Study: Health insurance ‘public option’ in CT could mean higher taxes, fewer providers

Hartford Business Journal – Tuesday, March 31, 2026
By Greg Bordonaro

A new study of efforts to open Connecticut’s state-run Partnership Plan to private employers warns that such an expansion could reduce state revenue, strain healthcare providers and shift costs onto taxpayers, even as Ned Lamont has signaled support for a different approach to health insurance reform.

The 20-page report, shared exclusively with Hartford Business Journal, was prepared by KNG Health Consulting, a Maryland-based health economics and policy firm, on behalf of the Partnership for America’s Health Care Future Action, one of the highest-spending lobbying organizations at the state Capitol, according to state data.

The Partnership describes itself as an alliance of hospitals, health insurers and pharmaceutical companies that opposes policies such as single-payer health care, Medicare expansion and “Medicare for All.”
Connecticut’s Health Care Future, a state-based project of the Partnership for America’s Health Care Future Action, is promoting the study’s findings.

The study analyzes the potential impact of allowing small businesses, nonprofits and unions to buy into the state’s Partnership Plan, a state-administered health insurance program currently available to municipal and other public-sector employees.

Researchers modeled the effects over a 10-year period and found the policy could significantly reshape the state’s insurance market. In higher participation scenarios, enrollment in the public plan could surpass private employer-sponsored insurance, while private coverage declines sharply.

The study projects that expanding the plan would reduce state revenue from insurance-related taxes and fees by between $44.5 million and $1.13 billion from 2026 to 2035, depending on how broadly the program is adopted.

To keep the plan financially stable, the report says, the state would face a difficult tradeoff: Either cut payments to hospitals and doctors by roughly 19% or raise between $134.5 million and $17.3 billion in new revenue over the same period.

Lower provider payments could reduce overall health care spending — by as much as $16.2 billion over a decade — but the study warns such cuts could lead to fewer providers participating in the system and reduced access to care.

The analysis also found mixed effects on coverage. In some scenarios, the number of uninsured residents could rise slightly due to changes in premiums, while in others it could decline modestly as more employers adopt the public plan.

Still, Lamont has said he is not pursuing a traditional public option model.

The Democratic governor, who is seeking election to a third term, has said he does not want his proposed “Connecticut Option” to be a government-run insurance plan. Instead, he has called for a system administered by private insurers, aiming to preserve competition while addressing costs.

Lamont also has emphasized value-based care as a cornerstone of his proposal. His plan would encourage state employees, retirees and small businesses to seek treatment from hospitals and providers that deliver the best outcomes at the lowest cost, noting that prices can vary widely across the state for similar services.

In an answer to a question from HBJ about producing a report for an organization that specifically opposes a public option, a spokesperson for Connecticut’s Health Care Future said via email that KNG Health Consulting is “a highly reputable firm with expertise across health policy and health economics.”

The spokesperson also noted that the state’s existing Connecticut Partnership Plan paid out almost $23 million more in claims than it collected in premiums last year.

According to state Comptroller Sean Scanlon, that was due in part to higher costs for Medicaid coverage and state employee and retiree benefits.

“These are another clear demonstration that government-run health systems in Connecticut are unaffordable and unsustainable,” the spokesperson for Connecticut’s Health Care Future said.

Participating in a panel of legislative leaders during Connecticut Business Day, hosted by the Connecticut Business & Industry Association in March, House Speaker Matthew Ritter (D-Hartford) said the governor’s Connecticut Option proposal likely will be put off until the 2027 legislative session.

Speaking later during the same event, Lamont also said developing the program “is going to take a year or so.”

House Bill 5041, which was proposed by Lamont to expand health care coverage, has been approved by the Committee on Human Services by a 16-7 party line vote. The bill, however, seeks to require the state Office of Policy and Management, in consultation with the state Insurance Commissioner, only to “study the feasibility of establishing the Connecticut Option program with the goal of reducing health insurance premiums.”

It also seeks an analysis of the state insurance market and “projected impacts of the Connecticut Option program on persons who receive health care coverage through the exchange. An interim report would be required to be filed with the state legislature no later than Jan. 15, 2027.

The bill has been referred to the Office of Legislative Research and the Office of Fiscal Analysis.

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