🔒Fertile business climate must be top priority

The special legislative session tentatively scheduled for the end of June couldn't come at a more critical juncture for Connecticut's economy.

With rumors swirling about some of the state's largest employers — Sikorsky Aircraft, Cigna and Aetna — being acquisition targets of out-of-state companies, the need to maintain and improve Connecticut's business climate is paramount. If any of those corporate giants are gobbled up by competitors in lower-cost states, thousands of Connecticut jobs could be at risk.

Hartford's perch as the Insurance Capital of the world could also be threatened.

Unfortunately, Connecticut has been put in a very vulnerable position following the House and Senate's passage of a $40.3 billion budget that raised taxes by $2 billion. That budget drew national attention and significant consternation from Connecticut employers that would feel the brunt of the tax hikes.

Gov. Dannel P. Malloy has proposed rolling back business tax increases by $223 million to sate the outcry from CT Inc. That's a good starting point. We urge lawmakers to heed Malloy's policy shift; to ignore it or play hardball would risk striking a major blow to the state's economy.

The timing of the merger talks is actually fortuitous because it shines a spotlight on the importance of having a competitive business climate. United Technologies Corp. last week confirmed that it will sell or spin off its Sikorsky helicopter division; Cigna was rumored to be in acquisition talks with Indianapolis health insurance giant Anthem; and Aetna was identified as an acquisition target of Minnesota-based UnitedHealth Group.

To be clear, these deals aren't being driven by Connecticut's tax policies. UTC is looking to unload its least profitable business, while the health insurance industry is heading toward a major consolidation wave. But if any of those deals are struck, Connecticut's business climate will play a critical role in determining where the surviving jobs stay or go.

Any health insurance industry consolidation will surely mean lost jobs either in Connecticut or other states as insurers scale up and drive cost savings from their operations. The surviving management teams will crunch numbers and weigh other factors to determine where to maintain their operations. If state lawmakers don't back off their $2 billion tax increase, there's a greater chance Connecticut jobs will go elsewhere.

We urge lawmakers to work with Malloy and rewrite what was a very bad budget for Connecticut's economy. 

Health insurance consolidation a small business concern

Speaking of consolidation, we hope state and federal regulators keep a close eye on the pending merger wave in the health insurance industry.

Beyond the potential job losses Connecticut faces, businesses of all sizes risk higher costs if the insurance market becomes too consolidated. A merger, for example, between Cigna and Anthem would allow the combined company to control nearly two-thirds of the Connecticut market, according to an analysis by the Stamford Advocate. Such clout would give the company significant leverage in negotiations with hospitals and doctors and consumers.

Medical providers, too, have been caught up in a prolonged merger-acquisition period, the consequences of which are yet to be known.

Health insurance costs are a major burden on Connecticut employers. Any mergers that threaten to increase those costs further must be looked at carefully. Connecticut's Insurance Department is considered one of the strongest state-based regulatory bodies in the country. We hope it leverages that expertise to make sure the state maintains a competitive health insurance marketplace.