Health insurance rating areas

House Bill 16-1336

House Bill 16-1336 fact sheet


Bill proposes a study of statewide single geographic rating area for health insurers

March 24, 2016 – A new bill, Single Geographic Area Individual Health Plans (Colorado House Bill 16-1336), concerning study of a single geographic rating area for health insurers to use when establishing rates for individual health insurance plans, passed out of committee to the House floor on a vote of 12 to 1 on March 24. There was no testimony in opposition at the committee level. The bill will move along to the House, before Senate consideration.

Introduced by Representative Bob Rankin (57th) and Representative Millie Hamner (61st), Garfield County Commissioner Tom Jankovsky is an advocate for House Bill 16-1336.

Under current law, health insurers are permitted to consider the geographic location of the policyholder when establishing health insurance rates for individual and group insurance plans. The bill directs the commissioner of insurance to study the impacts and viability of creating a single geographic rating area, consisting of the entire state, for purposes of determining premium rates for individual health benefit plans.

The passing of this bill would require the Colorado Division of Insurance (DOI) to study the viability and potential effects of creating a single statewide geographic rating area for individual health insurance. The DOI will complete the study and make recommendations to the Joint Budget Committee of the Colorado General Assembly by August 1, 2016. An amendment was added at the committee level directing the findings of the study to be presented to the House Health, Insurance, and Environment Committee, in addition to the Joint Budget Committee. This study will be conducted within existing DOI appropriated funds, and does not include setting aside of any state funds.

Reasons for introduction of the bill:

  • Health insurance providers selling individual policies are allowed to set premium rates based on four factors, one of which is where the individual lives (geographic rating area). The Division of Insurance (DOI) conducted a study in 2014 to evaluate the impacts of various geographic-rating-area configurations in Colorado. As a result of that study, DOI reduced the number of geographic rating areas from 11 to 9, retaining the seven urban areas and consolidating the state’s rural communities into two areas, beginning in the 2015 plan year.
  • For many Coloradans, health insurance remains unaffordable. Statewide, individual insurance premium rates increased by an average of 9.84 percent in 2016, with increases as high as 40 percent in some communities. According to insurance carriers, premiums are driven by the cost and utilization of health care, which vary by region.

The proposed bill includes a safety clause, which states that the General Assembly find, determines and declares that this act it necessary for the immediate preservation of the public peace, health and safety.

It is supported by Colorado Counties, Inc. (CCI), the Colorado Municipal League, Club 20, Chronic Care Collaborative, Colorado Center on Law & Poverty, Colorado Coalition for the Medically Underserved, and Colorado Consumer Health Initiative.

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