Health Insurance Info for Colorado

news & commentary on health insurance and benefits

Health Reform = higher health insurance premiums

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We tried to tell ’em, but no one on that side of the aisle listens: health reform inevitably drives health insurance rates even higher due to mandates and required coverage benefits on every policy (in Colorado, this was made worse by action at the state, not federal, level, when the Democrat ‘super-majority’ passed mandatory maternity coverage for every individual health policy sold or renewed in the state). This year, the average premium nation-wide rose 9 percent, higher than the last two years combined.

Want the whole story? go here.

And, before you think this report is biased, read this: the Centers for Medicare and Medicaid Services (CMS) estimates the growth in health insurance costs will increase 10 extra percentage points in 2014 because of health reform – a 14 percent increase, versus 3.5 percent without the law.

DOI reverses on mandatory maternity in individual health plans

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In a bulletin issued March 15th, 2011, the Colorado Division of Insurance has “changed its interpretation” of their previous bulletin, issued in December of 2010, regarding maternity coverage for individual health policies issued in Colorado.

The controversy stems from a difference between the “applicability clause” in the enabling legislation, HB 10-1021, and the statute, as enacted. The applicability clause states that maternity coverage was to be provided for both issued and renewing policies, while the statute, as enacted, calls for maternity coverage to be provided only for “issued policies”. The Divisions’ initial guidance under the previous Bulletin did not require the coverage on renewal policies.

In it’s new bulletin, the Division, after “further statutory review”, finds that, in its opinion, the provisions of HB-10-1021 does indeed require coverage for maternity expenses for issued and renewing individual sickness and accident insurance policies and health care coverage contracts, reversing in toto it’s previous position, without showing any specific reason or legal basis for the change in its position.

Now, it’s no secret that this Bill was controversial, rammed through a Democrat-controlled legislature without any input from either the industry or the minority, and signed by the Governor post-haste. While touted as a “reproductive services” bill that ensured fairness, in actuality there is no fairness in requiring males of any age, children, and females of non-child bearing years to pay for this expansion of maternity coverage. Certainly, purchasing individual health insurance with maternity coverage was available in Colorado – so, what was the point of the legislation?

Colorado’s Democrat legislators have been attempting to recast the individual health insurance market as the mirror image of the small group market for years, and this legislation is one result of that thinking. The downside to this, and the biggest problem, is the cost to such a policy. Anyone who looks at group coverage, as compared to individual coverage, is aghast at the price, a point most Democrats seemingly ignore, and which has contributed to the decline in Colorado’s small group insurance pool, especially since the repeal of risk-based premium provisions in the small group market.

A quick analysis of the rates now being charged for individual health policies shows that the legislation has, indeed, made individual health insurance policies more expensive, and will have a negative effect on new policy issuance in Colorado. One wonders if that was the intent of the legislation – after all, with higher premiums, a certain segment of the population is locked out of the market, just simply based on price. If one can only buy Cadillacs, rather than something cheaper, does one simply not buy? This has the effect of increasing the pool of un-insureds in Colorado,  rather than expanding the pool of covered individuals, regardless of what the PR coming from Democrats would suggest.

Let’s not forget that Colorado residents lost a strong carrier when Aetna withdrew from the Colorado market due to this legislation. Will we have others withdraw, as well? One only needs to look at the disastrous outcome of the Kentucky health insurance market (and others, notably New Jersey) to see what will transpire as more and more carriers flee the state because of their inability to expand the risk pool because of high premiums, mandated benefits, and hostile regulatory and legislative actions.

Of course, Democrats have us covered there, too: their real solution is to get rid of all carriers and saddle the residents with a single-payor system. I shudder to think what that will cost in higher taxes and job loss.

Lastly, to add insult to injury, the Division, in its decision requiring maternity coverage in all policies renewing after January 1st, 2011, has authorized carriers to retroactively charge additional premium for the coverage, assuming the carrier has filed and has approved such premium. Even if the carrier has not filed for rates relative to renewal maternity coverage, the Division will allow such retroactive charges, once rates are approved, to the policyholder.

I’ll research and comment on the average rate increases this latest exercise in “fairness” will cost the average Colorado health insurance consumer in another post, assuming that such information is even available.

DOI advises on change in statute interpretation

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In May 2010, the Colorado Legislature passed HB 10-1021, which amended the Colorado Revised Statutes to “expand the state’s mandatory maternity coverage to individual [health insurance] policies”. This change in the law is effective January 1, 2011.

On December 3, 2010, the Colorado Division of Insurance has issued a new bulletin, B-4.36 “Statutory Interpretation of Possible Conflicting Provisions in HB 10-1021”, which advises carriers of the Division’s position and interpretation of the statute’s language in Section 10-16-104(3). According to the DOI, “bulletins are the DOI’s interpretation of existing insurance law or general statements of Division policy”.

In issuing their bulletin, the Division has found conflicting provisions in the law between the statute and the applicability clause in HB 10-1021. In part, the bulletin reads “based on the Division’s reading of the statute… the clear intent… was to expand coverage only to policies issued (and not renewed) on or after January 1, 2011…”.

The statute is in conflict with the applicability clause in HB 10-1021, which uses the term “issued or renewed”,  whereas the statute language simply uses the word “issued”.  The Division takes the position that “the language to the contrary in the applicability clause was an inadvertent mistake”. The Division cites discussions with the bill sponsor and Legislative Legal Services in making this interpretation of the statute.

Therefore, while insurers are encouraged to offer maternity and contraceptive coverage to renewing policies, they are not required to do so, and the change in law only applies to individual and group sickness and accident policies issued after January 1, 2011.

 

UPDATED: This interpretation of statute has been overruled – see my new post, dated March 15th, 2011.

Update: mandatory maternity forces insurer to withdraw policies Jan. 1

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United HealthOne/Golden Rule, in an email release today, announced a temporary exit from the Colorado individual insurance market due to House Bill 10-1021, CONCERNING REQUIRED COVERAGES FOR REPRODUCTIVE SERVICES FOR HEALTH INSURANCE POLICIES.

Beginning January 1st, 2011, all individual policies sold in Colorado must provide for maternity and reproductive services, same as any illness, except in cases of pre-existing condition.

“Following recent passage of legislation mandating unisex rating and maternity coverage, Golden Rule was required to file new plan designs with the Colorado Division of Insurance (DOI). In early 2011, we will again offer consumers in Colorado a wide range of affordable health plan choices.

As of December 31, 2010, the only UnitedHealthOne plan that will remain available in Colorado is personal Dental.”

The new law, codified under 10-16-104 (3) (a) (I), Colorado Revised Statutes, doesn’t specifically address whether in-force individual plans will be required to provide this coverage on 1 January, or if individual plans will be allowed to update their coverage requirements at time of policy renewal.

Calls to other carriers operating in Colorado elicit little if any additional information on the benefits required under the law, or how these new mandates will affect premiums, or if other carriers may be forced to follow suit with “temporary” disruptions of individual health insurance availability on 1 January.

Developing…

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