A bill to ask the federal government for a waiver to implement a reinsurance program to help cover high-cost claims in high-premium areas of the state won preliminary approval in the Colorado House on Friday.
The bill, if Colorado gets the waiver, has the potential to reduce premium costs for those who get their insurance on the state's health insurance market, say its sponsors, Reps. Janice Rich, R-Grand Junction, and Julie McCluskie, D-Dillon.
"Reinsurance is a proven approach to reducing insurance premiums and providing relief to people that buy insurance in the individual market," Rich said. "Let me tell you why this bill appealed to me. I am from rural Colorado, and many who live on the Western Slope are struggling to afford health care, and I believe there is a potential savings for Colorado from a reinsurance program.
"We are predicting, at least in Mesa County where I live with this reinsurance program, we could see rates down by 25 to 30 percent," she added. "This could actually help small businesses and those who have not been able to afford health insurance otherwise."
Under HB1168, the state's insurance commissioner would apply for a waiver from the U.S. Department of Health and Human Services to allow the state to get federal money through the Affordable Care Act.
That money, up to about $260 million, would be used to reimburse insurance companies that operate on Connect for Health Colorado, the state's health insurance marketplace. It would operate similar to reinsurance policies that private insurers already purchase to help cover the cost of high claims, which oftentimes can cause premiums for everyone else on a particular plan to increase to cover those claims.
The bill calls on the insurance commissioner to set payment parameters around the state depending on current premium costs. For Mesa County and the rest of western Colorado, that rate would be between 30 and 35 percent, the highest rate because that region of the state has the highest premiums.
For areas outside of the state's largest cities — Colorado Springs and the Denver-Boulder area — the rate would be between 20 and 25 percent. The large cities would see the smallest rate, 15 to 20 percent.
Currently, seven other states have received federal waivers to create their own reinsurance programs, while another seven states — red and blue — are considering applying for them. Most of the waivers, which are modeled after a similar federal program, have helped reduce premiums by as much as 10 percent.
Some opponents of the measure said they don't necessarily oppose the idea of reinsurance, just how the bill would accomplish it.
"I appreciate the idea of reinsurance and I think it is something that we sorely need, the issue is the way this reinsurance is structured," said Rep. Colin Larson, R-Littleton. "There have been seven other states that have done reinsurance across the country, none of them have done it solely on the backs of providers, which is what we are proposing to do in this bill."
Larson said the bill would take up to $100 million out of the existing health care system and put it into the reinsurance program. That amount of money in lost profits to hospitals and other health care providers will cause many medical specialists to leave the state or not come here in the first place, reducing the level of medical care for all, he said.
The bill requires a final House vote, which could come as soon as Monday, before heading to the Senate for more debate.