Hartford Business Journal

16 HARTFORDBUSINESS.COM | DECEMBER 19, 2022 Jason Gutcheon is a partner at Professional Business Insurers of West Hartford. HBJ PHOTO | STEVE LASCHEVER Market Failure After ConnectiCare's exit, some experts say state's fully insured small group health insurance market is broken By Harriet Jones Hartford Business Journal Contributor W hen ConnectiCare announced last month it was exiting the fully insured small group market in Connecticut, it became the second carrier to do so this year, after Harvard Pilgrim. And it left just a handful of insurers offering such plans in the state — Anthem, UnitedHealthcare/Oxford and Cigna. Since 2018, Aetna has offered only one plan on the market. That landscape has prompted a number of experts in the field to utter the words "market failure." There were warning signs about ConnectiCare's intentions at a hearing held by the state Insur- ance Department this summer into requested double-digit premium rate increases. "ConnectiCare at that time talked about the significant loss they're expe- riencing, especially in the fully insured small group market," said Connecticut Business & Industry Association CEO Chris DiPentima. "That's just not sustainable for them to continue to lose that amount of money." DiPentima said he continues to see the cost of health care among the top three concerns cited by his members. For insurance brokers serving those businesses, the exit leaves them in a tight spot. "Providing less choice to my clients is always bad," said Jason Gutcheon, a partner at Profes- sional Business Insurers of West Hartford. "Anytime you have less competition, prices tend to go up." He also said ConnectiCare's exit is bound to have a knock-on effect on the remaining carriers that may be asked to absorb the company's book of business. "If a broker like me takes one of my many ConnectiCare small group plans and I move them to Cigna or Blue Cross or Oxford, they have to take them," he said. "It's guaranteed issue. They can't deny them. So what happens? Their block of busi- ness gets unhealthier by default." And that makes rate requests go up yet further. Costly mandates Some of those clients however, may opt either to forgo insurance altogether and push their employees onto the state's healthcare exchange to find individual coverage, or they may join the growing trend toward self-insurance. That can mean either a level- funded plan — something still offered by ConnectiCare — or fully self-in- suring by funding their own plan, essentially taking on the risk that they formerly assigned to an insurer. "Most employers have really moved toward some aspect of self-funding," said Jeff Hogan, president of Upside Health Advi- sors in Farmington. "We're in a really tough place right now, quite frankly." That's because the trend just adds to the pressure on fully funded plans, as better risk moves to the self-funded arena, leaving older and sicker — in other words more expensive — employees behind. DiPentima said he talks to compa- nies a lot about getting comfortable with the risks around self-insurance, where a plan can be upended by one or two employees experiencing an expensive medical event. "That comfort level has a lot to do with the communication with the employees," he said. "Making sure we're talking about how we stay healthier as individuals in that plan." Usually that will mean imple- menting a formal wellness program. "Traditionally it's been — okay, the employee will deal with their health and I won't ask them about it," he said. "When you roll out a wellness program, the employee and the employer are working together to make sure they're all as healthy as they can be, and so that barrier that was there before becomes a little blurred." Most companies with self- or level- funded plans also purchase stop- loss insurance to protect against catastrophic claims. One significant financial difference for level-funded and self-insured plans is they don't have to comply with state mandates for insurance coverage, giving them more flexibility on cost. Fully insured plans are required to cover dozens of coverage mandates, including seven new ones — ranging from telehealth and urgent crisis center services to mental health wellness exams — adopted by the state legislature this year. CBIA has long advocated reviewing, and potentially eliminating some mandates as a way to tackle premium costs, and ConnectiCare's exit from the small group market has renewed those calls. "Those mandates total up to about $2,500 per individual per year in health insurance costs," said DiPentima. "Some of them may be necessary, but clearly all of them probably aren't." Jeff Hogan

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