Health bill aims to stabilize insurance premiums
Under a measure heading to the state House of Representatives, health insurance companies would be able to adjust premiums based on a customer’s health, history in filing claims and duration of coverage. House Bill 1013 was approved Monday by the House Health, Environment, Welfare and Institutions Committee.
Health insurance premiums for small businesses have tripled over the last decade, reports the Colorado Division of Insurance. In the Vail Valley, hikes in health insurance rates have topped more than 80 percent in past years.
“The proposed legislation will make a more competitive market,” said Jamie Scholl, a Denver insurance broker and a representative of the Health Underwriters of Colorado. “The proposed legislation would also make it easier for carriers to insure in Colorado. We have lost 71 carriers since 1994. Seventy percent of the market in the state is currently controlled by four carriers. We want more carriers and more options.”
One of the biggest factors for the carriers exodus and the steady rate increase is that Colorado regulations don’t allow health insurance companies to rate small group market according to health status, said Mark Mathis, a spokesman for Humana, the largest small-group insurance carrier in the valley.
“That bill is in its early stages, but restoring health status rating is an important component of any effort to rehabilitate the small-group market,” Mathis said.
According to the Colorado Division of Insurance 4,680 Colorado companies eliminated health insurance coverage during 2001. Between 2000 and 2001, 81,845 employees in Colorado left the small-group market, a decline of more than 15 percent.
House Bill 1013, sponsored by Rep. Lynn Hefley, R-Colorado, is one of several bills expected to be introduced this year to try to improve the health insurance market, said state Rep. Carl Miller, D-Leadville, whose 56th District now includes Eagle, Lake and Summit Counties.
“It’s an attempt to support small employers, and I support any legislation that will improve health care options,” Miller said. “I support more options with less mandates. Several mandates are responsible for both high costs and the inflexibility of the plans employers can provide.”
For example, health insurance companies are barred from reducing premiums for workers in a small-group insurance policy who don’t smoke, but the companies also are barred from raising premiums for people in the same group with a family history of heart disease.
That has meant an employer with a high number of young, healthy, active workers sees the same premium increases as employers with workers who aren’t as healthy, proponents said.
“What’s so difficult about this is that there are so many factors that influence the current insurance market,” said Steve Shanley, a health insurance agent in the valley. “Any legislation that will allow an insurance company to become more precise in their rate structure is a step in the right direction.”
Opponents argued the bill would lead to disproportionately high premium increases for people who smoke or have medical conditions, or who have filed relatively high numbers of claims in recent years. They also said there was no guarantee that healthy people would see rate reductions, only a likelihood of smaller increases.
“I don’t think it’s a very good idea and I would be surprised to see that pass,” says Marci Tribelhorn, a health insurance agent in the valley. “Healthy people will have better rates, but those who don’t will have to pay astronomical prices.”
Hefley’s bill would allow companies to adjust the premiums for people within small groups – fewer than 50 workers. Most of businesses in the valley fall in this category. Adjustments, however, could not be 25 percent higher or lower than the insurance company’s base rates filed with the state Division of Insurance.
Rep. Andrew Romanoff, D-Denver, said he believed it is appropriate to charge higher rates to a smoker, but said it is unfair to increase rates for people with health problems not of their own making.
“”It’s not fair to punish people for the luck of the gene pool,” he said. “”Cancer is not an unhealthy decision. It’s a risk we all face and we ought to spread that risk, not penalize people who suffer it.”
Scholl said 39 states offer insurance companies such flexibility, and most of those states have a more competitive insurance market and lower overall health premiums. He said several companies would consider returning to Colorado to offer small-group insurance if Hefley’s bill passed.
“This bill encourages healthy people to stay in the market,” Scholl said. “The market in Colorado is paying 20 percent more because the carriers don’t get the money from the healthy people who don’t stay insured because premiums are so high. This also should stabilize premium rates.”
Veronica Whitney can be reached at 949-0555, ext. 454, or at firstname.lastname@example.org.
The Associated Press contributed to this story.