State Government Public Options Have Failed

Connecticut Should Avoid Following in the Footsteps of States Implementing Government-Controlled Programs Plagued by Unaffordable Costs and Broken Promises

With the 2025 legislative session underway in Connecticut, it’s an important time for policymakers in Hartford to remember state government-controlled health insurance systems, sometimes referred to as “public options” or “state government options” have failed to deliver on promises in states where they’ve been tested — and that past proposals for such a system in Connecticut have been analyzed and projected to hike health care costs.

Lawmakers need only look to Colorado and Washington State, the first two states to fully implement a state government public option, to see how such a system in Connecticut would fail.

• Two years after the state government public option was implemented in the state, POLITICO reported that “costs have not come down enough yet to make a real dent in affordability or in the rates of uninsured and underinsured” and “the policies haven’t yet achieved the kind of sweeping change that proponents had hoped.” According to the Journal of the American Medical Association (JAMA), Washington has been “unsuccessful at securing meaningful rate cuts premium savings for patients have not materialized in some cases” as of 2024.

• When first implemented, hospitals and other health care providers refused to accept Washington’s state government public option, called Cascade Care, because of its low reimbursement rates. Instead of working with health care providers, Governor Jay Inslee signed additional legislation mandating that they participate in the state’s public option. Some warned it could cause increased costs for citizens with private health coverage to make up the difference.

Reduced Access to Care

Washington’s hospitals are paying the price, and some may face closure. Hospitals in the state are making it harder for patients to get timely care. Healthcare leaders have warned that the public option relies on tying reimbursement to Medicare rates, which don’t cover hospitals’ cost of providing care.

The data is clear: Washington’s state government-controlled health insurance system is unaffordable and jeopardizes access to quality care. The failure of Washington’s system illustrates that the best path forward for the Constitution State is to build on and improve what is already working to increase access to the affordable, high-quality health insurance Connecticut residents depend on.

Colorado Public Option Plagued by Similar Problems

A 2024 study conducted by FTI Consulting found that the Colorado Option has failed to deliver greater affordability and increased choices for consumers since it was implemented in 2023.

• The study finds that “non-CO Option plans were the lowest cost option for enrollees seeking out bronze and silver plans.”

• The vast majority of Colorado Option plans failed to meet the 2024 10 percent premium reduction target set by statute. Only 11 plan-county combinations (2.2 percent) achieved the 10 percent reduction target.

FTI also found that The Colorado Option also hurt competition in Colorado’s insurance marketplace and decreased consumer options for health care coverage.

• “The average number of plans decreased by 37.7 percent (53 to 33 plans) across the majority of CO counties in the second year of CO Option implementation, indicative of decreasing competition.”

• The vast “majority of counties (87.5 percent) experienced as high as a 75.5 percent reduction in the number of available plans.”

• “After the CO Option was implemented, consumers were left with fewer choices than before. In fact, more counties than ever before offered consumers plans from only one issuer as fewer were able to stay afloat in the market.”

Low Enrollment

Washington’s public option has been plagued by low enrollment since its first year – and despite bold guarantees from state officials, it has done almost nothing to lower the state’s uninsured rate. 

• With big geographic gaps in plan availability, the state put more requirements on hospitals to contract with plans. But only 0.7% of Washington’s residents enrolled in a public option plan in 2024.

• Two years after implementation, residents of five counties still did not have access to a Cascade Select plan.

Nevadans Next in Line to Face Higher Prices, Reduced Choice

Nevada failed to learn from Colorado and Washington’s mistakes and is the on a path to implement a state-government public option. Already, the Nevada Public Option is expected to have little impact on enrollment when it is implemented in 2026, according to a 2024 report by Lanhee J. Chen, Ph.D., Tom Church, and Daniel Heil.

State-sponsored actuarial analyses suggest Nevada’s public option will have little effect on total exchange enrollment, even if insurers meet the state’s aggressive premium targets.

Past Public Option Proposals in Connecticut Projected to Increase Taxes & Premiums, Reduce Access to Quality Care

A 2022 report from KNG Health Care Consulting analyzing a past proposal to create a government-controlled public option in Connecticut, could lead to negative consequences, including higher taxes on individuals and businesses, higher premiums for workers and their families and reduced access to quality care for Connecticut residents due to unsustainable reimbursement rates for health care providers.

Some of the report’s key findings include:

• The existing state revenue from premium taxes and health insurance assessments could fall significantly under current rates – between $71 million and $122 million by 2023 – likely requiring the state to increase taxes and assessments on health insurers or through additional taxes on businesses and individuals.

• Premiums could increase for workers and their families, including for those whose employers do not take up the public option.

• The number of uninsured individuals under the new public option could increase, depending on the rate of “take up” among employers. In four out of the six scenarios modeled by KNG, the increase in the number of uninsured ranges from nine thousand to 29 thousand.

• The state employee health plan, or Connecticut Partnership Plan 2.0, the proposed vehicle for a public option in the state in the past, has historically been underfunded and faced other financial challenges. If a Partnership Plan 3.0 is also underfunded, the state would likely need to raise premiums or use other tax revenue and/or cut provider reimbursement rates to ensure the plan is financially secure. The study estimates that provider reimbursement rates would likely have to be cut by 15 percent. This could negatively impact Connecticut residents’ access to the quality care they need.

• If the state did not reduce provider reimbursement rates, the state would likely have to collect between $816 million to $1.152 billion to replace lost tax revenue and secure financial footing.

Read the full KNG report HERE.

In addition, a state government-controlled public option would hurt economic growth in Connecticut. A government-controlled system could jeopardize thousands of health insurance and health care jobs and billions of dollars of economic activity in the state.

The Right Path Forward: Improve What’s Working in Connecticut’s Current System

Policymakers can continue to build on positive progress toward expanding access to affordable high-quality care by focusing on solutions that strengthen Connecticut’s current health care system and support greater participation in existing programs — while rejecting unaffordable proposals to start over by creating a state government-controlled public option.

Read more on Connecticut’s Health Care Future HERE.