Colorado’s reinsurance bill drops marketplace health insurance
Health-care premiums are dropping for the first time in a long time, and for the individual marketplace on the Western Slope, premiums are going down dramatically.
The drop in premiums on the exchange can be attributed to the “reinsurance” bill the Colorado Legislature passed last session, according to Linda Gann, senior manager for the Western Slope with Connect for Health, the state’s insurance marketplace.
“There’s absolutely nothing simple about health care, but this is actually kind of simple,” Gann said. “It’s basically insurance for insurance companies.”
When a smaller insurance group has a high-cost health insurance claim — like a rare cancer, or premature birth — those costs can drive up premiums for the rest of the group.
Because the Western Slope has lower population density, the group sizes are smaller, exacerbating the already high costs of health care.
Under the reinsurance program, insurance companies can dip into their own insurance to pay for the higher claims and avoid raising premiums.
“What reinsurance does is build an insurance pool for insurance companies,” Gann said. “When a claim reaches a certain dollar amount, reinsurance kicks in, and that fund pays for that member’s care.”
The availability of reinsurance, assuming it gains a waiver from the U.S. Department of Health and Human Services, will make premium costs drop 30 percent for most of the Western Slope region.
Garfield County had 2,481 people enrolled in the health care exchange as of June 30, according to Connect for Health.
With financial assistance, the average premium for rural areas is around $107 per month. In Garfield County, the average monthly tax credit on the premiums was $806.
Premiums are much higher in rural areas, but because of the tax credits in the exchange, the price the insured person pays stays comparable to other areas.
“The tax credits do their jobs equalizing the high cost of premiums in the rural areas,” Gann said at the Club 20 summer policy meeting in Snowmass Village July 11.
Reinsurance works by taking taxpayer funds from the federal government that would go to the financial assistance, and investing it into the reinsurance pool — which lowers the initial premium amount.
The federal government is still considering granting the waiver, but Gann is optimistic.
“The feds are going to have to approve the reinsurance law that we passed, but it’s happened in other states, and the government has approved that, so we’re anticipating that will be the outcome with our request, but we won’t know that for a little bit,” Gann said.
If HHS for some reason does not grant the waiver, the individual market premiums will drop in this region by only 1.2 percent.
Some plans will drop more than the average. Friday Health Plans under the exchange are expected to drop nearly 42 percent with reinsurance, and Bright Health Insurance Co. plans would see a 36 percent decrease.
Denver-area plans on the individual marketplace are expected to go down only 15 percent with reinsurance, but those premiums are already far lower than the Western Slope and other rural areas.
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