We’ve got a problem Colorado. We’re now the state with the highest insurance premiums in the nation. Surprisingly, only the rural areas suffer this situation. But it certainly begs the question why are rural residents singled out for such rates? Affordable access to health care shouldn’t be a trade-off a person makes to live in a small town.
A silver level health insurance plan on Colorado’s health insurance exchange is $239 on average in urban and northeastern areas while it is $328 on average in western and southern areas of the state.
Why the disparity? Because under the 2010 Patient Protection and Affordable Care Act states developed geographical rating regions for the new health insurance exchanges. These regions are determined by the state and based on the Metropolitan Statistical Areas. The regions provide a geographical marker for insurance companies to base their premiums. The federal government requires the exchanges’ rating regions “apply uniformly to all health insurance issuers in a market, (be) based on one or more geographic boundaries described previously, and (avoid being) unfairly discriminatory.” Colorado has some work to do in meeting these requirements.
For a state consistently ranked in the top 15 healthiest states in the nation (according to the United Health Foundation), we have an ideal population to insure. Coloradans tend to be healthy and make healthy choices. Yet when people choose to pay the tax penalty instead of enrolling in health insurance, they leave themselves open to the very real possibility of medical debt. Imagine blowing your knee skiing and going through the necessary surgeries and physical therapy sessions that can cost upwards of $14,000. Without insurance, you will have to cover these costs on your own.
Colorado has 11 geographic rating regions; five are rural and have higher average premiums than the other six. These rural regions resort, southeast, west, Pueblo MSA and Mesa MSA are home to only 920,533 people, according to the 2010 census. The exchange fails to attract competitive premiums in rural regions because the low competition areas have been carved out from higher competition and more fiscally attractive regions. Rural regions need more hospital systems and a larger population to be competitive with the urban regions.
The main issues with this situation: The inequity caused by the current geographical rating regions and the lack of adequate subsidies covering rural regions with high premiums.
Colorado legislators are working on solutions though some are better than others. Representative Jared Polis (D-Boulder) is looking to get an insurance subsidy waiver for the resort region. Garfield County’s threat to sue the Department of Insurance is misguided and moves the debate away from a constructive solution. Both of these efforts focus on a single region. Colorado must focus on solutions that help all the rural regions.
I’d like to make a couple suggestions here. Redraft the insurance exchange’s rating regions using the more applicable health statistical areas instead of MSAs. Health statistical areas are currently used to track health related data and are a better marker of what hospitals are routinely used by a population. People from small towns in western and southern Colorado frequently travel to the Front Range to access specialty health care. Insurance premiums need to reflect this movement. This will take some time and politicking but I think we have the legislators to make this a reality.
Second, additional subsidies for rural families will alleviate the financial strain of current premium costs until the rating regions can be redrawn. A recent Fiscal Times article by Brianna Ehley highlights experts’ belief that insurance premiums in rural areas will increase in 2015. The 920,533 people from western and southern Colorado potentially purchasing insurance on Connect for Health CO need some help. Rep. Polis’ work in this area is well worth developing.
The state needs to find a solution before fewer health insurance companies offer plans in rural regions and premiums go even higher. There is no reason why a regional inequity should occur in health insurance premium costs in Colorado, especially in a state that is this healthy.