Colorado HB 1355 increases premium costs
January 22nd, 2009 | by Brian Schwartz |The Aspen Times reports that a new Colorado regulation limiting risk-rating has increased insurance premiums:
As the second part of a law reforming state health insurance takes effect this month, some Aspenites with group health plans could see their premiums rise by as much as 25 percent. The bump is in addition to regular annual increases.
“We have seen rate increases as high as 60-plus percent on some groups,” said Mark Devlin, owner of Aspen-based Devlin Financial Services. …
[The regulation] that could hit pocketbooks the most involves a change in the rules for issuing health insurance premiums for groups of 50 or fewer employees.
Prior to the passage of House Bill 1355, insurance companies had the option of lowering the premium for a relatively healthy group by up to 25 percent, and raising the premium for a less-healthy group by up to 10 percent, Devlin explained.
But state lawmakers worried that the policy was discriminatory, he said.
So in 2007, they passed House Bill 1355, banning the practice. By January 2008, insurance companies were required to cease the practice of charging less-healthy groups more, and by January 2009, companies had to cease the practice of charging healthier groups less.
This shouldn’t surprise anyone. community rating laws have been shown to increase premiums and decrease the number of insured. Insurance underwriter James L. Sugden warned of such increases last August.
See also Destroying Markets: How Guaranteed Issue and Community Rating Destroyed the Individual Health Insurance Market in Eight States, by Merril Mathews, who has blogged about HB 1355’s damaging effects.
(via Linda Gorman)
tags: Colorado health care, community rating, HB 1355, Linda Gorman
