🔒CT bill would allow small businesses to pool workers to save on health insurance, proposes study of ‘Connecticut Option’

State lawmakers are considering legislation that would allow small businesses to pool their workers to provide more affordable health insurance, while also requiring a study of a possible state-designed health plan known as the “Connecticut Option.” House Bill 5378, raised by the legislature’s Insurance and Real Estate Committee, would allow small businesses to pool through a structure known as a “multiple employer welfare arrangement,” or MEWA. The proposal aims to give small employers more leverage in the insurance market by allowing them to pool workers across companies to offer health benefits, similar to so-called association health plans, while placing the arrangements under state regulation to ensure financial stability and consumer protections. The bill would establish a regulatory framework allowing groups of employers, often through trade associations or chambers of commerce, to jointly offer health benefits to their workers. The committee held a public hearing on the bill on March 3. Among those submitting testimony was Grace Brangwynne, policy director for healthcare, insurance and housing for the Connecticut Business & Industry Association, which has been lobbying the state to allow association health plans for several years. Brangwynne stated that small businesses in the state are facing a healthcare crisis and called it a “right-now emergency.” She said HB 5378 would bridge the coverage gap, and noted that other states, including Maine, New Jersey and Virginia have passed similar legislation. Allowing smaller businesses to form groups would improve their bargaining power in the insurance market, where companies with fewer employees often face higher premiums and fewer plan options than larger firms. Those opposed to the bill, however, say MEWAs are not the best option for workers. John Brady, executive vice president of AFT Connecticut, a union representing more than 30,000 professionals in healthcare, education and public service, testified against the bill, calling MEWAs “junk insurance.” “These arrangements fail to address the core issues of healthcare affordability and access,” he said, adding that they “lack key consumer protections required under the Affordable Care Act, expose consumers to significant risk, as well as weakening the market risk pool and serving to discriminate against certain groups.” MEWAs function similarly to association health plans, which allow businesses in related industries or organizations to pool to purchase coverage. But MEWAs differ in key ways. Under federal law, association health plans typically purchase insurance policies from an insurer for participating employers. MEWAs, by contrast, are often self-funded arrangements, meaning the pooled employers collectively assume the financial risk of paying medical claims rather than relying entirely on an insurance carrier. The state proposal would require MEWAs to be licensed and regulated by the state Insurance Department. The bill includes oversight provisions, such as financial solvency requirements, reporting obligations and the use of stop-loss insurance designed to protect the arrangement if claims exceed expected costs. Backers say those safeguards are intended to prevent problems that have occurred in the past with loosely regulated employer health pools that collapsed after failing to cover claims. During an interview with Hartford Business Journal before the legislative session began, Gov. Ned Lamont said he would support a bill that allowed associated health plans. In addition to authorizing MEWAs, the legislation directs state officials to study the feasibility of establishing a “Connecticut Option” health plan, which Lamont has also said he supports. The concept would involve a state-designed insurance program intended to expand coverage choices and reduce costs, though the bill does not create such a plan. Instead, state agencies would examine potential program designs and report back to lawmakers with findings.