New London — A bill to expand the state employee health plan to small businesses would have an estimated first-year cost of $1.5 million and because the state doesn't have insurance for unexpected losses, it would bear the risk of costs that exceed premiums.

This proposal would put the state in a risk-sharing relationship with a third-party contractor, but risk is the price of economic development, Comptroller Kevin Lembo said.

"There are smart folks throughout the state stuck in cubicles with big ideas, and they're stuck there for a number of reasons," he said, "but primary among them is fear of losing their health coverage, especially if they have a young family."

Some are concerned that adding people with greater medical needs to the pool would drive up premiums for state employees, but with an estimated additional 100,000 people joining, Lembo doesn't see that happening.

The comptroller sat down with The Day Editorial Board on Monday, mostly to drum up support for House Bill 7267. It would allow the state to use its negotiating power to offer plans to small businesses — those with under 50 employees — in its first year, and to individuals in the second. The state would develop different benefit structures, as the state plan "is not going to be an affordable option for most anyone to buy into," Lembo said.

Lembo said there would be no state subsidies available in the small group market, and the subsidies in the individual market still need to be modeled.

According to the Employee Benefit Research Institute, less than half of small businesses in Connecticut offer health insurance to employees, a 26 percent decline over the past decade.

When the bill came before the Insurance and Real Estate Committee last month, the majority of submitted testimony was in support. With big issues such as tolls, marijuana legalization and paid family leave, the bill hasn't garnered too much attention, but Lembo feels it will once it clears the Appropriations Committee.

Lembo thinks the bill has the votes to get through both legislative chambers — mostly split on party lines — but doesn't know if the governor will sign it.

Naturally, much of the opposition to the bill came from groups representing insurance companies, and they voiced concern that this plan would destabilize the marketplace. Also opposed is the Connecticut Business and Industry Association, though Lembo said when he talks to chambers of commerce around the state, he hears support from the business community.

Responding to concerns that this would be a "slippery slope" or "creep" toward single-payer, Lembo said, "There isn't the political will to do that."

While the state already contracts with two third-party administrators, Lembo said the state would probably put out a request for proposals for the small-group population, which he described as "niche group" requiring different communications.

He said a third-party administrator is necessary because the state doesn't have the capacity or the expertise.

Lembo noted that in discussions of a public option several years back, the insurance industry said it could take care of the problem and offer more affordable products, but that hasn't happened.

"If it was meaningful, structural reform, yeah, I'll get on board with that, but I haven't seen that yet," he said. Pointing out that he and Gov. Ned Lamont have agreed that the market has failed, Lembo questioned, "Something needs to disrupt this, and if not this, then what?"

e.moser@theday.com