ConnectiCare’s office in Manchester. Credit: Christine Stuart / CTNewsJunkie

Health insurance provider ConnectiCare will stop selling new fully insured small group plans later this week as it begins to depart from a market in which it currently insures just over 20,000 Connecticut residents. 

The change will begin on Thursday, Dec. 1, when the provider will stop writing fully insured small group plans for new customers, a spokesperson said Monday. The provider will continue to offer renewals to small group customers whose plans are effective through May 1, 2023.

In a statement, ConnectiCare spokesperson Kimberly Kann called the decision to withdraw from the fully insured small employer market a difficult one. 

“This decision was made after a thorough actuarial and financial review which made it clear that we can no longer offer competitively priced fully insured small employer products in this market,” she said.

ConnectiCare will continue to offer small employer products under its Fixed Funding Solutions program, the statement said. 

The departure comes months after ConnectiCare and other providers sparked outrage by requesting digit rate hikes for individual and small business plans. In July, ConnectiCare requested a rate increase of 29.3% for its small group plans. The state Insurance Department eventually approved an increase of 15%.

During an Insurance Department hearing in August, ConnectiCare’s president, Karen Moran, argued that rate increases were necessary to help the company withstand over $65 million in losses over the past year and is required to keep pace with rising healthcare costs.

“For an insurance program to be sustainable, rates must be adequate to provide for payment of claims and the administrative cost of running the program,” Moran said. “For the past year, the total insurance premium that we have received is far less than we have actually funded.”

ConnectiCare’s departure from the fully insured small group market will impact the Connecticut Business and Industry Association, which had partnered with the provider to offer the plans to its members.

On Tuesday, Chris DiPentima, CBIA’s president and CEO, said ConnectiCare’s move followed similar withdrawals from the market by Harvard Pilgrim Health Care earlier this year and Aetna in 2018. 

“What does this mean for our businesses, particularly the small and mid-sized businesses in Connecticut who primarily participate in the fully insured health care market?” DiPentima said. “It only leaves them a few carriers and more need for them to really look at what they’re offering for health care.” 

DiPentima said the rising cost of health care was among the most common concerns for Connecticut business owners along with staffing shortages and energy costs. He said he hoped the state would consider proposals to reduce the cost of providing health insurance including allowing association health plans and reducing mandates on health insurance carriers. 

“I think it’s solvable,” DiPentima said. “If you look at what some other states are doing to keep down health care costs, there’s some good best practices out there.”

The ConnectiCare news comes just days before the Connecticut Insurance Department, the Office of The Healthcare Advocate, and the Office of Health Strategy host a joint hearing in an effort to identify factors contributing to the rising costs of health care and health insurance. 

“Healthcare affordability is critical for the health and outcomes of Connecticut residents, and to the longevity and effectiveness of our healthcare system,” state Healthcare Advocate Ted Doolittle said in a statement.

The hearing will be held on Thursday at the Legislative Office Building in Hartford and is expected to include testimony from health care providers, insurers, pharmacies and academics.