023, if a public health insurance plan was adopted.

The state would have to make up that shortfall likely through an increase in taxes and assessments on health insurers, or through additional taxes on businesses and individuals, the report said.

Premiums could increase, the study’s authors noted, as could the number of uninsured individuals. In four of six scenarios modeled, KNG said, the increase in the number of uninsured people ranges from 9,000 to 29,000 as a result of higher premiums for workers, especially for those whose employers do not take up the public option.

And if the new insurance plan is as underfunded as Connecticut’s current insurance plan for non-state employees, the report concludes, the state would likely need to raise premiums or other tax revenues, which would result in a heavier financial burden for residents, or cut provider reimbursement rates, which could negatively affect access to high-quality treatment and services.

SB 842 — the state’s third attempt at creating a “public option” — stalled out last year. It had won support from progressive Democrats and then-Comptroller Kevin Lembo, but drew fire from the executives of several Connecticut-based insurance companies.

Gov. Ned Lamont, through a spokesman, also voiced misgivings over the bill, fearing that it would constitute a potential “blank check” to the state.

Lembo, who as comptroller oversaw the state’s healthcare plans, had argued that the reforms were financially sound.

KNG’s study comes as the legislature prepares to convene for its 2022 session next month. It is possible that a new public option bill could surface, though it is not clear if it’s chances of success would be greatly improved from last year.

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