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Health insurance rates down, but still high

Health insurance rates for the new, broader northwest Colorado geographical rating area that includes Garfield County are averaging about 20 percent less this year, according to a recent analysis comparing costs for 2015 with those under the former resort rating area that was eliminated last year after pressure from local elected officials.

However, rates in Garfield County and most rural counties in the state are still somewhat higher than in Denver and other more populous areas, leading many of those same officials to call for a single, statewide rating system.

“Our commissioners have maintained their position that a statewide rate system makes sense,” Garfield County Attorney Frank Hutfless said. “By doing that, you increase competition across the state. As there is more competition, rates go down.”
Hutfless was directed by county commissioners early last year to prepare legal arguments for a potential lawsuit against state and federal insurance regulators making a case that Colorado’s rating system was unfair.

In particular, the former resort rating area, which included Garfield, Pitkin, Eagle and Summit counties, had what, by most accounts, were the highest insurance premiums in the United States under the Patient Protection and Affordable Care Act (ACA), or Obamacare.

“My contention is there is absolutely no justification for dividing the state. The good news is we made some dramatic improvement with the new rating areas. The bad news is it’s not nearly enough, and we still have a lot of work to do.”Jim Markuson former financial officer with Valley View Hospital and longtime observer of health care costs

The Colorado Division of Insurance, which oversees the state’s health insurance exchange, ultimately agreed to do away with the resort area and include those four counties in a broader rating area.

The new West Rating Area takes in the northwest segment of Colorado, except Mesa County, which remains its own metropolitan rating area.

“As a lawyer, I still think the state is in violation of the Affordable Care Act, which provides that no action is to be taken that will unfairly disadvantage one group of people over another,” Hutfless said, adding Garfield County alone is not in a position to make that challenge.

Feb. 15 is the final deadline for individuals and employee groups to enroll in health plans through the state exchange.
Through the end of January, about 186,500 new people had enrolled in private coverage through Connect for Health Colorado, according to the most recent statistics released by the exchange.

Jim Markuson of Glenwood Springs, a former financial officer with Valley View Hospital and longtime observer of healthcare costs, agrees that the state’s rating system creates a disadvantage for those in rural areas.

“My contention is there is absolutely no justification for dividing the state,” Markuson said. “The good news is we made some dramatic improvement with the new rating areas. The bad news is it’s not nearly enough, and we still have a lot of work to do.”

Markuson provided an analysis of individual and group health insurance rates for this year compared to 2014, which was the inaugural year under the provisions of the ACA.

For the least-expensive Bronze Plan, Markuson said the lowest premiums in the new West area dropped 19 percent from last year.

But the lowest premium available in this region, at $311.55 per month, is still somewhat more than the Denver-area rate of $210.81, according to Markuson’s analysis. This year’s rates are also about 3 percent lower for the Denver area, he said.
In 2014, the lowest premium available in the former Resort area was about 72 percent more than the best available rate in Denver. This year, that difference has fallen to about 48 percent.

Under the mid-grade Silver Plan, the lowest premium for the geographic area including Garfield County dropped by 22 percent compared with last year. Again, though, the lowest premium available here is about $358.06 per month, compared with $206.59 for Denver.

Employers still have another year before those with 50 or more employees are required to provide health insurance. But group plan rates have fallen as well under the new geographic rating system, by 19 percent for a Bronze Plan, compared to last year.

The cost difference compared to Denver, however, is similar to that for individual plans, Markuson noted in his analysis.
Premiums for group plans are also about 19 percent higher than premiums for individual plans in this geographic area, he said.

“I am told that the reason for this difference is that the risk pools could be different,” he said.

Regardless, “You can see, there is still a huge difference in premiums between Denver and rural Colorado,” Markuson said. “I firmly believe that where a person resides should no longer be a factor in the calculation of health insurance premiums.”
For one, there aren’t enough insured people in rural areas to adequately spread risk, he said.

Also, rural areas have an “umbilical cord” to urban areas for expensive tertiary care and care that’s not available in their own community.

“A lot of health insurance costs incurred by residents of rural areas is spent in metropolitan areas,” Markuson said. “By keeping premiums high, healthy people are incentivised to go without insurance and pay the lower penalties as prescribed under the Affordable Care Act.”

Markuson said he would support what’s called a “tiered rate band,” where, for example, premiums could be capped at 110 percent of average in “high cost” areas, and limited to 90 percent of average in “low cost” areas.


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