Colorado’s individual health-insurance market is failing, with average premiums rising 20 percent in 2017 and another 27 percent this year.
As such, a bill moving through the Colorado Legislature asks this question: Is it fair to ask some 2 million people in this state to pay between 2 and 8 percent more for their insurance premiums next year in order to stabilize the individual market for roughly 140,000 people who face the prospect of even more skyrocketing costs without some kind of help?
The proposal, from Democratic Rep. Chris Kennedy of Lakewood and Republican Rep. Bob Rankin of Carbondale, would establish a reinsurance program that, in many ways, offers insurance to health insurers who have taken the sickest and most expensive patients into individual plans since the Affordable Care Act required all Americans to buy policies in 2014 and banned insurers from rejecting customers because of pre-existing conditions.
Reinsurance allows insurers to turn over to the state their highest claims once they exceed a certain cost, such as $25,000, and to have the state cover those bills until the claims reach $1 million. Doing so would reduce insurers’ risks and allow companies to bring down the overall costs of premiums between 10 and 25 percent as compared to what they otherwise would charge in 2019, Kennedy and interim Colorado Insurance Commissioner Michael Conway said.
About half of the funds needed to pay for this reinsurance program would come from federal funds — specifically, the money that is saved by the federal government in premium subsidies now offered to lower-income individuals when premiums come down. But the other half would come from 2 percent fees placed on other health-insurance plans purchased by Coloradans on the individual, small-group and large-group markets, as well as 8 percent fees on stop-loss plans purchased by self-insured companies.
That, according to Colorado Health Institute economist Edmond Toy, means that 2 million Coloradans would pay about $100 per year more for their health insurance while about 124,000 people now in the individual market would pay about $1,300 per year less. And another 17,000 people who now go without insurance would buy into that individual market, bringing the state’s uninsured rate down from 6.5 percent to 6.2 percent.
The question of whether that is a fair trade divided many Republicans and business leaders from Democrats and from mountain-town residents who may be paying nearly $400 a month for individual health insurance during the first hearing of House Bill 1392 in the House Health, Insurance and Environment Committee on Thursday.