Legislators Should Reject State Government-Controlled Health Care in Connecticut

Policymakers Should Instead Build on What’s Working in Health Care to Lower Costs, Expand Access

Leaders in Connecticut have rightly rejected past proposals for the creation of a new state-government controlled health insurance system, or public option. Legislators in Hartford should continue to reject any plan that would create or expand unaffordable government-controlled health insurance systems.

A Connecticut State Government Public Option Could Lead To Higher Taxes & Premiums, Reduce Access To Quality Care

A report from KNG Health Care Consulting finds that the creation of a new government-controlled health insurance system in Connecticut, known as the 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. The full report, “The Impact of a Connecticut Public Option on Health Insurance Coverage and State Spending,” was commissioned by the Partnership for America’s Health Care Future.

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 Connecticut Partnership Plan 2.0 is already underfunded. If 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 result in the loss of thousands of health insurance and health care jobs and billions of dollars of economic activity.

Government-Controlled Public Option Systems Have Failed In Every State They Have Been Pursued

The public option in Washington, the only state in which a government-controlled public option has been fully implemented, has experienced unaffordable costs and low enrollment.

• Proponents of the public option in Washington state estimated program plans would have premiums between five percent and 10 percent lower than traditional plans on the exchange. Instead, public option premiums in 2021 were, on average, 11 percent higher than the lowest silver plan premium available in each county on the marketplace.

• Just one percent of people buying plans on the exchange in Washington chose government public option plans in 2021.

• Washington’s system relies on cutting payments to hospitals to control costs and ties reimbursement to Medicare rates, which don’t even cover hospitals’ cost of providing care. This puts patients’ access to quality care at risk. The only obvious alternative would be massive tax hikes on families and small businesses.

Colorado is pushing to implement a government-controlled system – known as the ‘Colorado Option’ – after receiving approval from the Biden administration in late June. Experts have warned of significant consequences impacting cost, access to care and quality of care.

• The newly released 2023 health insurance rates and product offerings show that the Colorado Option falls far short of the promise of savings and increased competition. In fact, non-Colorado Option plans are less expensive for most Coloradans and the Colorado Option is forcing insurers out of the market which leads to less choice and competition. 

• Approved individual and small-group premiums for 2023 are higher than 2022 by an average of 10.4 percent and 7.4 percent, respectively. The rate hikes are likely to be especially high in rural Colorado, where health insurance is most expensive.

• Four prominent health insurers have announced they will partially or completely exit Colorado. Competition has decreased and there are fewer insurers for individuals and employers to choose from, disrupting Coloradans’ choices.

• Connect for Health Colorado’s own consumer impact analysis shows that fewer insurers and fewer plans will be available in 2023 compared to last year. Six insurers will offer individual market plans this year compared to eight last year. There will be 166 plans available through Connect for Health on the exchange versus 257 plans last year.

• In the few areas where the Colorado Option is the lowest cost plan, the savings are minimal. For example, consumers in Denver will save 10 to 48 cents by purchasing the Colorado Option plan. These cost savings may not last, as the insurer offering this rate was forced by state regulators to sell the Colorado Option at a seven percent loss in 2023. The carriers’ own actuaries indicate this artificial Colorado Option rate is inadequate and not sustainable.

• Unsustainable and artificial premiums could likely drive increased costs for medical providers in the state – who would have to choose between passing that cost on to patients or cutting services.

Nevada lawmakers passed rushed legislation to create a state government-controlled option in the final weeks of the 2021 legislative session. The final bill included a provision for a five-year actuarial study of a state government public option before implementation out of substantial concern the policy would prove unaffordable.

• Nevada stakeholders pointed out that creating the state government option “does nothing different than Medicaid and the Health Exchange currently do, but add costs, increase burdens, and damage both the health insurance market and health care provider network. The public option provisions of the bill are neither a solution nor a benefit to Nevadans.”

• Nevada is facing a dire physician shortage – ranking 48 out of 50 states in physicians per capita. Cutting payments to providers, which the state concedes will happen under a public option, will make it harder to attract and retain doctors in the state.

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

Connecticut has made significant progress building on its current health care system to expand access to low-cost or free health coverage. In July 2022, Governor Lamont announced an expansion of the Covered Connecticut program to include additional consumers who meet eligibility requirements — and provide additional benefits for enrollees.

As a result of collaboration and partnership between policymakers and the private sector, the program that previously provided low-cost or free health insurance to approximately 800 parents and caretakers will soon be available to nearly 40,000 Connecticut consumers who can benefit from access to high-quality health coverage at no charge.

The Covered Connecticut announcement builds on recent progress, including record high enrollment in the exchange, Access Health CT.

In addition, recent public opinion research finds the vast majority of likely voters (69 percent) prefer building on and improving Connecticut’s current health care system over creating a new state government-designed health insurance plan (31 percent).

Policymakers can continue to build on the positive momentum 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.

Learn more about how state government-controlled health insurance systems in other states also “aren’t working out” HERE.

Read more on Connecticut’s Health Care Future HERE.