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Colorado’s Private Health Insurance Market. Hot Issues in Health Care Legislative Conference November 17-18, 2006. <!--PICOTITLE=“Colorado’s Private Health Insurance Market”--> <!--PICODATESET mmddyyyy=09202006-->. Overview. Place private health insurance market in competitive market context

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colorado s private health insurance market

Colorado’s Private Health Insurance Market

Hot Issues in Health Care Legislative Conference

November 17-18, 2006

<!--PICOTITLE=“Colorado’s Private Health Insurance Market”--><!--PICODATESET mmddyyyy=09202006-->

Hot Issues in Health Care Legislative Conference

overview
Overview
  • Place private health insurance market in competitive market context
  • Describe small group market trends
  • Describe individual market trends
  • Discuss market-driven versus publicly supported policy approaches
  • Present various policy options
health insurance markets compared to competitive markets
Health insurance markets compared to competitive markets
  • The health care insurance market rarely meets conditions necessary for a competitive market
  • Conditions for competitive markets include……
in 2004 05 colorado regulated about 23 of private insurance market
In 2004-05, Colorado regulated about 23% of private insurance market

Source: Kaiser Commission on Medicaid and the Uninsured, Colorado Division of Insurance, 2006. Data from 2004-05.

adults are more likely to be uninsured than children
Adults are more likely to be uninsured than children

Source: U.S. Census Bureau, Current Population Survey

trends in the u s insurance market increases in premiums relative to inflation and earnings
Trends in the U.S. insurance market: Increases in premiums relative to inflation and earnings

Source: Kaiser Family Foundation, 2006.

trends in colorado s employer based market employee premium increases over time
Trends in Colorado’s employer-based market: Employee premium increases over time

Source: Medical Expenditure Panel Survey

trends in colorado s employer based market family premium increases over time
Trends in Colorado’s employer-based market: Family premium increases over time

Source: Medical Expenditure Panel Survey

trends in health insurer market in colorado
Trends in health insurer market in Colorado
  • Enrollment in state’s top 10 health plans has increased:
    • 1.8 million people at end of 1995
    • 2.9 million at end of 2005
  • For-profit health plans make up greater share of the market than nonprofit plans
what defines the small group health insurance market in colorado
What defines the small group health insurance market in Colorado?
  • Small employers between 2 – 50 employees
  • Business Groups of One (self-employed individuals)
  • Guaranteed issue (cannot be denied coverage due to health status)
  • Use of claims experience and health status to set rates is allowable
  • Some rate-setting controls
small group market
Small group market

The decline in participation corresponds with increasing premiums.

small group market1
Small group market

Disagreement as to source of increasing premiums –

  • Reforms passed by Colorado legislature in 1994 (HB 94-1210) or
  • Inflationary market trends across the country mitigated by HB 94-1210
small group market impetus for h b 94 1210
Small group market: Impetus for H.B. 94-1210
  • No limits on annual rate increases for small employers – premiums could double in one year based on health status of employees.
  • Carriers could decline or limit coverage of individuals in the small group market.
  • Led to very unstable market conditions.
small group market hb 94 1210
Small group market: HB 94-1210

HB 94-1210 included various changes to the small group market:

  • Guaranteed issue
  • Market conduct rules
  • Modified community rating with rate controls implemented over 3-year period
  • Business Group of One added
small group market hb 94 12101
Small group market: HB 94-1210
  • Since its passage, most of HB 94-1210 has been rescinded by the legislature or superseded by federal HIPAA rules
  • Remaining/modified regulations from 1210:
    • Business Group of One remains, but greater controls on employment documentation
    • Premiums can range from an annual 25% reduction to a 10% increase based on health status (claims experience) on top of medical inflation, geographic region and industrial classification
    • All carriers must offer standard and basic plans
what is the individual health insurance market in colorado
What is the individual health insurance market in Colorado?
  • Roughly 11% of Colorado’s privately insured population is in the individual health insurance market
  • No guaranteed issue; carriers allowed to deny applicant based on health status
  • Very few mandates apply
  • Health plans must file premiums with the state and must be found actuarially sound
individual market
Individual market

Colorado’s high-risk pool: CoverColorado

  • State established, subsidized health insurance plan for people “uninsurable” because of a pre-existing medical condition
  • A few other qualifying circumstances (see CHI brief on high-risk pool)
  • 23 states have a high-risk pool
  • 180,000 participants nationwide; 5,000+ in Colorado
individual market1
Individual market

Funding for CoverColorado

  • Premiums, state unclaimed property fund and assessment on insurers
  • Premiums set between 100% and 150% of annual average small group premium rate
  • High premiums, high deductibles
  • In 2005, almost 50% of CoverColorado members had a deductible > $5,000
two approaches to stimulate small group health insurance market
Two approaches to stimulate small group health insurance market
  • Structure health insurance to operate more like a competitive market through greater consumer-directed health care purchasing
  • Increase government involvement through regulatory mechanisms and subsidies to increase coverage for low-income workers
consumer directed purchasing
Consumer-directed purchasing
  • High-deductible health plans can be coupled with health savings accounts (HSAs)
  • Greater cost sharing, more out-of-pocket expenses when shopping for health care
  • Consumers with more out-of-pocket expenses will require greater transparency in pricing and quality information, a “Consumer Reports” for health care consumers
regulatory guidance and publicly financed subsidies
Regulatory guidance and publicly financed subsidies
  • Individual mandate to obtain health insurance coverage (same as auto insurance mandate)
  • Employer mandate to provide coverage to employees
  • Reinstate modified community rating/risk pooling
  • Publicly financed premium subsidies for low-income workers
now for the experts
Now for the experts………
  • Ruth Benton - CEO, New West Physicians
  • Bill Lindsay – President, Benefit Group, Lockton Companies of Colorado