HB 5378, An Act Concerning Self-Funded Multiple Employer Welfare Arrangements And Requiring A Study Of The Feasibility Of Establishing The Connecticut Option Program and Multiple Employer Welfare Arrangements

TESTIMONY OF THE CONNECTICUT HOSPITAL ASSOCIATION
SUBMITTED TO THE INSURANCE AND REAL ESTATE COMMITTEE

Tuesday, March 3, 2026

The Connecticut Hospital Association (CHA) appreciates this opportunity to submit testimony concerning HB 5378, An Act Concerning Self-Funded Multiple Employer Welfare Arrangements And Requiring A Study Of The Feasibility Of Establishing The Connecticut Option Program and Multiple Employer Welfare Arrangements.  

Connecticut hospitals make our state stronger by delivering nationally recognized, world-class care, supporting jobs and economic growth, and serving communities across Connecticut.  Every day, hospitals improve access, affordability, and health equity — providing care to all patients regardless of ability to pay.  At the same time, hospitals invest in their workforce and local communities, even as they navigate significant financial and federal challenges.

Connecticut hospitals share the committee’s goal of improving affordability and access to health coverage for employers, employees, and families across our state.  Hospitals experience firsthand the consequences when coverage is unaffordable or unstable; patients delay care, preventive services are skipped, and uncompensated care increases.

For these reasons, we appreciate the bill’s focus on creating opportunities for small businesses to pool together to offer more affordable health insurance coverage for their employees.  We are supportive of this concept, provided appropriate guardrails are maintained and strengthened.  At the same time, we oppose the inclusion of the “Connecticut Option” feasibility study in this legislation because of significant concerns regarding potential impacts on provider reimbursement, access to care, and the stability of Connecticut’s healthcare delivery system.  The following details our concerns related to the “Connecticut Option” study and our support for properly constructed Multiple Employer Welfare Arrangements (MEWAs).

“Connecticut Option” Study

While we appreciate the desire to explore affordability strategies, we respectfully oppose the inclusion of a feasibility study of a “Connecticut Option” program within the bill.

The study language directs the Office of Policy and Management to examine provider reimbursement methodologies, premium reduction targets, and related cost containment approaches.  Although framed as exploratory, such studies frequently serve as precursors to rate-setting or reimbursement caps tied to Medicare or other benchmarks, which can be detrimental to patients — harming affordability and access to care.

Connecticut hospitals are already operating under significant financial strain, with the Office of Health Strategy recently issuing a report showing statewide operating margins at only 0.2%.  Reimbursement from government payers remains well below the cost of care.  Connecticut hospitals incur nearly $3 billion in Medicaid and Medicare losses annually.  Workforce shortages, supply inflation, and pharmaceutical costs continue to challenge the healthcare delivery system.  Imposing additional downward pressure on commercial reimbursement through a government-run health insurance plan would further jeopardize access to care.

Commercial payments help offset chronic Medicare and Medicaid underpayment and fund critical services.  A government-run health insurance plan would make the problem worse without addressing the drivers of the cost-shift — Medicare and Medicaid underpayment. 

Additionally, a state-run health plan would rely on restricting where patients can go for care.  Narrow provider networks would strip patients of choice and limit where patients can receive care.

There is a better way to make healthcare more affordable, especially as we confront the challenges of federal policy shifts.  Connecticut should strengthen what works and address what’s broken in healthcare, not create a new government-run plan that repeats known failures.  True affordability depends on preserving patient choice, access to trusted providers, and high-quality care. 

Multiple Employer Welfare Arrangements (MEWA)

HB 5378 establishes a state licensing and regulatory framework for self-funded MEWAs.  Properly structured and carefully regulated MEWAs may offer small employers additional options to provide coverage to their workers.  Expanding or preserving employer-sponsored coverage is a shared objective.  When more individuals have coverage, hospitals see reductions in uncompensated care and improved continuity of care for patients.

We appreciate that the bill:

  • Requires licensure by the Insurance Commissioner
  • Applies key insurance code requirements
  • Prohibits discrimination based on health status
  • Prohibits preexisting condition exclusions
  • Establishes minimum actuarial value standards

These elements are critical.  Historically, loosely regulated MEWAs in other states have resulted in insolvencies, unpaid claims, and significant harm to consumers and providers.  A strong state regulatory framework is essential to avoid repeating those failures.

Additionally, we would like to ensure that MEWAs operating in Connecticut are subject to robust consumer protections, solvency requirements, network adequacy standards, prompt-pay rules, and offer a comprehensive set of benefits to enrollees.

If done correctly, a regulated MEWA structure could serve as a constructive tool to expand or stabilize employer-sponsored coverage without undermining market stability or patient protections.

Thank you for your consideration of our position.  For additional information, contact CHA Government Relations at (203) 294-7301.