Connecticut’s Health Strategy Agency Devotes Majority of Budget to Out-of-State Consultants, Drawing Legislative Scrutiny
Connecticut's Office of Health Strategy (OHS) allocated over $11.5 million to healthcare consulting firms in fiscal year 2025, which accounts for nearly the entire $13.7 million agency budget. The majority of these funds, about $9.1 million, originated from the Insurance Fund, a separate state fund financed by fees levied on insurance companies, costs ultimately passed onto consumers. The remaining funds stem from federal government sources. Eleven consulting firms, mostly large and out-of-state firms, received contracts to support various OHS programs, including the state's health information exchange, cost growth benchmarks, and initiatives promoting health equity.
The OHS budget has surged from $2.7 million in 2019 to $18.5 million in 2025, with $13.5 million coming from the Insurance Fund. A significant portion of OHS's 2026 budget is earmarked for “other expenses,” mainly consultant contracts, and the agency has requested additional full-time staff, including two attorneys, an economist, and an insurance actuary. Notable contracts include $7.8 million to Health Information Alliance Inc for managing Connecticut’s health information exchange, and $1 million to Onpoint Health Data for managing the state’s All Claims Payer Database.
The agency’s growing reliance on Insurance Fund fees to cover consultant contracts has drawn criticism from a 2025 legislative working group. This group noted state agencies, including OHS, have been allocating Insurance Fund monies for staffing costs that arguably should come from the General Fund. Criticism also emerged from the Connecticut Hospital Association over OHS's dependence on out-of-state consultants instead of local healthcare professionals.
The Healthcare Cost Growth Benchmark Initiative, a program managed by OHS and modeled after Massachusetts’ approach, has yet to successfully control healthcare costs. Consultant Bailit Health, receiving over $2.6 million, has provided technical support and analytics for this initiative. Between 2021 and 2023, healthcare cost growth in Connecticut exceeded established benchmarks by wide margins. Despite these results, OHS has set modest benchmarks for the next five years aiming for 2.8% growth annually.
Legislators, including Rep. Kerry Wood, emphasize increased scrutiny on the use of the Insurance Fund, highlighting consumer cost impacts. Industry experts argue OHS lacks sufficient in-house financial expertise to manage its regulatory and oversight responsibilities effectively. They recommend hiring personnel skilled in finance and actuarial functions rather than depending heavily on consultants.
OHS defends its strategy, stating that employing outside consultants is more cost-efficient given its size and budget. The agency points to Massachusetts for comparison, noting that Connecticut has fewer staff and a lower budget but tasked with similar responsibilities, including oversight of certificate of need processes and healthcare affordability.
OHS manages two major projects, the Health Insurance Exchange and the All Claims Payer Database, which handle large volumes of sensitive healthcare data requiring specialized security and technical expertise beyond agency capacity. Consultants are selected through competitive processes and provide expertise across multiple state agencies, offering legislative responsiveness that would be difficult to maintain with a fully staffed permanent workforce.
An unpaid panel of university and policy experts also advises OHS on setting healthcare cost benchmarks. However, benchmark methodologies so far have not curbed cost growth effectively. The reliance on external consultants and the current structure raise questions regarding optimal resource allocation and regulatory efficiency in Connecticut’s healthcare policy administration.
The debate continues over Insurance Fund expenditures and whether some costs should shift to the General Fund to reduce insurance premiums. Legislators seek to improve cost transparency and promote competitive insurance markets by revisiting assessment structures. The discussion highlights ongoing challenges in balancing effective healthcare oversight with fiscal responsibility within Connecticut’s insurance regulatory environment.