Lawmakers and others considering an expanded government role in health insurance will soon learn whether Connecticut’s powerful insurance industry still packs a punch in the General Assembly.

Supporters and opponents of legislation creating a state-sponsored insurance plan for small businesses and nonprofits in Connecticut disagree on the intent of a letter by five insurance executives spelling out their opposition to Gov. Ned Lamont.

“The pandemic has demonstrated that employees can work virtually, making it easier for companies where they are domiciled and grow,” the executives told Lamont in their April 13 letter. “All of us will have to decide where it will be best to deploy our resources long term.”

Private insurance companies are an economic mainstay in Connecticut, powering as many as 50,000 direct and indirect jobs related to the industry. The Connecticut Economic Resource Center estimates that the insurance industry contributes about $15 billion to the state’s economy.

The letter was signed by Gail K. Boudreaux, president and chief executive officer of Anthem; Thomas A. Croswell, CEO of the combined Harvard Pilgrim Health Care and Tufts Health Plan; David M. Cordani, president and CEO of Cigna Corp.; Dirk McMahon, president and chief operating officer of UnitedHealth Group; and Karen S. Lynch, president and CEO of CVS Health Corp.

Comptroller Kevin Lembo, who has helped lead the effort crafting the legislation, called it “very obviously a threat.”

“There’s a difference between engaging in policy and finding a solution everyone can live with and ‘take my marbles and go home,’” he said.

The push to expand government-sponsored insurance comes as the federal government, through the newly enacted American Rescue Plan, is funding a massive expansion of Obamacare and the state insurance exchanges, including Access Health Connecticut. Gov. Lamont, who opposes the Lembo-endorsed plan, says he favors expanding coverage through Access Health Connecticut, which offers federally-subsidized health coverage to more than 100,000 state residents through private insurance companies.

Greater choice or a reason to leave?

For the insurance companies, Connecticut faces a clear choice.

“It has never been more critical for the State to create a climate that retains and attracts businesses that will help stabilize the economy,” the executives wrote in their letter.

They say Lembo’s initiative is a “government-run health care plan that will increase costs to the State and its taxpayers.”

Sen. Kevin Kelly, the Senate’s Republican leader, said the executives’ letter is a statement “as to the reality of what Connecticut is,” which is characterized by slow economic and job growth.

“Other states like Iowa would love to be the insurance capital and would love to have 50,000 good paying jobs,” he said.

Chris DiPentima, president of the Connecticut Business & Industry Association, said the letter was not a threat.

“They’re just stating the facts,” he said. “I don’t know if the letter will turn people around. I don’t know if it will cause any change in the legislative process.”

Backers say the legislation would give residents greater choice and government more clout in negotiating better insurance options. Opponents — the industry and organized business community — say it would result in a cost shift to private purchasers of health care, lead to higher taxes or both.

It’s a priority for Lembo and Democratic leaders of the legislature. They promised soon after Election Day in November to again seek so-called public option health insurance, citing numerous complaints from constituents about rapidly rising costs. Legislation similar to what’s now being considered fell apart in 2019 under intense industry lobbying.

Small businesses are increasingly avoiding buying health insurance because of the rapidly rising cost, Lembo said. Insurers are “just hunkering down and figuring out how to protect a shrinking book of business,” he said.

“They’re failing to serve small businesses, failing to serve nonprofits,” he said. “They keep jacking up the cost.”

In response, Susan Halpin, executive director of the Connecticut Association of Health Plans, said the comptroller’s plan “lays a path to single-payer health care.”

“Connecticut’s public option targets small employers, large nonprofits, union health plans, and even individuals,” she said.

A $50 million tax

The legislation’s next step in the General Assembly is the finance committee this week. Rep. Kerry Wood, D-Rocky Hill, and a member of the committee, said lawmakers will focus on a provision calling for a $50 million tax on insurance carriers that would be used to provide subsidies to those who otherwise could not afford health insurance.

“I would argue we should not necessarily do that right now,” she said. “Are we taxing ourselves out of the recession or are we investing in the economy?”

Wood cited Connecticut’s bulging rainy day fund and federal pandemic aid. “Let’s hit the pause button. We have money in the bank, and we’re getting a ton of money from the feds,” she said.

Backers of the bill say insurers no longer have to pay $300 million in federal taxes that Congress has dropped, making the proposed state tax a lighter burden.

As House chairwoman of the insurance committee, Wood wrote an amendment to the legislation that passed with Democratic and Republican backing. Finance committee chairman Sean Scanlon, D-Guilford, must round up enough votes to strip out the amendment that Lembo calls a “poison pill.”

It would require the state insurance pool, known as the Partnership Plan, to be regulated by the Connecticut Insurance Department, providing consumer protections and putting it on the same footing as private insurance plans, backers say.

Lembo said it looks benign, but would turn over those who are insured by the plan to a private carrier. “It would no longer be our program. It would be a program to any company that runs it,” he said.

With its concentration of carriers, Connecticut is no ordinary laboratory for a health insurance public option, which Halpin said “has the capacity to erode a major industry in the state.”

“The CEOs are paying very close attention to what’s been happening on the ground here in Connecticut because it’s the insurance capital of the world,” she said

Stephen Singer can be reached at ssinger@courant.com.