Jankovsky column: A sensible solution to stabilize state’s insurance market
April 28, 2018
Garfield County residents and Coloradoans across the state are struggling with ever-increasing health insurance costs, which have reached exorbitant levels on the individual market and are getting worse every year.
According to the Colorado Division of Insurance, the issue is being felt regardless of zip code, with three years of annualized premium increases in excess of 20 percent (and even higher in rural and mountain communities). This means the average cumulative premium increase in the individual market was approximately 72 percent over the past three years — this has a staggering effect on our residents.
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. Critical and immediate action is needed to secure stabilization in the individual market.
State lawmakers have a solution before them this session in HB 18-1392, the Individual Health Insurance Market Stabilization Act, which is co-sponsored by Colorado State Reps. Bob Rankin (R) and Chris Kennedy of Lakewood (D).
This bipartisan bill creates a high-cost reinsurance program that buffers insurance companies against risk for unusually expensive claims, such as transplants and cancer care. It spreads the risks to avoid destabilization of the market, and incentivizes insurers to offer coverage in currently underserved areas.
There is a cost — $300 million for the reinsurance program. The summary from the fiscal note says it much more succinctly:
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"This bill requires the commissioner of insurance to seek a state innovation waiver under the federal Affordable Care Act to create a state reinsurance program in Colorado. If federal approval is received, the reinsurance program will apply to 2019 health plans sold on the individual health insurance market. To fund the reinsurance program, the commissioner is authorized to assess a fee on state-regulated health insurance carriers of up to two percent on premiums. In addition, the reinsurance program will be supported by federal funds that would have otherwise been provided to consumers as federal advanced premium tax credits.
"The bill directs the commissioner to set the parameters of the reinsurance program, so that claims costs in the areas of the state with the highest health insurance premiums are reduced by 30 percent, and that all other geographic areas of the state have a 20 percent reduction in claims costs. Fees collected from health insurers and available federal funds under the State Innovation Waiver are to be deposited into the newly created Reinsurance Program Cash Fund. The reinsurance program is created as an enterprise under TABOR and revenue is exempt from the TABOR revenue limits."
The Colorado Division of Insurances has said that each individual on group plans will pay roughly $100 per year, but those on the individual market will save an average of $1,300 annually, or 20 percent per person.
Reinsurance is the necessary step to stabilize the individual market, and it is making a difference in other states. This non-partisan strategy has been endorsed among both Republican and Democratic governors and elected insurance commissioners alike in Alaska, Minnesota, and Oregon, all of which have implemented reinsurance programs. Wisconsin and Maryland just passed bills for reinsurance; and Louisiana is expected to pass legislation this session.
Burgeoning costs are causing healthy consumers to drop insurance coverage, thus leaving a risk pool that is more prone to illness and expensive to cover. This, in turn, causes everyone's health insurance to increase, and we all pay the price. In Garfield County, our neighbors and friends are directly impacted. Across the state, some are not reporting income or are turning away work to stay below the 400 percent of poverty threshold for the subsidy. Others are moving away because of insurance costs. These are drastic measures. High-cost health premiums are impeding people's abilities to save for retirement, buy homes, or save for college.
Reinsurance is admittedly not an all-in-one solution, yet waiting another year is not the solution. Reinsurance will have a dramatic impact on the lives and livelihood of many Coloradans. We urge state lawmakers to follow their local county commissioners in supporting HB 18-1392 to begin addressing Colorado's health care crisis. Our communities can't wait!
As a Garfield County commissioner, I've spoken with many people who are struggling with the high cost of health insurance. I know of an individual battling cancer who has children and doesn't have insurance. I also recently attended a memorial service for a friend who faced health issues without insurance and died. That individual had spoken with me about the high cost of health insurance for seven years. The time to act is now.
Contact your state senator, Randy Baumgardner, and ask him to vote in favor of this bill. It will help all the people of Colorado. He can be contacted at 303-866-5292 (office) or 970-509-9187 (cell); or by email at firstname.lastname@example.org or email@example.com.
Tom Jankovsky is a Garfield County commissioner.