Is reinsurance the antidote for high insurance premiums in Colorado’s mountain communities?
Pitkin County can lay claim to a bevy of bragging rights when it comes to quality of life, but not when it comes to the cost of health insurance premiums.
Along with other rural mountain communities, including Eagle, Garfield and Summit counties, customers on the individual market have seen their annualized premiums skyrocket by some 72 percent over the past three years, according to the state’s insurance division.
There might be help on the way, however, and it will boil down to what state lawmakers decide during the current legislative session.
House Bill 1392, the Individual Health Insurance Market Stabilization Act, aims to stabilize health plans on the individual market — those buyers who don’t get insurance through their employer or relatives and don’t have Medicare or Medicaid. Many of those individuals who have been hurt in the wallet are those who weren’t eligible for federal tax credits under the Affordable Care Act.
In 2015 in Pitkin County, 3,020 residents, or 16.9 percent, were uninsured; 7,583 individuals, or 42.5 percent, had employer-sponsored insurance; and 3,361, or 18.9 percent, had individually purchased insurance, according to the Colorado Health Institute.
Another 1,629 residents, or 9.1 percent, were Medicaid enrollees and 139 individuals, or 0.8 percent, were enrolled in Child Health Plan Plus.
The reinsurance bill is hardly perfect, said Pitkin County Commissioner Rachel Richards. Still, she strongly supports it.
“It really would make a difference to people when the rates for 2019 go out in the fall,” said Richards, who testified about the bill April 19 before the state’s health education committee.
The bill’s goal is to lower premium increases on the individual market by 20 percent in 2019.
Richards is co-chair of the organization Counties & Commissioners Working Together, which lobbies the statehouse for policy changes pertaining to health care, affordable housing and transportation, among other causes.
The organization includes the entire board of Pitkin County commissioners, who have voiced support for the bipartisan bill whose prime sponsors are state Reps. Bob Rankin (R) of Carbondale and Chris Kennedy (D) of Lakewood, and Sens. Don Coram (R) of Montrose and Kerry Donovan (D) of Vail. The bill was introduced to the House on April 13.
Reinsurance programs have caught on in other states, such as Alaska, Minnesota and Oregon.
By setting up a reinsurance fund, the new bill in Colorado would help the state’s 124,000 residents who have private insurance, but it would result in the remaining 2 million people seeing their premiums rise by single-digit percentage points.
Half of the $350 million annual program could be supported by federal dollars, the other half paid for by the insurance carriers.
The trade-off, suggested Edmond Toy, director of the nonpartisan Colorado Health Institute, poses a sticky scenario.
“The outlook for this bill is uncertain,” he wrote in a report published April 18. “On the one hand, the bill has both Democratic and Republican sponsors in the House and Senate. This bipartisan backing will improve its chances for passage, but various stakeholders have voiced concerns.
“Many insurance carriers support the concept of reinsurance, but some believe that policymakers need to find a financing mechanism that doesn’t just target carriers. For example, some states fund their reinsurance programs using general tax revenue. In addition, a reinsurance program won’t address the underlying causes of high insurance costs. Rising prices for medical services and greater use of health care will continue to drive up insurance premiums.
“Reinsurance is just a Band-Aid to a problem that needs fundamental changes.”
Richards, however, said something needs to be done sooner than later, or consumers on the individual market will continue to suffer as their premiums continue to increase.
Garfield County Commissioner Tom Jankovsky, in an op-ed sent to local media Friday, agreed.
“The failure to find a solution is hurting many Colorado citizens, and particularly small business owners, mom-and-pop operations, nonprofits and individuals working in the trades who don’t qualify for group plans,” he wrote. “Critical and immediate action is needed to secure stabilization in the individual market.”
Said Richards: “The real issue, at the end of the day, is the overall market,” she said. “What is the benefit to you? You might be in the group market, but if you lose your job, you’re in the open market. We need to stabilize the overall market. Fourteen Colorado counties have one provider. That’s zero competition, zero choice for the consumer.”
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