As Connecticut businesses brace for another round of double-digit health insurance increases, the state’s two candidates for governor agree healthcare has become an affordability problem — but offer significantly different ways to address it.
Gov. Ned Lamont, the incumbent Democrat, wants to use the state’s purchasing power to negotiate lower prices from hospitals, insurers and pharmaceutical companies, while challenger Sen. Ryan Fazio (R-Greenwich) favors reducing regulations and increasing competition among healthcare providers.
The issue was prominent last week when the candidates appeared separately at the Connecticut Business & Industry Association’s The Connecticut Economy conference at the Hartford Marriott Downtown.
Healthcare costs are increasingly straining employers. The state Insurance Department recently approved 2027 insurance rates that include average increases of 15.1% in the small-group market, which covers businesses with 50 or fewer employees. The CBIA Foundation’s 2026 Survey of Connecticut Businesses found that 88% of responding businesses reported higher per-employee healthcare costs at their most recent renewal.
Lamont
Lamont told the CBIA audience that as Connecticut’s pension burden has declined, healthcare costs have moved in the opposite direction.
“Healthcare costs are rising, and that’s why that’s the biggest priority I’ve got for the next four years,” he said.
His principal proposal is what he calls the Connecticut Option, which would assemble a larger purchasing pool potentially including state and municipal employees and retirees, and employees of nonprofits and small businesses. The group would use its purchasing power to negotiate lower prices with hospitals and insurers.
Lamont also wants to apply that purchasing-power strategy to prescription drugs. At the CBIA event, he said he is working with other governors in the region on the possibility of states pooling their pharmaceutical purchases to negotiate better prices.
“So rather than have every state go out and buy pharma by themselves, let’s pull together and see if we can get better pricing,” Lamont said.
Lamont said private insurers, independent providers or nonprofits could bid to administer a preferred provider network and assume the risk, rather than taxpayers.
Fazio
Fazio’s healthcare agenda focuses more heavily on competition and reducing regulations that he argues restrict the supply of healthcare services.
He supports association health plans, which would allow small businesses and other groups to combine to purchase health insurance, giving them some of the advantages larger employers have in negotiating coverage.
During the CBIA event, Fazio said such legislation continues to have bipartisan support and argued it could reduce premiums for participating businesses by 10% or more.
“There is no reason this shouldn’t have passed in the last eight years,” Fazio said. “The fact that it wasn’t done yesterday is a scandal in my mind.”
During an interview with Hartford Business Journal earlier this month, Lamont also said he would sign association health plan legislation. He has suggested those businesses could also become part of the larger Connecticut Option, increasing its purchasing power.
Fazio, however, would go further in deregulating healthcare.
He wants to overhaul Connecticut’s certificate of need (CON) process, which requires healthcare providers to obtain state approval before making certain major investments, expanding services or adding facilities.
Fazio characterizes the CON process as a government “permission slip” that delays competition and increases costs. During the CBIA event, he argued Connecticut should make it easier for healthcare providers to add beds, equipment and services.
He also wants the state to recognize more out-of-state professional licenses and to reduce licensing fees for healthcare workers, arguing that increasing the supply of doctors, nurses and other providers would improve access and put downward pressure on costs.
Fazio has also called for reconsidering some state-mandated health insurance benefits, which he argues contribute to higher premiums.
The hospital tax
The candidates also differ over the state’s tax treatment of hospitals, although their positions are more nuanced than a simple disagreement over whether hospitals should pay more or less.
Fazio has criticized Connecticut’s hospital provider tax, a Medicaid financing mechanism under which the state taxes hospitals and uses the revenue to help draw additional federal funding. He argues the state has historically retained too much of the resulting revenue rather than returning enough to hospitals.
“If we are going to have the hospital tax … every dollar that the tax is raised on the hospitals in Connecticut, they should get $1 of reimbursement back, roughly, and then the surplus can go to the state,” Fazio told HBJ.
He said the tax has been used “to fill the state coffers rather than create an optimal situation for patients and healthcare providers,” although he acknowledged that the latest agreement between the state and hospitals improved that financial arrangement.
Lamont defended the provider tax as a way for Connecticut to maximize federal Medicaid reimbursement and said the latest agreement directs the additional hospital reimbursement back to hospitals.
“After a lot of negotiation, we said all that addition on the hospital reimbursement will go to the hospitals,” he told HBJ.
Lamont said he is concerned that federal healthcare changes could cause more people to lose insurance coverage, increasing uncompensated care at hospitals and ultimately putting additional financial pressure on the state. He also acknowledged uncertainty surrounding the future of hospital provider taxes as the federal government reexamines the financing mechanism.
At the same time, Fazio is proposing to reconsider a different tax benefit enjoyed by large nonprofit hospital systems. He said large, multibillion-dollar hospital systems, along with wealthy nonprofit universities, should pay a “reasonable share” of property taxes to their host municipalities, with the revenue used to reduce the burden on other local taxpayers.
Lamont cited that proposal in criticizing Fazio’s healthcare agenda, arguing that additional taxes on hospitals could increase healthcare prices or ultimately require greater state subsidies.
Fair Share initiative
Lamont also proposes a Fair Share Healthcare initiative that would require certain large employers to contribute toward state healthcare costs when their workers receive coverage through HUSKY, Connecticut’s Medicaid program.
The proposal would apply to for-profit employers with at least 100 workers and to nonprofits with at least 1,000 employees, excluding contracted social-service providers. Employers could be assessed up to $1,000 for each employee enrolled in Medicaid.
Lamont’s campaign estimates the proposal could raise more than $100 million annually, with the money used to subsidize coverage through the state’s health insurance exchange and Covered Connecticut.
