Colorado needs to make health insurance affordable for all
Under the Affordable Care Act, states were given the option of allowing insurance carriers to include defined geographic areas in their formula for insurance premiums. The feds suggested that Colorado use the seven metropolitan statistical areas (MSAs) plus two other areas for the rural areas of the state. Instead, Colorado Insurance Commission decided to develop four rural areas plus the MSAs, effectively defeating the objectives of the ACA in geographic area 11 (“resort area”).
The cornerstone of the ACA was to facilitate the purchase of health insurance, which would increase the number of insured people and spread risk thereby reducing costs. By sub-dividing the state geographically, risk is not spread over large populations and consequently there is potential for significant variations in insurance premiums.
This is exactly what happened with insurance premiums being as much as 100 percent higher in the resort area as opposed to Denver. Of course this does not affect self-insured employers, federal employees, Medicare plans, state employees or local government employees, making it even more discriminatory for a particularly vulnerable group in our community.
The data used to justify the designation of a “resort” area came from the Colorado Association of Health Plans, which is a private trade group comprising eight to 10 insurance companies including Anthem, United, Rocky Mountain, Cigna and Humana. The original letter from this private group of insurance companies was sent to the insurance commission on March 14, suggesting the proposed geographic areas. In essence, these insurance companies provided the notice to HHS with a rubber stamp from the Colorado Division of Insurance. Upon review of their tables and underlying rationale for the new areas, I am convinced that the Insurance Commission did not fully evaluate the data or conduct any additional analysis, as the conclusions are clearly flawed to an alarming degree.
The new insurance commissioner, Margaret Salazar, has maintained that the insurance commission was under pressure to provide notice of geographic areas to HHS and that was a contributing factor to this incredibly ridiculous action. Yet, the notice to HHS was dated March 20 and the deadline was not until mid-April. It certainly appears that the insurance commission acted quickly in order to avoid any controversy or input from the affected parties, local governments and health care providers. Adding insult to injury, most of the insurance companies in the Colorado Association of Health Plans chose to not offer viable coverage in the resort area.
The data in the report attempts to justify the development of the “resort area.” The most glaring example of flawed logic is the analysis presenting the average charge for six APR DRG’s (at the minor case level) at the four principal hospitals in the four counties in the resort area. The table is supposed to illustrate the high charges at the resort hospitals (as compared to other rural hospitals). They state that these six APR DRG’s represent 23.35 percent of total admissions. Of course evaluating only 23.35 percent of admissions may or may not be representative of the overall level of individual hospital pricing.
The report also maintains that 46 percent of inpatient admissions for residents of the resort area do not occur in the resort area but occur in metro MSAs, which renders costs at local providers almost irrelevant. Apparently, the insurance commission chose to ignore that fact in the establishment of the resort area. In fact, I would guess that many of those admissions in the MSAs are for tertiary care, which is generally very costly. So, the resort area is ultimately subsidizing health care costs in the MSAs. People in the resort area pay high premiums. A lot of their health plan payments go to health care providers in the MSAs, which help them hold their charges down (or offer higher discounts to insurance carriers). This translates to money being moved from the resort area to MSAs, which is an economic stimulus for the MSA and an economic drain from the resort area.
This was brought to the attention of the insurance commission months ago. State Rep. Bob Rankin, R-Carbondale, met with the insurance commission in June and was told that it was a done deal and nothing could be done about it. I have written to the insurance commission, Health and Human Services and the governor with no response from any of the parties. (Originally, I did speak with HHS and they were reluctant to get involved since Colorado had elected to run its own exchange.)
We have been told that the insurance commission is reviewing geographic areas for 2015, but that does not help the affected people and employers in 2014. People in lower income levels in the resort area will have the benefit of insurance tax credits, which will lower their premiums. However, small businesses and middle class people will be unable to afford even the bronze level of coverage. Small employers and individuals in the lower and middle section of middle class that currently have health insurance will be forced to (illegally) discontinue coverage and will be exposed to tax penalties and potentially financially devastating health care costs for unanticipated care because they are financially unable to afford health insurance. For example, a family of four residing in Garfield County and making approximately just under $94,200 per year will receive a tax credit of about $795.70 for the lowest priced Silver Plan and will pay a premium of $712.50/month. Meanwhile, a family that makes just over $94,200 per year will pay a premium of $1,508.20.
It is unacceptable that the state of Colorado has not been willing to work on a solution for 2014. I think at this point, alternatives may include creating state-based assistance for middle income people and small employers facing these outrageous insurance premiums or developing a pool of money from the profits of insurance companies to be made available to victims of these premium rates. Perhaps, since Cover Colorado will no longer be necessary, the Plan could be converted to a tool to assist affected people and small groups for 2014.
Ideally, for 2015, geographic areas should be reduced to a single area for the entire state due to the fact that all of rural Colorado accesses specialized and tertiary care in the MSAs. Rural Colorado should not be expected to subsidize the economies and health insurance premiums in the Denver area.
It is time for county commissioners, city managers and mayors and chambers of commerce in all of the affected counties to descend on the governor’s office and demand a resolution for 2014.
— Jim Markuson of Glenwood Springs is a 30-year Garfield County resident with 40 years experience with various hospitals in health-care financing.
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