From the Capitol: Shifting Expenses to Insurers Could Cost You

March 19, 2015

Questionable money maneuvers, shocking cuts to social services, and tax hikes on families and employers: yes, these are all in the governor’s latest budget proposal.

Also in the proposed two year budget currently being reviewed by the state legislature is a particularly concerning money shift that could spell especially bad news for all insurance ratepayers.

The governor’s budget includes a proposal to move almost $9 million in annual expenditures from CT’s “General Fund” – our state’s bank account – to CT’s “Insurance Fund” – a bank account that fills its coffers by collecting fees from insurance companies.

The state assigns certain expenses to the “Insurance Fund” – and in turn, the state assesses Connecticut insurers for however much the state needs to pay for those expenses. Every time more expenses get assigned to the Insurance Fund, more money needs to be collected through taxes from insurers. The more money the state grabs from insurers, the more these insurers will charge you and me for our insurance premiums and fees.

It’s a vicious cycle.

By targeting one industry in particular, instead of budgeting for these expenses responsibly with the state’s general bank account, the state would unfairly raise taxes on one specific business sector. And to cover the costs of these taxes, insurers would hike up rates across the board. We would all have to pay more for health insurance, car insurance, and home insurance.

The Governor’s budget office has tried to justify this move by pointing to the fact that the costs being pushed onto the backs of our insurers will help pay for good things like breast and cervical cancer detection, AIDS services and venereal disease control. They say these will benefit insurers. But what they don’t mention is that these costs won’t only fall on health insurers. As the legislation is currently written, these costs will fall on all other insurance providers. Tell me, how exactly will an auto insurer benefit from a needle exchange program? How will a home insurer benefit from venereal disease control?

The governor has made promises to help CT’s insurance industry flourish and help reduce the costs to get insurance. But his proposal doesn’t accomplish either. Taxing the industry more will only increase costs for businesses and consumers alike.

Instead of shifting expenses that ought to be paid for by the general fund, let’s start budgeting responsibly, let’s live within our means, and let’s put an end to shifting costs onto the backs of people like you and me.