Connecticut Leads U.S. in Small Business Health Insurance Decline Since 2009

Since 2009, Connecticut has experienced the largest decline in small businesses offering health insurance in the United States, with a nearly 25% drop according to a recent study by Take Command. This analysis draws on data from the Medical Expenditure Panel Survey (MEPS) and highlights significant shifts in the small group insurance market driven by rising healthcare costs and evolving policy landscapes. Similar declines have been noted across Northeastern states including New Jersey, Vermont, New York, Rhode Island, and Delaware, underscoring regional trends.

The study attributes these steep drops to a blend of structural and economic factors, including historically high coverage rates in the Northeast that predisposed these states to larger percentage declines. Furthermore, the region faces some of the highest healthcare and business costs nationally, which complicates the affordability of employer-sponsored health benefits. Strong individual insurance markets in the Northeast have also provided small employers with alternatives, reducing the necessity to offer group health plans.

In Connecticut, fully insured small business health plan enrollment has halved over six years ending in 2023, accompanied by a notable exit of key insurers from the small-group market such as ConnectiCare, Harvard Pilgrim HealthCare, Cigna Healthcare, Oscar, and Aetna Inc. This attrition has intensified pressures on small employers already challenged by rising premiums and limited negotiating power.

Nationally, the increasing cost of health insurance has driven many small firms, particularly those with fewer than 50 employees, to reconsider or discontinue offering coverage. Despite these challenges, employer-sponsored insurance remains a fundamental component of the U.S. healthcare system. However, only about 30% of small businesses nationwide currently provide health coverage, despite employing over a quarter of the workforce.

The comprehensive report by Take Command offers a state-by-state overview of the changing landscape of small business health insurance, including coverage rates, access disparities for employees, and trends in premium costs. It provides critical insights for insurers, employers, and policymakers navigating the complexities of small group health benefits in a context of escalating healthcare expenses and evolving market dynamics.