We hear it all the time—healthcare needs to change. Costs are out of control. Transparency is lacking. Employers and employees alike are drowning in expenses with no clear understanding of where their money is going. While there’s ongoing conversation in Washington about fixing the system, some Connecticut lawmakers are proposing legislation that undermines employers who have taken real steps to regain control through self-funding.
Senate Bill 10 (SB 10) is a direct hit to businesses that have taken control of their healthcare, pushing them back into the clutches of big insurance companies. It’s a gift-wrapped handout to the fully insured market, forcing Connecticut businesses to either pay exponentially more for healthcare, give up offering benefits altogether, or retreat to the fully insured system—an option that isn’t even available to many small self-insured employers, as large insurers often refuse to bid on their plans. Those that do manage to secure coverage often face skyrocketing premiums, zero transparency, and no control.
This isn’t just bad policy—it’s reckless.
Self-Funding: The One Avenue for Real Cost Control
Businesses turned to self-funding because the traditional insurance system is broken. Self-funded employers aren’t just purchasers of health insurance—they’re running their own health plans. They analyze costs, negotiate provider contracts and manage pharmacy benefits. They choose what’s best for their employees instead of letting big insurance companies dictate everything.
Self-funding gives employers real data, real control, and real options. Unlike the fully insured system—where companies are forced to “order off the menu” without even knowing the prices—self-funding empowers employers to build benefits based on what their specific employee population actually needs. More importantly, employers have a fiduciary duty to act in the best interest of their employees, ensuring that every healthcare dollar is spent wisely. Self-funding allows them to fulfill this obligation by making data-driven decisions, eliminating waste and strategically layering in programs and cost-control mechanisms that drive down expenses. By tailoring benefits and implementing innovative solutions like direct contracting, transparent pharmacy pricing, and proactive care management, self-funded employers can reduce out-of-pocket costs for their people while maintaining high-quality coverage.
The rise of captives and other alternative funding mechanisms proves that businesses want out of the traditional insurance model. The market is already moving in the right direction—until SB 10 threatens to pull it backward.
SB 10: A Death Sentence for Self-Funded Plans
This bill doesn’t just nudge employers away from self-funding—it blows the whole system up. SB 10 mandates that employers take on a massive new financial burden, increasing their claims responsibility to at least:
- $50,000 per claim,
- 120% of expected claims, or
- $10,000 per employee enrolled
That’s an impossible burden. The cost of self-funding will surge—rising at least 20% per employer group. Small businesses, the backbone of Connecticut’s economy, will be left with impossible choices: absorb crushing costs, cut jobs, wages or benefits to afford coverage, or surrender to the fully insured market—where big insurance can drive up costs unchecked, piling on hidden administrative fees and padding their profits with little to no accountability. Self-funding eliminates these opaque charges, ensuring that every healthcare dollar goes toward actual care, not insurer windfalls.
And when costs rise for employers, they rise for employees too. If lawmakers think this won’t directly hit workers, they’re wrong—higher costs mean higher deductibles, steeper out-of-pocket expenses and fewer covered services, leaving employees to bear the financial burden of a system that puts insurer profits over people.
Who Really Wins? Big Insurance
It’s no secret who benefits from this bill—insurance giants. They’ve been watching the rise of self-funding and captives, and they don’t like it. These companies thrive on opacity. They make their money by keeping employers in the dark, setting premiums without transparency, and controlling every aspect of a health plan.
By making self-funding unaffordable, SB 10 forces businesses back into a system where they have no control. And in the fully insured world, where does all that extra money go? Straight into “administrative fees” and insurer profits. Employers pay more, employees get stuck with higher deductibles and out-of-pocket costs, and the only real winner is the insurance company cashing in on inflated premiums.
This isn’t about helping employers or employees. It’s about consolidating power in the hands of a few massive insurance companies that already dominate the market.
A Devastating Blow to Connecticut’s Economy
The financial fallout of SB 10 will be massive. Nearly half of Connecticut businesses use self-funded plans because it’s the only sustainable way to provide quality healthcare while managing costs.
If this bill passes, we’ll see:
- Fewer employer-sponsored health plans
- A rise in alternative benefit solutions like Individual Coverage Health Reimbursement Arrangements (ICHRA) and other risk-sharing models
- A surge in uninsured workers
- Hiring freezes and layoffs as businesses struggle to absorb higher costs
- A forced migration back to fully insured plans, where employers have no options
This is the last thing Connecticut businesses need. We should be expanding employer flexibility, not stripping it away.
The Bottom Line: SB 10 Must Be Stopped
If lawmakers truly want to reform healthcare, they should be encouraging self-funding, not killing it. The system needs change, and self-funding is one of the few mechanisms actually moving the needle.
Instead, SB 10 forces businesses back into the same broken system they’ve been trying to escape. It’s an unprecedented attack on employer choice, an unnecessary financial burden on small businesses and an outright victory for the insurance giants that profit from opacity and overpricing.
We cannot let this pass. The Connecticut legislature must reject SB 10 and protect the right of employers to control their own healthcare costs.
Lawmakers, do the right thing. Let businesses build better benefits—not force them into a system that doesn’t work.
