HB 5041, An Act Expanding Health Care Coverage

TESTIMONY OF THE CONNECTICUT HOSPITAL ASSOCIATION
SUBMITTED TO THE HUMAN SERVICES COMMITTEE

Tuesday, March 17, 2026

The Connecticut Hospital Association (CHA) appreciates this opportunity to submit testimony concerning HB 5041, An Act Expanding Health Care Coverage.  CHA opposes Section 1 of the bill related to the government-run “Connecticut Option,” and supports Sections 4 and 5 of the bill related to assistance for employers to support health insurance coverage and the creation of “portable benefit accounts.”

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 support their employees through tax credits for contributions to individual coverage Health Reimbursement Arrangements (HRAs).  We are also supportive of the creation of “portable benefit accounts” to be used for purchasing health insurance and health-related expenses.  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. 

“Connecticut Option” Study (Section 1)

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.  

Commercial payments help offset chronic Medicare and Medicaid underpayment and fund critical services.  Imposing additional downward pressure on commercial reimbursement through a government-run health insurance plan would further jeopardize access to care, making 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. 

Tax Credits for Individual Coverage HRA Contributions (Section 4)

Connecticut’s hospitals support policies that assist small businesses in supporting their employee’s healthcare.  Section 4 of the bill represents a thoughtful approach to improving access to health benefits by providing targeted incentives to small employers that choose to help their employees purchase coverage through the individual market.

Small businesses play a vital role in Connecticut’s economy but frequently face barriers when attempting to provide traditional employer-sponsored health insurance.  Premium costs and administrative complexity can make it difficult for employers with fewer than fifty employees to offer comprehensive health benefits.

Individual coverage Health Reimbursement Arrangements (HRAs) provide an alternative pathway by allowing employers to contribute pre-tax funds that employees can use to purchase individual health insurance coverage.  This approach can give employees greater flexibility in selecting plans that best meet their needs while still ensuring they receive meaningful financial support from their employer.

By creating a tax credit to encourage adoption of these arrangements, Section 4 would help expand access to health coverage for employees who might otherwise remain uninsured or underinsured.

Portable Benefit Accounts (Section 5)

We support Section 5 as it creates a framework that allows independent workers to access portable benefits that can be used to purchase health insurance and cover health-related expenses.  Hospitals care for many patients who work in contract, freelance, or gig-based arrangements and who often lack access to traditional employer-sponsored health coverage.

By allowing employers to contribute to portable benefit accounts for these employees, this proposal creates a new pathway for these workers to obtain financial support for health insurance and medical expenses.  Expanding coverage options for this growing segment of the workforce can help more Connecticut residents maintain consistent access to care and reduce the likelihood that individuals delay treatment because of cost.

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