Connecticut Lawmakers Drop Plan To Expand State Health Insurance

Hartford Courant (CT)

Legislation known as the “public option” that would have created a state-sponsored insurance plan for small businesses and nonprofits will not be taken up by the General Assembly following opposition from Gov. Ned Lamont, lawmakers said Friday.

Democrats have been pushing for years for the public option as part of health care reform, but Republicans and some business executives have been strongly against it. Democrats raised the issue again this year, but it will not be part of a broader health care reform that lawmakers are trying to pass before the regular legislative session ends June 9.

“Yes, it is true that the governor had some concerns about the actual public option piece of the bill, but we have a lot of agreement about the health care reform aspect of the bill,’' said Rep. Sean Scanlon, the former co-chairman of the insurance committee who is among the legislature’s leading authorities on health care.

“Everyone calls it the public option bill, but there’s a lot more in it than just the public option,’' Scanlon said. “It’s really a health care reform bill.’'

The legislation proposed to extend the state insurance pool that’s accessible to municipalities to be available to small businesses, nonprofits and individuals. The CBIA said the government plan has operated with a shortfall and undermines arguments to expand the state’s presence in health insurance.

Comptroller Kevin Lembo, whose office administers the Connecticut Partnership Plan, said in a March report that the plan is financially stable and projections show it will remain so. Unlike private-sector plans that it says generate profit with low medical loss ratios — the percentage of premium dollars that a health plan spends on medical claims and improvements rather than administrative costs — the balance of unused premium dollars paid by groups in the state plan is held in reserve and used to reduce premium costs, the report said.

The legislation faced stiff opposition from the business community, including five executives from Hartford-area insurance companies. In a letter to Lamont last month they warned that companies might move workers out of Connecticut if it is viewed as too costly.

Lamont’s chief spokesman, Max Reiss, said Lamont has remained firm in his position that he wants to make health care more affordable for Connecticut residents.

Reiss said Lamont favors expanding access to Obamacare, the existing government-subsidized health care insurance program, instead of subsidizing a new effort.

“He did not support a program that was going to be back-stopped by taxpayers with an unknown cost,’' Reiss said in an interview Friday.

Lamont, he said, is still pushing for health care improvements in the future.

“If we could do what we can at the policy level to drive down the cost of health insurance and health care, we want to do all those things,’' Reiss said. “But given the potential blank check to the state of Connecticut to cover a public option is not something that the governor felt was prudent.’'

Lembo said Lamont has “denied affordable health care options to small businesses and nonprofits despite the obvious need and overwhelming support from the public.”

“There is another structural issue within Connecticut government, however, when popular and necessary policies are jettisoned to please the wealthy and well-connected,” Lembo said.

Chris DiPentima, president of the Connecticut Business & Industry Association, which is fighting the public option, said Lembo’s “response is politics.”

CBIA members typically have fewer than 100 employees and are not among Connecticut’s wealthy residents, he said. Businesses agree that rising health insurance costs are a major issue, but do not believe a public option is a solution.

“This was not going to lower the costs of insurance,” DiPentima said. “It will raise the costs of doing business in Connecticut.”

Rep. Kerry Wood, a moderate Democrat who co-chairs the legislature’s insurance committee, said she believes much of the problem has been resolved because the federal government recently provided $85 million over two years in coronavirus stimulus funds to Connecticut’s health exchange under the Affordable Care Act, commonly known as Obamacare. Along with other improvements, the extra money helped abrogate the need for the public option, she said.

“There’s really no need for it at this point,’' Wood said in an interview Friday. “The hole that we were trying to fix with the public option bill is fixed. Both Anthem and CIGNA have come out with small-group plans. There are more options for small businesses than there were a year ago. There’s no need to run that bill.’'

She added, “When we take away private sector business and put it into the public sector, we lose jobs.’'

Susan Halpin, executive director of the Connecticut Association of Health Plans, said the decision to drop the public option is “very welcome news.”

“We hope the legislature will engage the industry In any conversation moving forward,” she said.

“As people learned the many details of the public option they had more questions than answers, more concerns than comfort going forward with it,” she said.

The health insurance industry fought hard, calling the public option a “state government-run public health care system” that would jeopardize more than 48,000 jobs in the industry and $15.5 billion in direct or indirect economic activity.

Senate Republican leader Kevin Kelly of Stratford and Sen. Tony Hwang of Fairfield said their party has a better way to make health care affordable.

“A government-run public option does not achieve that goal,’' they said. “Connecticut Senate Republicans have a plan to reduce the costs of healthcare and increase access without hurting jobs. Democrats refused to advance our plan out of committee. But now it’s past time for Democrats and the governor to work with us.’'

House Republican leader Vincent Candelora of North Branford said Democrats “need to drop the antagonistic approach’' to the insurance industry.

“Expanding the reach of state government’s tentacles in the insurance industry isn’t the sort of health care reform that will benefit Connecticut, and I’m glad this ideological push to put government in competition with a cornerstone of our fragile employment market has finally run aground,’' Candelora said.

Separately, both Lamont and some Democratic lawmakers still favor a $50 million state tax on Connecticut’s six health insurers because the federal government recently phased out a tax that generated a total of $300 million per year from Connecticut insurers.

“What the industry is saying is we’re trying to tax them $50 million, but they’re getting a $300 million federal tax cut,’' Reiss said. “Our goal is to get as many people covered as affordably as possible so they can cover their premiums and cover their co-pays. This is a drop in the bucket for them.’'

Christopher Keating can be reached at [email protected]