EDITORIAL: Proceed cautiously with a Connecticut public option

April 28-- Apr. 28--Connecticut Comptroller Kevin Lembo and the Democrats in the legislature backing his proposal to create a public option to make health care insurance more affordable are on to something. However, the potential for the state legislature to overreach is significant.

Lembo's primary target in pushing for Connecticut to become the first state offering a public option is small businesses. Small-sized companies employee more than 700,000 workers in Connecticut. That's half the workforce. But many of these small businesses operate at the margins. They do not enjoy the economies of scale of larger businesses and corporations. And this can make it difficult for them to offer health insurance to employees.

Less than half of small businesses in Connecticut provide employee health insurance, which means about one-quarter of the state workforce cannot access insurance through their employer.

Eight in 10 employees say health insurance is "very" or "extremely" important when making career decisions. In other words, access to insurance can play a bigger factor than pay, career advancement opportunity or landing a likeable job. Conversely, small businesses may be unable to attract the quantity and quality of employees they need to grow because they are not in a financial position to offer health insurance.

The insurance factor thus distorts normal market forces, acting as a drag on economic growth and market flexibility.

Lembo's response, as contained in House Bill 7267: "An Act Concerning Public Options for Health Care in Connecticut," is to create an alternative that more small businesses would find affordable.

Called ConnectHealth, this public option would be open to small businesses with 50 people or less. Lembo explained, in a meeting with the editorial board, that his office, which manages the largest employer health plan in the state (190,000 state employees and family members), could use its negotiating power and a large diverse risk pool to provide quality, affordable health insurance plans.

Lembo addressed our concern that his public option would compete with a major state employer, the insurance industry. It employs about 60,000 people. The comptroller pointed to statistics that show Connecticut's largest insurance employers are not players in the small business market. Cigna doesn't take part in the small business market, while Aetna and UnitedHealthcare cover less than 30,000 lives collectively, a tiny fraction of their business.

Also, the state would hire one or more private insurers to administer the programs, adding some industry jobs.

The approach would not be without risk. If too many high-cost patients end up in the public option, it could destabilize the market in the state and potentially drive up costs to the state for insuring its own employees. But Lembo, since first elected as comptroller in 2010, has proved to be fiscally prudent and an honest broker of state finances. His confidence that he can make this work carries significant weight.

What would be a mistake is to expand the public option in its second year of operation to individuals, as currently conceived in the legislation. This would significantly increase the odds of disrupting the marketplace and driving up premiums.

The better choice is to give a ConnectHealth public option for small business several years to work and prove its merits before considering opening it to individuals. Who knows, by then perhaps Congress would have stopped fighting over health care coverage and provided a federal plan, building on or replacing the Affordable Care Act, that provides all Americans access to decent health care coverage.

The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Tim Cotter, Staff Writer Julia Bergman and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.

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