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Health insurance reform nears

Colorado’s health insurance market is teetering on the brink of a death spiral – the point at which so many healthy people have dropped coverage that those who remain are predominantly unhealthy, having medical costs that far exceed their payments in premiums.

Here are the facts:

– HMO premiums in Colorado soared by 55 percent to 92 percent since 2001.



– 15,000 small businesses, representing at least 125,000 employees and dependents, have dropped small-group coverage. That’s a loss of more than one out of every four who were insured in 2000.

– Since 1994, the number of insurance companies offering coverage in Colorado has declined from 83 to less than 24, significantly reducing consumer choice and competition.



Despite that stark reality, lawmakers and special interests have buried their heads in the sand in defense of the status quo for years rather than face the changes necessary to give Colorado’s health insurance market a chance to recover.

Last week, lawmakers finally drew the line. House Bill 1164 by House Speaker Lola Spradley, which I sponsored in the Senate, makes some significant changes.

– It sets up a pilot program for Multiple Employer Welfare Arrangements, which allows small employers to pool together to stabilize risk and seek cheaper insurance premiums.

– The bill removes restrictions which prevent insurance companies from offering discounts to attract healthy groups. Colorado’s existing “community rating” law has tied the hands of insurers by forcing them to charge the same premium to predominantly healthy groups as to those with high health care costs.

Think about it like this: You and I go to lunch together every day. Both of us pay $10, but every day I get an $18 steak, and you get a $2 cheese sandwich. How long are you going to subsidize my steak and be satisfied with your cheese sandwich?

That’s the predicament community rating imposes upon healthy consumers.

And it gets worse, because when healthy consumers leave the market, the high-cost consumers who remain now pay an even higher cost.

Many will understandably argue that insurance is intended to spread risk. That’s true. But the healthy person simply cannot afford to pay equal cost because the risk of going uninsured competes with the reality of mortgage payments, car payments, student loans, and children’s expenses.

Most of us have little faith in insurance companies. Fine. How do “greedy” insurance companies make a profit? By insuring healthy people who pay more in premiums than they receive in medical care.

HB 1164 allows insurers to offer discounts to attract healthy groups back into the market. Moreover, Colorado law continues to guarantee coverage to those with the most severe health-care needs.

Finally, HB 1164 trusts consumers to make important choices about their health-care needs by requiring insurance companies to offer one “mandate-lite” insurance policy.

While good arguments exist for consumers to choose mandated coverages – such as prostate exams and mammograms – there’s no reason responsible adults shouldn’t be able to choose to pay for those coverages apart from the insurance company.

After all, if a prostate exam costs $100, your insurance company will simply add $100 – plus interests and overhead – to your premium.

For those who want mandated coverages, all of Colorado’s existing mandates will continue to apply to the dozens of other policies offered by every insurance company.

“Mandate-lite” is a bare-bones, basic policy available to those who choose it.

While everyone would like to see insurance prices go down, the more immediate goal is to stabilize costs and offer consumers choice. HB 1164 takes an important step in that direction.

Sen. Mark Hillman, R-Burlington, sponsored HB 1164 and other health insurance reform measures during the 2003 session. He represents 12 counties on the Eastern Plains. His e-mail address is mail@markhillman.com.


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