Colorado Division of Insurance considers geographic ratings for health insurance

Comments are due January 1 for 2015 rate adjustments

PRESS RELEASE
December 5, 2013

Wednesday, December 4, Colorado Insurance Commissioner Marguerite Salazar and her staff held a one hour community webinar by computer. Some questions subvvvvmitted in writing via chat by those watching were addressed.

Salazar is with the State of Colorado Department of Regulatory Agencies Division of Insurance (DOI). The agency states that in setting the rules and parameters under which insurance carriers file their premium rates, the DOI is guided by these principles:

  • Insurance rates should not be excessive, inadequate, or unfairly discriminatory;
  • Consumers should have the greatest choice of policies at the most reasonable cost possible; and
  • There should be open competition between insurers on a sound financial basis
  • She hopes that by engaging in these discussions, the state can achieve a fair and balanced outcome for 2015

The webinar restated there are two key factors which cause the differences in rates between regions:

  1. health care costs in that region; and
  2. the utilization, or how much the health care is used.

The Affordable Care Act (ACA) required geography to be one of the few factors used by insurance companies to vary premiums. The rates for 2014 have been set already, and the discussions by the DOI are to address concerns for the rates in 2015. Comments to the DOI must be submitted before January 1 to be considered for 2015 rate changes.
Contact the Department of Regulatory Agencies Division of Insurance website

Salazar closed the webinar with these words: “You have heard that we are looking at cost and we are looking at utilization. You understand now we can’t move people into the metropolitan areas because it is against federal regulation, and we have looked at moving Garfield County to different places, but that really does have a ripple effect across the state. But if anybody wants to us to continue looking at some of those ideas, we are more than happy to do that. Write to us at the DORA website or call.”

Garfield County’s concerns
Garfield County Commissioners and County Attorney Frank Hutfless are addressing the ratings for residents, hoping to help lower insurance premiums for county residents and business. “Our message to the insurance commission is that Garfield County and 47 rural counties are unfairly treated and discriminated against in health insurance rates as a result of action taken by the Colorado Division of Insurance in establishing health insurance rating areas,” said Hutfless. “In addition,” he said, “I believe the geographic rating system applied to Garfield County does not support the intent of the Affordable Care Acts and federal regulations that prohibit rate discrimination and require health insurance to be affordable.”

As pointed out by the Board of County Commissioners, “this action resulted in substantial premium increases in Garfield County and throughout rural Colorado. Garfield County has also been categorized as a resort community, which is the rating resulting in the highest premiums for health insurance.” Hutfless added, “this should not happen, because 22 counties throughout the state have higher insurance costs than Garfield County, and yet citizens pay lower insurance premiums in them.”
Garfield County points of interest on state geographic rating areas

John Martin presented this information to Colorado Counties, Inc., Annual Winter Conference.

Resources
Factors Affecting Health Insurance Premiums Starting in 2014
Department of Regulatory Agencies Division of Insurance website

Fact Sheet:
Colorado Geographic Rating Requirements in Mountain Resort Counties

DOI information released Wednesday includes:
Division of Insurance webinar slides

 

Geographic insurance premium rating areas comparison

State Geographic Rating Areas 2010 Population Population per Geographic Area
Colorado

11

5,029,196.00

457,199.64

Washington

5

6,724,540.00

1,344,908.00

Oregon

7

3,831,074.00

547,296.29

California

19

37,253,956.00

1,960,734.53

Idaho

7

1,567,582.00

223,940.29

Montana

4

989,415.00

247,353.75

Arizona

7

6,392,017.00 913,145.29
Nebraska

4

1,826,341.00 456,585.25
New Mexico

5

2,059,179.00 411,835.80
Kansas

7

2,853,118.00 407,588.29
Oklahoma

5

3,751,351.00 750,270.20
Iowa

7

3,046,355.00 435,193.57
Texas

26

25145561 967,136.96
Florida

67

18,801,310.00 280,616.57

 

Comparative inpatient hospital charges

2012 Colorado Hospital Association

Other pneumonia-moderate severity
  Valley View Hospital $24,477.00
  Metro Average $27,013.00
  State-wide $20,866.00
Heart Failure-major severity
  Valley View Hospital $27,266.00
  Metro Average $40,338.00
  State-wide $35,933.00
Knee joint replacement-moderate severity
  Valley View Hospital $55,392.00
  Metro Average $82,995.00
  State-wide $74,793.00
Intervertebral disc excision-minor severity
  Valley View Hospital $44,653.00
  Metro Average $45,334.00
  State-wide $40,882.00
Knee and lower leg procedure-minor severity
  Valley View Hospital $30,508.00
  Metro Average $56,106.00
  State-wide $47,061.00
Uterine and adnexa procedure-minor severity
  Valley View Hospital $36,240.00
  Metro Average $42,071.00
  State-wide $36,257.00
C-section-minor severity
  Valley View Hospital $23,637.00
  Metro Average $21,635.00
  State-wide $19,434.00
Vaginal delivery-minor severity
  Valley View Hospital $9,344.00
  Metro Average $12,195.00
  State-wide $19,434.00
Normal new born-minor severity
  Valley View Hospital $3,042.00
  Metro Average $4,644.00

 

Average cost for all nine procedures:

Valley View Hospital – $28,555
Denver metro area hospitals – $36,533
Statewide average – $32,177

2011 healthcare costs by county

Small group, individual and Medicaid
– Source: Colorado All Payor Claims database

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