With just over two weeks left in the legislative session this year, Democrats who had been pushing legislation to create a public option health plan conceded that the effort would fail again. Opposition from the insurance industry and Gov. Ned Lamont had sunk the bill – the third consecutive year it died unceremoniously.
Twenty-eight hundred miles away, a proposal before Nevada’s General Assembly had a different outcome. Following a 12-9 party line vote in the Senate, Nevada became the second state in the nation to approve a public option insurance policy.
Colorado followed a week later. Gov. Jared Polis signed into law a public option set to launch in 2023.
Proponents of Connecticut’s bill kept a close eye on the successes elsewhere. But as they look to the next regular session, many say they still see no clear path to victory.
“The idea makes sense and the benefit is clear. But the insurance lobby in Connecticut is stronger than it is anywhere else in this country, because they’re right here,” said Rep. Sean Scanlon, a Guilford Democrat who was an original author and longtime supporter of the measure. “Unless there are people willing to set aside their concerns on behalf of the residents who would benefit from this, I don’t see anything changing.”
Under Connecticut’s proposal, Comptroller Kevin Lembo had planned to use the state’s purchasing power to negotiate an insurance policy for individuals. Rates would have been modified annually based on claims so costs remained lower and coverage broader than other offerings.
As it had in previous years, the insurance sector lobbied hard against the plan. In an April 13 letter to Lamont, the heads of five major companies – Anthem, Cigna, UnitedHealth Group, CVS Health and the combined Harvard Pilgrim Health Care and Tufts Health Plan – raised concerns about the bill and urged the governor to back policies that encourage businesses to stay in Connecticut. They included a thinly veiled threat to leave the state.
“The pandemic has demonstrated that employees can work virtually, making it easier for companies to choose where they are domiciled and grow,” they wrote. “As a result, it has never been more critical for the state to create a climate that retains and attracts businesses … All of us will have to decide where it will be best to deploy our resources long term.”
Lembo said the industry’s presence here is one of the biggest hurdles to passing a public option.
“I really do give kudos to the folks in Nevada and Colorado for getting it done, and I’m interested to see how it comes together. But the landscape in Connecticut is a little bit different,” he said. “We have major health insurers sitting on our lawn. And so that makes their voices, it seems, more powerful than the voices of the people who are struggling to get coverage.”
Ultimately, Lembo and lawmakers have said, the governor refused to sign the bill after pushback from the industry. And despite new momentum around a public option in other states, legislative leaders say the outlook here hasn’t shifted much.
“You’re not going to have a major changing of the principals who were involved in those negotiations,” House Speaker Matthew Ritter, D-Hartford, said. “I’ll continue to have meetings and listen. But it’s the same cast of characters.”
Wins and losses
On the campaign trail, President Joe Biden pledged to create a public option at the national level, though prospects have dimmed since then.
In absence of that, states are stepping up.
Nevada Gov. Steve Sisolak on June 9 signed into law a public option plan that mandates insurers who bid to cover Medicaid recipients and state employees also bid to offer the government-managed health plan. State officials would choose certain providers to be in-network for the public option and order that they charge 5% less in monthly premiums than the typical plan on the state’s insurance marketplace, and 15% less after four years, the Associated Press reported.
An actuarial study still needs to be done, and the state must apply for a waiver from the federal government. Supporters there say the new policy will extend coverage to Nevada’s 350,000 uninsured residents and lower the cost of health insurance, the AP reported. The public option is expected to launch in 2026.
On June 16, Polis signed Colorado’s bill.
Under that plan, the state will require insurance companies to offer the public option, dubbed the Colorado Health Benefit Option, by Jan. 1, 2023. It is expected to be available on the individual and small group marketplaces, which cover about 15% of residents, and within two years, premiums must be 15% less than the rates offered by insurers in 2021 (adjusted for inflation), the Denver Post reported. The Colorado plan will also set benchmarks for the types of care covered.
The bill overcame thunderous opposition. Health care lobbyists spent a record amount of money fighting the proposal, according to the Denver Post, saying the cost-cutting would harm the sector, especially small hospitals.
But it gathered support from health care advocates, who called the measure a “win for Black and brown communities, rural Coloradans, small businesses and so many others,” the paper reported.
News surrounding the public option hasn’t been as rosy in Washington state, where the first bill was passed in 2019. The state launched the health plan in January, but the response so far has been unimpressive.
Washington’s health insurance exchange has sold only 1,443 public option plans, accounting for less than 1% of all policies, according to Pew Charitable Trusts. In parts of the state, premiums for the public option cost more than those of similar commercial plans. And many of Washington’s hospitals have refused to take part in the new policy, Pew reported, spurring lawmakers to raise a proposal that would force participation if there aren’t enough coverage options in a geographic area.
Proponents say it’s too early to judge Washington’s program. During the initial years of the Affordable Care Act, they told Pew, premiums for many commercial policies were high, but they later fell as insurers became more informed about the markets.
Focus shifts in Connecticut
Insurers in Connecticut have also watched the process play out in other states. They remain opposed to a public option plan here.
“We know that it is an agenda item for a certain group of policymakers. So we expect that it will be revisited,” said Susan Halpin, executive director for the Connecticut Association of Health Plans, which lobbies on behalf of insurance companies. “We would hope that, with all the information that has come to light in past debates, it will again be rejected.”
Halpin pointed to the early results in Washington state and said trust in government-run plans is shaky.
“If you’ve seen one public option, you’ve seen one public option. There isn’t a clear definition of what a public option is; it varies by state,” she said. “In Connecticut, there really isn’t a public option. What we’ve seen [proposed] here, it’s just a rebranded program opening up the state employee plan that has been around for 10-plus years.”
Republican lawmakers and advocates for the business community have argued against a public option, saying it could destabilize the health insurance marketplace, lead to job losses in the sector and require taxpayer or employer subsidies to finance the initiative.
“It definitely puts a drag on the jobs here. There are thousands upon thousands of jobs, both directly and indirectly, in the market. And if we were to go to a public option, it certainly does have an impact on that,” said Eric Galvin, president of ConnectiCare.
“It doesn’t threaten the health of the industry. It’s more a matter of … we’re No. 1 per capita in terms of actuarial talent in the nation. Those kinds of things are hard to maintain,” he said. “If you start doing things like a public option, now there’s less of a demand. Once you start to push away this notion of [being] the insurance capital of the world, there’s obviously an impact on the employment profile in the state.”
One area where some backers of the public option have found common ground with the insurance companies is in shifting the conversation away from the failed legislation and toward a policy that succeeded this year – millions of dollars that the state dedicated to creating additional subsidies on the Connecticut’s insurance exchange, Access Health CT.
After it became clear that the public option wasn’t going to pass last spring, lawmakers supported a plan to devote $23.6 million to the “Covered Connecticut Program,” an effort to provide free health coverage through the exchange to as many as 40,000 qualifying people. The program launched in July.
“I don’t worry about others,” Ritter said, referring to the success of public option plans in Nevada and Colorado. “I want to look at Connecticut. I want to see what adding 40,000 people to the exchange means in terms of pricing for future rates. Obviously, when you add more people, that should help. And I also want to see what the Biden administration does.
“Those are the things that are going to guide my decision and my thought-making process” about a future public option proposal, he added, “more than what Colorado or Nevada did.”
Asked about the passage of government-run plans in other states, Halpin also initially steered the discussion to the new exchange subsidies.
“All eyes right now are focused on the exchange and the subsidies that are being provided on the exchange,” she said. “I think all the efforts are, as they should be, in getting those people who are eligible to sign up for those plans.”
Staunch supporters of the public option haven’t completely ruled out a revival of the bill. If plans in Colorado and Nevada are successful, Lembo said, eventually “that will increase our chances.”
Sen. Matthew Lesser, another author and longtime advocate of the measure, noted that insurers have requested higher rates for next year.
“Until the industry is able to provide lower prices through radical competition, I think you’re going to hear repeated calls for a public option,” he said.
But the 2022 legislative session is only three months long, and the proposal still lacks support from governor’s office, dampening hopes for an immediate triumph.
“It’s really a short window of time and a lot of people – if not the majority of them – are thinking about re-election more than policy,” Scanlon said. “And if a deep-pocketed adversary is spending a lot of money to communicate to the people in your district that what you’re doing is dangerous – [lawmakers] think twice about what they’re voting for.”