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<<!-- PICOTITLE= "Health Insurance Market in Colorado" --> <!-- PICODATESET mmddyyyy=08202001 -->. HOT ISSUES IN HEALTH CARE. Sponsored by Rose Community Foundation. HEALTH INSURANCE MARKET IN COLORADO. W. N. Lindsay Benefit Management & Design, Inc. 1720 South Bellaire Street, Suite 250

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hot issues in health care

<<!-- PICOTITLE= "Health Insurance Market in Colorado" --> <!-- PICODATESET mmddyyyy=08202001 -->


Sponsored by

Rose Community Foundation

health insurance market in colorado


W. N. Lindsay

Benefit Management & Design, Inc.

1720 South Bellaire Street, Suite 250

Denver, CO 80222

(303) 691-0335

setting the stage
Setting the Stage
  • Urban and Rural Access
  • Small Group Health Insurance Challenges
  • Significant and sustained price inflation
national trends
National Trends?
  • Influenced by large employers
  • Health care prices vary by market

*Estimate is statistically different form the previous year shown: 1996-1999, 1999-2000, 2000-2001, 2001-2002.

Note: Data on premium increases reflect the cost of health insurance premiums for a family of four.


national rx drug trends
National Rx Drug Trends

Source: Mercer/Foster Higgins National Survey of Employer-Sponsored Health Plans 2001

total hmo enrollment and growth rate july 1992 to july 2001
Total HMO enrollment and growth rate, July 1992 to July 2001

Note: Growth rates based on total enrollment, not the rounded-off numbers given in this chart

SOURCE: EBRI 5/30/02

health plan enrollments for covered workers selected years 1996 2001
Health Plan Enrollments For Covered Workers, Selected Years 1996-2001

Sources: Kaiser/Health Research and Educational Trust (HRET) Survey of Employer-Sponsored Health Benefits, 1999, 2000, 2001; and KPMG Survey of Employer-Sponsored Health Benefits, 1996, 1998.

america s health care providers won the battle vs managed care
America’s Health Care Providers Won the Battle vs. Managed Care
  • Network adequacy rules
  • Any willing provider requirements
  • External appeals required
  • Gag clauses removed
  • Out-of-network providers included
  • Prompt pay rules
  • Non-contracted reimbursement rates
  • Health plan liability

But they may have lost the war.

consider this
Consider This!

Shift cost to employees

Higher deductibles & OOP limits

No reimbursement until a claim is processed

Removal of copayments from plans

Collections on an individual employee basis

Increased bad debt

No assignment of benefits for non-contracted providers

“The leading cause of personal bankruptcy is health care costs.”

Source: Prosperity Institute Report 2/2002

colorado has been a laboratory
Colorado Has Been a Laboratory
  • 1992 RWJ Planning Grant
  • 1994 Business Group of One
  • 1994 Small Group Health Reform
  • 1994 Modified Community Rating
  • 1994 Small Employer Health Care Purchasing Cooperative
  • 1996 Child Health Plan
  • 1998 Child Health Plan Plus (SCHIP)

And…there have been a few explosions!

colorado hmo enrollment
Colorado HMO Enrollment

Source: Interstudy Statistical Report 2000

colorado hmo results
Colorado HMO Results

Source: Colorado Division of Insurance, May 2001

insured status small employer market
Insured StatusSmall Employer Market

Source: Colorado Division of Insurance April 30, 2002

employers reactions to rising health care costs
Employers’ Reactions to Rising Health Care Costs

December 2000




December 2001




August 2002




Pass on Cost Increase

Absorb Cost

Change Coverage

Source: BMAD Employer Surveys

contrary concepts
Contrary Concepts:

Public Policy

Insurance Principles

  • Guarantee Issue all products (HIPAA)
  • Open enrollment required (HIPAA)
  • Limits on “pre-ex” (HIPAA)
  • Maternity not pre-ex (HIPAA, Pregnancy Discrimination Act)
  • Mandated coverage (e.g., Mental Health)
impacts of laws on insurance
Rate regulation

Rating restrictions

Market conduct rules

Guaranteed availability

Limiting restrictions by insurers

Small employers only

Impacts of laws on Insurance

State Laws

Federal HIPAA Law

challenges to effective competition
Challenges to Effective Competition

The size of the pool is shrinking!

  • Number of uninsured growing
  • Number of small businesses not offering insurance is growing
  • More employees not electing coverage when offered it
challenges to effective competition1
Challenges to Effective Competition

Different sets of rules!

Self-funded small employers 8-10%+

Individual insurance 3-7%+

Employee leasing companies 2-5%+

Others (METS, MEWAs, etc.) 3-5%+


fact based assessment
Fact Based Assessment

Example of individual insurance

Age 25 $125.89

Age 35 $150.13

Example of small employer group insurance

Age 25 $193.25

Age 35 $206.41

$500 deductible, 90/60% PPO, $5,000 Coinsurance, $20 office copay,

10/30/50 Rx, 6/02 Denver rates

fact based assessment1
Fact Based Assessment

Individual Insurance is Cheaper

  • New Pre-ex
  • Subject to Medical Underwriting
  • Policy limits, restrictions
  • No state mandates*


current status
Current Status?
  • Humana—major off-anniversary rate change
  • Sloans Lake HMO is sold
  • Denver Health HMO withdraws from small group
  • Aetna, Pacificare withdraw from Alliance
  • Aetna withdrawal from HMO small group
  • Alliance/CHIP fails
current status1
Current Status?

On-going challenges:

  • Rate increases (ALL groups)
  • Stop-loss market has hardened
  • Small employer pool decreases
  • Rural access to insurance options
  • Over age 65 access to physicians
what are we to do
What are we to do?
  • Re-entry penalty
  • Gather data on insurance coverage
  • Define “insurance”
  • Provider cost data and quality

"Picking a healthcare financing system is kind of like picking someone to marry--you're picking a set of problems you are prepared to live with.”

Marc J. Roberts, Ph.D., Harvard School of Public Health