ConnectiCare to stop selling small group policies

ConnectiCare, which offers health plans on and off Connecticut's health insurance exchange, has alerted brokers that it will soon stop selling small group policies to new customers.

"ConnectiCare has made the difficult decision to withdraw from the fully insured small employer market in Connecticut," spokeswoman Kimberly Kann said in a statement. "This decision was made after a thorough actuarial and financial review, which made it clear that we can no longer offer competitively priced fully insured small employer products in this market."

The company said it will no longer sell new small group policies – on or off the exchange – beginning Dec. 1. It will offer renewals to small group customers with effective plan dates through May 1, 2023.

News of the withdrawal was first reported by the Hartford Business Journal.

"We understand this news comes at a challenging time, and we remain committed to serving our state's small employers," Kann said. "We are making these changes to ensure the health and longevity of our business so we can continue to provide the high-quality health plans employers and individuals in our state depend on."

About 20,000 people are covered by the company's fully insured small group plans. ConnectiCare has sold small group policies through Access Health CT, the state's exchange, since 2018, and has 3,476 members there.

ConnectiCare this year sought an average rate hike of 22.9% on its small group policies offered through the exchange. The state's insurance department approved an average of 15%, with plan increases ranging from 13.1% to 18.9%.

Officials with Access Health CT, whose mission is to help all residents gain access to coverage, said they will reach out to those affected by ConnectiCare's exit from the small group market.

"It's about making sure that residents are able to look at alternative options and don't get confused with this and have all the facts ... to know what's out there in the marketplace," said John Carbone, director of small group and product development for Access Health. "We're going to work with our brokers, because this population is heavily broker driven."

Chris DiPentima, president and CEO of the Connecticut Business & Industry Association, said the move by ConnectiCare leaves small businesses with fewer choices when selecting an insurance plan.

"It's a very challenging market, especially for our small and mid-size businesses," he said. "This just makes it a little bit more challenging. It leaves a smaller pool of carriers."

CBIA and others have called on state officials to examine the cost drivers behind the rising price of health insurance and are asking the General Assembly to tackle affordability in the upcoming legislative session.

"Rising health care costs are right up there [in terms of concerns] we hear from the business community, along with energy costs and the workforce crisis," DiPentima said. "Those are really the top three issues for Connecticut's small businesses, and this potentially exacerbates it."

Many people who purchase individual plans through Connecticut's health insurance exchange qualify for financial assistance to offset the cost of monthly premiums, but small businesses do not.

"The small businesses are the ones that really get the short end of the stick," said Ted Doolittle, the state's health care advocate. "They don't have the protection of the subsidies that the individual folks do. One effect of this will be that some of the small groups will just stop offering insurance and allow their employees to go get what plans they can on the marketplace where they might be subsidized."

Karen Moran, ConnectiCare's president, said at a public hearing in August that the company had sustained more than $65 million in losses in the individual market over the last year because rate increases have not kept up with higher utilization of medical services and the cost of prescription drugs, among other expenses.

"For an insurance program to be sustainable, rates must be adequate to provide for payment of claims and the administrative costs of running the program. For the past year, the total insurance premiums we have received are far less than the cost of care we've actually funded," she said, explaining why the company was seeking substantially higher rates.

ConnectiCare also asked for an average hike of 24% on its individual plans. The state signed off on 15%.

Sen. Matthew Lesser, a Middletown Democrat who is co-chair of the Insurance and Real Estate Committee, said legislators are planning to explore health insurance cost drivers in the upcoming legislative session.

"It's just one more indication that the small group market isn't serving the needs of Connecticut's small businesses," he said of ConnectiCare's withdrawal. "That's why we need real, substantive reform to address their health insurance. It's an ongoing problem, and it's only getting worse."