New bill would let Connecticut small businesses pool resources for health insurance

House Bill 6710, “An Act Concerning Association Health Plans,” could provide a transformational benefit for Connecticut small businesses. The bill would allow multiple small businesses to buy insurance for their employees together as a single entity instead of each negotiating individually.

Businesses with fewer than 51 employees will be able to join together with other members of their industry association to purchase medical insurance plans for their employees. The result, according to supporters of the bill, will expand the ability of small businesses in the state to offer competitive benefits for employees who might otherwise be forced to find their own insurance plans through the ACA healthcare exchanges.

During a Feb. 21 public hearing, the bill drew significantly more support than opposition, with 37 organizations and individuals speaking out in favor of HB 6710.

Opposition to the bill during the hearing consisted of 10 speakers that included State of Connecticut Healthcare Advocate Ted Doolittle along with representatives from the Connecticut Hospital Association, the American Cancer Society, The Leukemia & Lymphoma Society and the American Lung Association. The detractors raised concerns about the need for stricter regulatory systems to prevent fraud and predatory practices in association health plans, and that by pulling relatively healthy young workers out of the ACA coverage pools those left behind may see increased costs.

“I think that this bill as written will do much to undermine the success of the ACA and Access Health CT, but it will not do much to restrain the growth of health care prices which are the challenge ahead of all of us,” said Doolittle in his testimony. “It is a step backwards, and it does not place anybody on stronger ground to face the future.”

However, he noted that his office’s opposition to the current bill would not extend to a revised version that included specific provisions strengthening the rights of sick or injured employees to access care under the plan.

Wyatt Bosworth, the assistant consul for the Connecticut Business and Industry Association (CBIA), spoke in favor of the bill.

“With the record level of inflation, the Covid pandemic coming to an end, and a historic workforce shortage I think the legislature is finally focusing on an issue that has been present for the past few years and recently been exacerbated, and that’s the cost of health insurance for the small employer,” said Bosworth, who noted the CBIA has made supporting the bill a top priority for the coming legislative session.

“Small employers under 50 employees don’t have many options when it comes to getting health insurance,” Bosworth explained. “They can go to the small group ACA market and buy a fully insured product, but those are becoming increasingly expensive and carriers are withdrawing from the market due to the plans being unaffordable, so small businesses are not enrolling in them. As a result, a lot of small employers are simply just not offering coverage anymore to their employees, or they’re sending them to the exchange.”

By banding together, Bosworth stated, the small businesses and organizations that purchase health insurance through an association plan will essentially be able to negotiate better deals by bundling dozens or hundreds of plans.

Bosworth described the bill as a necessity given the failure of the legislature to create a public option. “The pool in the small group market is becoming increasingly more sick,” he noted, “and as a result increasingly more expensive. This bill would provide another option, an option that’s more affordable, an option that would give small employers more robust coverage than they have access to now.”

The bill has bipartisan support among state representatives, and support in the state senate from Republican members. Rep. Tom Delnicki of the 14th District (which includes Windsor) and Sen. Tony Hwang of District 28 (which includes parts of Westport and Weston as well as Fairfield, Easton, and Newtown) co-sponsored the bill.

“This show of broad based and bipartisan and bicameral upport for this legislation today is very encouraging,” Hwang said. “It also shows that we all agree that for middle-class Connecticut families, the cost of health care is anything but affordable.”

Bruce Adams, the president and CEO of the Credit Union League, has joined the CBIA in supporting the bill said that the impact for Connecticut credit unions could be massive.

“Right now, our total eligible universe is under 5,000,” Adams said, but noted that the bargaining ability would be far greater than any individual credit union could muster. “The median headcount at a Connecticut Credit Union is eight people, the average is 20 but that is skewed by some larger members. Our median asset size is $40 million, which for a financial institution is very small.”

According to Adams, it is not unusual for credit unions ,which are run as cooperative businesses and typically have all volunteer boards, to only post profits in the “five figures” range.

“When a credit union makes a profit, that profit goes back to the members by lowering rates,” Adams added. He said that in organizations with low margins, which also see their role as providing the capital to grow local businesses and the community the impact could also extend beyond the credit union itself. If this bill lowers health insurance costs by 20%, that could double a credit union’s profit.”