One of the “most egregious oversights by lawmakers was failing to address the state’s fully insured small group health insurance market, which has been in a steady decline for years,” the Hartford Business Journal (HBJ) pointed out following adjournment of the state legislative session in May.
The observation was buttressed by unassailable industry data: “Enrollment in fully insured health plans offered to Connecticut small businesses has shrunk by more than 50% over the last six years” according to one tally. “Insurers currently offering fully insured small group health plans in the state — Anthem, Cigna, Aetna, Oxford Health and UnitedHealthcare — covered 75,830 lives in 2023, down 51.5% from the 156,507 lives covered in 2018, according to data from the Connecticut Insurance Department.”
Farmington-based ConnectiCare and nonprofit Harvard Pilgrim HealthCare have both exited the fully insured market during the past two years, HBJ pointed out. That was followed last month by Bloomfield-based Cigna Healthcare and New York-based insurance technology company Oscar notifying policyholders they will stop offering a small group plan they jointly launched just a few years ago.
And then, while that ink was barely dry, the announcement this month that Aetna has informed the state Insurance Department it has decided to leave the small group market and will no longer offer new businesses small group health plans.
The dangers are clear and present. The HBJ summed it up succinctly: “small businesses face consistent annual premium increases that typically outpace the rate of inflation, making it increasingly difficult for them to afford health benefits.”
Proposed legislation, yet to be approved, has the potential to create transformative change, which could lower the cost of health coverage for small businesses and their employees as well as improving the quality of that coverage.
Connecticut’s retail businesses are among the many small businesses across our state that have consistently expressed support. Retail businesses here support more than 470,000 jobs and contribute more than $34 billion to our state’s economy. There are roughly 42,000 retail establishments in Connecticut, and in total, the retail industry produces approximately 14% of Connecticut’s total GDP.
Retail businesses provide good jobs for Connecticut families, and more than 98 percent of all retail companies are small businesses, employing fewer than 50 people. In the context of this proposed legislation, that is especially important.
Even with all the changes and challenges of the post-COVID economy, the cost that is often most crippling to small retailers is the cost of health care. Association health plans are a solid private sector solution to rising healthcare costs. They are effective – and can help to keep Connecticut retail businesses, and Connecticut residents, here in our state.
It is far from a novel idea. States across the country allow association health plans; nearly 40 states according to a tally by Bloomberg Law. There were nearly three dozen co-sponsors in Connecticut’s legislature this year, supporting what was referred to as “employee health benefit consortiums.”
Permitting their establishment would allow small businesses to work collaboratively to do what larger businesses do – obtain and offer affordable and quality health insurance to their employees and their families. Nonprofit organizations would also qualify to do the same.
The Connecticut Business & Industry Association shared data from the National Federation of Independent Businesses indicating that “almost all (94%) of small employers find it challenging to some degree to manage the cost of offering employer-sponsored health insurance, with almost half (48%) reporting it as very challenging.”
As the Middlesex County Chamber of Commerce – which represents more than 1,900 businesses employing over 50,000 people – described it in a published article, small businesses “are navigating soaring costs – in a state that’s already among the 10 most expensive states to run a business – and a worker shortage crisis that’s showing no signs of easing.”
“Small employers need to be able to offer competing benefit packages to recruit and retain new employees and compete with larger counterparts who already have the scale to offer robust health benefit packages,” West Hartford Chamber of Commerce President & CEO Chris Conway told legislators this year.
This month’s upcoming Special Session of the legislature is expected to be limited in scope so as to preclude many issues, including association health plans, from being considered. That would push the issue out another half year, to the start of the 2025 legislative session in January.
For retailers, a health benefit consortium can make all the difference in the world, providing an opportunity to reduce one of the highest costs they have in running their businesses. It can allow them to use the power of group purchasing to realize some savings, afford to continue in business, and compete successfully in a marketplace that is more competitive and complex than ever.
Connecticut’s small businesses, often described as the backbone of the state’s economy, and their employees deserve action on this initiative. The benefits will not only accrue to employees and their families, but also to their customers. It can lead to healthier, more educated consumers of health care services, and lower premiums.
All of which sounds very much like an unbeatable combination. We may need to wait until next year, but we surely should not need to wait any longer. As one supportive legislator said amidst the repeated delays, “Doing nothing is not an option.”