State Government Public Options Have Failed

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

States that have experimented with government-controlled health insurance have proven that these heavy-handed systems do not work. Connecticut policymakers should heed the warning these states offer and reject misguided calls for similar, overly complex and administratively burdensome models or expansions of government-controlled systems. Despite lofty promises, public option systems have repeatedly failed to lower costs or expand choices in a meaningful way. In fact, analyses of similar proposals here in Connecticut have shown they would drive up health care costs for families, businesses, and taxpayers.

The most direct route to a government takeover of health coverage in Connecticut would be passing a public option bill. But there’s also a quieter, more incremental path. By layering on costly mandates and restrictive regulations, policymakers could squeeze private insurers out of the market. The result would be fewer options, higher premiums, and greater calls for an expansion of government-run systems as the private market is artificially undermined by burdensome red tape.

Connecticut families can’t afford either path. The public option has only added more arbitrary regulations and costly compliance measures, in turn raising the cost of care and decreasing competition in the insurance market. Lawmakers should not repeat the mistakes of other states. In fact, Connecticut leaders have previously rejected similar proposals.

Instead of dismantling what works, lawmakers should focus on policies that strengthen competition, expand access, and keep coverage affordable — not hand control of our health care system over to more costly government-controlled systems. 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, 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’s public option plans have been “unsuccessful at securing meaningful rate cuts, premium savings for patients have not materialized in many cases” as of 2024.

• The Office of the Insurance Commissioner subsequently approved 2024 rate increases of nearly nine percent as the public option puts upward pressure on the market. Insurance Commissioner Mike Kreideler said he’s “deeply concerned at what these increases mean for individuals and their families.”

Reduced Access to Care
Washington’s hospitals are paying the price for the state’s failed public option, 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’ costs 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 achieve its primary objective to reduce premiums and increase 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 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.”

Four years after implementation, the Colorado Option still suffers from many of the same flaws. Low enrollment plagues the program, with less than half of individuals in the market deciding to enroll in public option plans. Colorado has also suffered from an exodus of carriers in the state, with six insurers leaving the market over the course of 2024, and two more leaving in 2025.

Data published by the Center for Medicare & Medicaid Services (CMS) shows that the Colorado Option has done very little, if anything, to reduce premiums. It is clear that, much like the only other public option in the country, Colorado’s public option has failed to deliver on its promise to lower the cost of care in a meaningful way. The state’s reinsurance program has been much more effective at bringing premiums down.

• The overwhelming majority of service areas have premium savings from the Colorado Option of less than one percent.
• Denver, which encompasses 40 percent of the market in its service area, shows less than 0.2 percent in Colorado Option premium savings. In comparison, reinsurance reduces premiums by 15 percent.
• Twenty-three of the 34 service areas, which encompass the vast majority of the state’s market, show less than 0.5 percent in Colorado Option premium savings. In comparison, reinsurance in those same service areas lowers premiums by 15-32 percent.

A 2026 report conducted by Mathematica on behalf of the Colorado Division of Insurance studied the impact of the Colorado Option on health plan enrollment and affordability in the individual and small-group markets. The report found that Colorado Option plans have not produced meaningful, statistically significant premium savings across the board. In fact, non-Colorado Option plans are typically just as price competitive, demonstrating that the commercial market continues to perform well in Colorado.

• In 2020, Colorado implemented a reinsurance program, which is likely responsible for any reduction in premiums – not the Colorado Option.
• Enrollment in Colorado Option plans is very low, demonstrating that consumers find commercial plans to be a better value.
  • In 2023, total Colorado Option enrollment in the small group market was 160 consumers, which is less than 0.1 percent of the market.
  • In 2024, this number only increased to 450 consumers, or 0.3 percent.
  • In the individual market, a minority of enrollees selected Colorado Option plans as well – 35 percent in the on-exchange market and 24 percent in the off-exchange 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 among counties with a Cascade Select plan, the plans account for less than 20 percent of enrollment in 24 counties; in 10 counties, public option enrollment accounted for more than 20 percent of enrollment.
• 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 on a path to implement yet another harmful state government public option. There is a growing concern that the public option may destabilize the broader market as more pressure is placed on insurers to meet unreasonable premium reduction goals. Brokers in the state have also sounded the alarm, as they raise worries that the new public option plans will not “provide the same level or quality of offerings as other alternative plans on Nevada Health Link,” while simultaneously undercompensating brokers due to the plans’ razor-thin margins.

Even a state-sponsored actuarial analysis suggests Nevada’s public option will have little effect on total exchange enrollment, even if insurers meet the state’s aggressive premium targets – which may prove to be unsustainable in the long run. Based on this evidence, it appears Nevada’s public option would achieve the same outcome of every other public option in the country: failure.

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 found that a public option 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 and $1.152 billion to replace lost tax revenue and secure a 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.