HARTFORD, CT — Democratic legislative leaders, Gov. Ned Lamont, and state Comptroller Kevin Lembo unveiled a sweeping new bill Thursday that would change how health insurance is sold to individuals and small businesses in Connecticut.
The new legislation ditches the idea of allowing small businesses to join the state employee health insurance pool. Instead, the bill would require health insurance companies bidding for an unknown group of businesses and individuals — in a new pool managed by Lembo’s office — to lower premiums by 20%.
Rep. Sean Scanlon, D-Guilford, said the plans offered to individuals and businesses through this new pool would come “with a guaranteed reduction in costs.”
The premiums in 2022, the first year the plans would be offered, would be 20% lower than the average premiums for individuals and small group plans offered on the exchange in 2020, rates for which are expected to be announced in the coming weeks.
If the insurance companies offering plans through the new “Connecticut Option” don’t meet that benchmark, then the General Assembly could come back and decide to create a true government-run public option.
It’s unknown how many insurance companies would seek to bid to provide insurance for the Connecticut Option, but the plans will be offered both on and off AccessHealthCT, the state’s health insurance exchange.
The final draft of the bill was not available publicly today and it’s unclear whether debate on the legislation would start today in the House or the Senate.
The new legislation, according to a press release, would also reinstitute the individual mandate on individuals who choose not to purchase insurance. The federal mandate was eliminated a year ago, but Connecticut’s legislation would bring it back to the level it was at when it expired.
The mandate was $695 per adult or 2.5% of annual income, whichever is greater.
Sen. Matt Lesser, D-Middletown, said they expect the individual mandate to generate $25 million.
It would also require the state to apply to the federal government for a reinsurance waiver to help reduce the costs of the program and provide additional backing against high-cost claims.
In addition the proposal places a small tax on prescription opioids. The revenue collected from that tax will help restore Medicaid coverage to several thousand of the Husky A parents who lost access to the program under the state’s last budget. It also requires the state to petition the federal government for permission to import prescription drugs from Canada at greatly reduced prices.
Lembo described the legislation as “Historic for Connecticut. Historic for the nation.”
He said what they are doing with the legislation is the most important thing they can do as policymakers to help small businesses grow and prosper.
“The bill has the potential to change the trend on medical costs,” Lembo said. “It has the potential to change the trend on increased deductibles and pushing people further and further away from care while they’re simultaneously paying more for the underlying policy.”
It also has the power to “disrupt the market, which is failing,” Lembo said.
The plan increases competition in the market by requiring insurance companies that serve state employees to also provide cost-effective plans through the exchange, according to a press release.
There are only two insurance companies currently offering plans to individuals on the exchange, ConnectiCare and Anthem. When Connecticut’s exchange first opened in 2013 there were four insurance companies participating.
Susan Halpin, head of the Association of CT Health Plans that represents the insurance industry in Connecticut, said they can’t support the legislation.
“We believe the current legislation, as drafted, continues down the path toward government-run health insurance and we principally cannot support its passage. As the Insurance Capitol of the World, we should be embracing the growth of the health plan jobs here. If the aim is to reduce rates, we should be looking at all the cost drivers in our excellent but expensive health system. As health plans, we stand ready to meet that challenge and work with anyone that wants to advance true market-based solutions. We appreciate the Governor’s office’s effort to mediate the bill.”
Lamont said he’s been speaking with the insurance industry about the legislation.
“I wanted them at the table and I want them at the table moving forward,” Lamont said.
Scanlon said the insurance industry might not embrace this, but they are having a “constructive dialogue” with them.
Lesser said a lot of what’s in the bill are ideas that came from the insurance industry.
A number of advocates have been pushing for this type of legislation for a decade.
“We have heard too many stories from small employers and families across the state that they cannot access the health care they need because insurance premiums and out-of-pocket costs are out of control,” said Frances G. Padilla, president of Universal Health Care Foundation of Connecticut. “Our state must step up and help those left behind in the current health care market. This bill could make a real difference for thousands of small businesses and individuals.”
But not everyone was impressed with the proposal.
An insurance industry lobbyist is the one who handed a copy of the bill to Sen. Kevin Kelly, R-Stratford, and Senate Republican Leader Len Fasano late Wednesday night.
“How do you have a press conference on one of the most significant changes on health care law from an insurance mandate, to prescription drugs, to private insurance without ever having at the very least any conversation with the minority party of this building,” Fasano said.
Fasano said there was no public hearing on any part of the draft legislation introduced by Democrats with eight session days left.
“I just believe the whole process to be deceitful,” Kelly said.
Kelly said many of the problems with the health insurance industry are related to the failures of the Affordable Care Act.
“We’ve been trying to work with them on it,” Kelly said. “We put forward ideas and now we’re shut out of the room.”