Coverage of Reinsurance

Proposed fee to stabilize Colorado’s individual health-insurance market dies in the Senate

By Ed Sealover (May 06th 2018)

The idea of launching a reinsurance program to save Colorado’s flailing individual health-insurance market was big and it was bold. But in the end, it wasn’t bipartisan enough.

Republicans on the Senate State, Veterans and Military Affairs Committee on Friday killed House Bill 1392 3-2 on a party-line vote. That decision came after its Republican Senate co-sponsor, Don Coram of Montrose, looked at his colleagues on the committee and acknowledged that he didn’t know exactly what the answer was to bring down skyrocketing premiums in his part of the state but that he had to try something like this.

Under a reinsurance program like those that have been implemented in Alaska and Minnesota, the state would place a 2 percent fee on all large-group, small-group and individual plans offered by private insurers and use that to generate a money to insure the insurers who face the highest costs in the individual market. Those insurers could submit to the state claims between $25,000 and $1 million and ask for them to be covered by this new pool of revenue — a cushion that would allow individual-market insurers to bring down premiums statewide by an average of 16 percent but bring them down even more in extremely high-cost areas of the state like the mountain towns and the Western Slope, said co-sponsoring Rep. Chris Kennedy, D-Lakewood.

Kennedy and co-sponsoring Rep. Bob Rankin, R-Carbondale, also set the program up to end after five years, so the state could determine whether it had achieved its purpose.

“It’s a 2 percent tax on a broad spectrum of insurance providers with a 35 percent decrease for people in this spiked-up pool in western Colorado,” Rankin told the House during debate on the measure on April 27th. “This is a necessary step if rural Colorado is to survive and not have people leaving there.”

Read Full Story at DenverBusinessJournal.com

Reinsurance program can stabilize health insurance costs

By Tom Jankovsky (April 29th 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-Carbondale, and Rep. Chris Kennedy, D-Lakewood. 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.

Read Full Story at GJSentinel.com

Is reinsurance the antidote for high insurance premiums in Aspen, other mountain communities?

By Rick Carroll (April 28th 2018)

Pitkin County can lay claim to a bevy of bragging rights when it comes to quality of life, but not when it comes to the cost of health insurance premiums.

Along with other rural mountain communities, including Eagle, Garfield and Summit counties, customers on the individual market have seen their annualized premiums skyrocket by some 72 percent over the past three years, according to the state’s insurance division.

There might be help on the way, however, and it will boil down to what state lawmakers decide during the current legislative session.

House Bill 1392, the Individual Health Insurance Market Stabilization Act, aims to stabilize health plans on the individual market — those buyers who don’t get insurance through their employer or relatives, and don’t have Medicare or Medicaid. Many of those individuals who have been hurt in the wallet are those who weren’t eligible for federal tax credits under the Affordable Care Act.

In 2015 in Pitkin County, 3,020 residents, or 16.9 percent, were uninsured; 7,583 individuals, or 42.5 percent, had employer-sponsored insurance; and 3,361, or 18.9 percent, had individually purchased insurance, according to the Colorado Health Institute.

Another 1,629 residents, or 9.1 percent, were Medicaid enrollees and 139 individuals, or 0.8 percent, were enrolled in Child Health Plan Plus.

The reinsurance bill is hardly perfect, said Pitkin County Commissioner Rachel Richards. Still, she strongly supports it.

“It really would make a difference to people when the rates for 2019 go out in the fall,” said Richards, who testified about the bill April 19 before the state’s health education committee.

The bill’s goal is to lower premium increases on the individual market by 20 percent in 2019.

Read Full Story at AspenTimes.com

Colorado takes steps to shore up markets and protect consumers

By Bethany Pray (April 26th 2018)

Since the passage of the Affordable Care Act (ACA) eight years ago, Colorado has jumped on opportunities to improve health care access for its residents, expanding Medicaid coverage and creating a state-based health insurance exchange where Coloradans can take advantage of federal subsidies that help pay for the cost of coverage.

With the feds now in the process of undercutting the ACA, Colorado has an opportunity – through House Bill 1392, the Individual Health Insurance Market Stabilization Act – to use reinsurance to stabilize a market that the feds have knocked off-balance, and simultaneously to make premium prices more equitable for rural Coloradans. While Coloradans who qualify for subsidies can purchase more affordable coverage, those with incomes over 400 percent of the federal poverty level pay full price. Fortunately, HB 1392 and the reinsurance system could provide some relief from rising premiums.

Reinsurance works like this: a fund is created that helps cover costs for the most expensive enrollees in individual and small-group plans. Because insurance carriers know they’ll have help covering the highest cost enrollees and will bear less risk, they can set premium prices lower for everyone. Those lower premiums make coverage more attractive to the healthy individuals who might otherwise skip having coverage – a problem worsened since the federal government gutted the “individual mandate” that required us to get covered.  Bringing more healthy individuals into the risk pool helps further reduce the costs of insurance. Reinsurance programs are underway in three states, and the first to implement the plan – Alaska – has had significant success. In Alaska in 2017, projected premium rate increases of 42 percent were instead held to just 7.3 percent.

The special twist in HB 1392 is that reinsurance funds will be dispersed in such a way that premiums can be lowered most dramatically in high-cost areas, especially the Eastern Plains, Western Slope and the mountain corridor. We heard testimony in the House Health, Insurance and Environment committee recently about costs that exceeded 20 percent of one middle-class family’s income, or a whopping $25,000 for an individual’s policy, combining premium payments and deductibles. Families and businesses in rural Colorado can’t thrive unless residents above the income cut-off for subsidies have access to health care — whether that’s to provide prenatal care, treat a broken wrist or get access to necessary medications.

Rep. Chris Kennedy and Colorado’s Division of Insurance, under Acting Commissioner Michael Conway, have engaged closely with stakeholders over the past year. Much of that work involved developing a mechanism to create the reinsurance fund, which would combine new fees on individual, group and stop-loss policies, along with a re-purposed portion of the federal funds Coloradans receive through the premium tax credit program.

This is a solid plan that deserves strong support. At the same time, we need to continue efforts to identify providers, facilities and procedures that contribute to the outsize costs that inflate premiums, and to develop mechanisms to rein in outliers and ensure quality, affordable care. Costs matter. But we simply can’t afford to leave Coloradans in those areas out in the cold. Adopting a reinsurance plan now is the right choice.

Read Full Story at Colorado Center on Law & Policy

Bill aims to lower health care rates

By Charles Ashby (April 28th 2018)

DENVER — One way to lower health care costs in areas of the state that are seeing double-digit increases in premiums is to get insurance companies to pool people together under the same health care plans.

But to get insurance companies to do that hasn’t been an easy task because of the high cost of doing so, lawmakers say.

That’s why Rep. Bob Rankin, R-Carbondale, and Chris Kennedy, D-Lakewood, got preliminary approval in the Colorado House on Friday to provide insurance for insurance companies, a practice called reinsurance.

Such a program allows insurance companies that buy reinsurance coverage to make claims for high costs just like patients do.

“When it comes to payment reform ideas and trying to address what I see as an irrational subdivision of our insurance market into these little subgroups,” Kennedy said. “What we really need is the broadest pool possible to share the risk. That’s what insurance is all about. This is the single best thing that we can do to stabilize the health care markets.”

But it drew opposition partly because the measure, HB1392, calls on the Colorado Division of Insurance to assess a 2 percent fee on all premiums statewide to fund the reinsurance program, which would be about $360 million, half of which would be federal money.

“This is once again feeding a monster without any accountability,” said Rep. Susan Beckman, R-Littleton. “Until we get some transparency in the system, move it to more of a free market, we’re going to be taking a group of people to fund other groups.”

Others didn’t like the bill because it attempts to repair errors created by the federal Affordable Care Act, also known as Obamacare.

Rep. Dan Thurlow, R-Grand Junction, said he just can’t see how the measure would help.

“I would love to say … here’s a magical formula that we’re going to lower your rates,” Thurlow said. “I’m sorry, but I just don’t believe it. We can’t just magically say let’s take two percent from all the other (insurance) plans … and say now we’re going to put that two percent into the other market, and that it’s not going to create higher … rates. I think we’re kidding ourselves.”

The measure somewhat replaces an idea that Rankin and Rep. Millie Hamner, D-Frisco, have supported, and that’s to make the entire state its own geographic rating area when it comes to determining premiums, instead of the current nine.

But that effort died because it would lead to higher insurance rates in the more populated areas of the state, such as the Front Range.

The bill requires a final House vote before heading to the Senate, where Sen. Don Coram, R-Montrose, and Kerry Donovan, D-Vail, will try to get it to the governor’s desk.

Read Full Story at GJSentinel.com

Legislature considers raising fees on employer health plans to stabilize individual market

By Ed Sealover (April 20th, 2018)

Colorado’s individual health-insurance market is failing, with average premiums rising 20 percent in 2017 and another 27 percent this year.

As such, a bill moving through the Colorado Legislature asks this question: Is it fair to ask some 2 million people in this state to pay between 2 and 8 percent more for their insurance premiums next year in order to stabilize the individual market for roughly 140,000 people who face the prospect of even more skyrocketing costs without some kind of help?

The proposal, from Democratic Rep. Chris Kennedy of Lakewood and Republican Rep. Bob Rankin of Carbondale, would establish a reinsurance program that, in many ways, offers insurance to health insurers who have taken the sickest and most expensive patients into individual plans since the Affordable Care Act required all Americans to buy policies in 2014 and banned insurers from rejecting customers because of pre-existing conditions.

Reinsurance allows insurers to turn over to the state their highest claims once they exceed a certain cost, such as $25,000, and to have the state cover those bills until the claims reach $1 million. Doing so would reduce insurers’ risks and allow companies to bring down the overall costs of premiums between 10 and 25 percent as compared to what they otherwise would charge in 2019, Kennedy and interim Colorado Insurance Commissioner Michael Conway said.

Read Full Story at DenverBusinessJournal.com

Leave a Reply

Your email address will not be published. Required fields are marked *
You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>