Hartford Business Journal

36 HARTFORDBUSINESS.COM | JANUARY 12, 2026 INDUSTRY OUTLOOK | HEALTH CARE Kyle Kramer, CEO of Day Kimball Health in Putnam, says rural healthcare providers face growing financial and workforce pressures in 2026. Contributed Photo At A Crossroads The state's health sector faces strong headwinds in 2026 Cost pressures Rising insurance costs are expected to remain a major pressure point for Connecticut employers and residents in 2026. In September, the state Insurance Department approved an average rate increase of 16.8% for fully insured individual health plans and an average hike of 11% for small-group policies. Combined, those plans cover about 224,000 Connecticut residents. The increases come as enhanced federal subsidies under the Afford- able Care Act have expired, raising concerns that many individuals and families may no longer be able to afford coverage. State officials estimate Connecticut could lose about $295 million in enhanced federal tax credits that help tens of thousands of residents pay health insurance premiums. In December, Gov. Ned Lamont said the state plans to spend $70 million from its rainy day fund to partially offset the loss of federal subsidies. Cost pressures are also mounting in the employer market. According to a December analysis by the State Health Access Data Assistance Center at the University of Minne- sota, average annual premiums for employer-sponsored family coverage nationwide rose to $24,540 last year, an increase of more than $600 from the prior year. James Michel, CEO of Access Health CT, the state's Affordable Care Act exchange, said employers have long strug- gled with rising group health insurance costs and limited plan options, often leaving them to choose between offering expensive coverage or no coverage at all. That prompted Access Health CT in 2025 to launch its BusinessPlus program, which helps brokers and employers administer Individual Coverage Health Reimbursement Arrangements, or ICHRAs. ICHRAs allow employers to provide pretax dollars that employees use to purchase individual health coverage and pay qualified medical expenses, rather than enrolling in traditional group plans. Michel said the Affordable Care Act remains a critical backstop as affordability challenges intensify. "Because of the Affordable Care Act, more people than ever are enrolled in a health insurance plan," he said. "This expansion has also led to an increase in access to preven- tive care, often helping people catch conditions like diabetes and heart disease early." Workforce shortages Meantime, staffing issues are equally important as hospitals struggle to fill open positions. By David Krechevsky davidk@hartfordbusiness.com C onnecticut's healthcare sector heads into 2026 amid mounting financial pressures, sweeping technological changes and policy reforms that could reshape how residents access and afford care. Leaders across hospitals, rural health systems, insurance market- places and life sciences reveal a sector in transition — one trans- forming under the weight of rising costs, expanding coverage needs and scientific breakthroughs happening in the state's own labs. "Connecticut's healthcare land- scape is being reshaped," said Jeffrey Flaks, president and CEO of Hartford Health- Care, the state's second-largest health system. "Consumers will expect health systems to deliver on the promises of more convenient access to care, more affordable care options, and safety they can see and trust." Access to care Flaks' comments come as the state Office of Health Strategy in early December approved HHC's applica- tion to acquire Manchester Memorial and Rockville General hospitals from bankrupt California-based Prospect Medical Holdings for $86.1 million. The addition of Manchester and Vernon will increase the number of hospitals in the HHC system to nine. Hartford HealthCare has also promised to invest about $225 million in the hospitals over the next three years. Flaks said health systems need to adapt to consumer expectations by expanding convenient, lower- cost care options, such as neigh- borhood urgent care centers and 24/7 virtual services, to improve access and reduce strain on emergency departments. Healthcare access challenges are particularly acute in rural commu- nities, said Kyle Kramer, CEO of Day Kimball Health in Putnam. Rural hospitals often serve as the primary providers of emergency care, specialty services and behav- ioral health across large geographic areas with limited alternatives. Rural health systems face compounding pressures, including aging populations, limited public transportation, rising operating costs and a payer mix dominated by government programs. Kramer said those factors are widening the gap between the cost of delivering care and the reimbursement rural providers receive. Financial strain from those dynamics is among the factors driving Day Kimball's ongoing discussions with UConn Health about a potential merger or strategic partnership. More broadly, health systems across Connecticut face reimburse- ment deficits amid rising costs that could get worse as federal Medicaid funding declines. Last July, Congress approved changes to the Medicaid program that are set to take effect soon and could result in roughly 150,000 Connecticut residents losing coverage. The reductions come as hospitals continue to seek higher reimburse- ment rates. Medicaid payments, which are funded by state and federal governments, have covered about 61 cents on the dollar for a decade, according to healthcare leaders. During a special session in November, state lawmakers approved legislation setting aside $500 million from the state's rainy day fund to help offset anticipated federal funding cuts. "The financial pressures surrounding Medicaid will play a defining role in 2026," Kramer said. "Connecticut's Medicaid program is critical to low-income families, older adults and individuals with complex health needs." As more residents enroll in Medicaid due to economic conditions and rising insurance premiums, health systems will face an increasing mismatch between service demand and reimbursement, he said. "This gap strains operating margins, complicates recruitment, limits capital investment and threatens core service lines such as behavioral health, women's health and EMS," Kramer said. James Michel Jeff Flaks

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