Statewide bill to lower rural health insurance rates gets green light from feds
By Katherine Nettles
Gunnison County is among many areas along the Western Slope that may see health insurance premiums drop by up to 29 percent next year, thanks to a reinsurance bill that passed in Colorado this spring and received federal government approval on July 31.
The statewide reinsurance bill, HB-19-1168, may hold the key to stabilizing private health insurance markets, making them more accessible and affordable by helping to cover the state’s highest risk individuals.
The reinsurance bill is sometimes referred to as “insurance for health insurance companies,” because it aims to assist health insurers in paying high-cost insurance claims, by waiving federal requirements, requesting federal funds or both, according to the Colorado General Assembly bill summary. This in turn decreases the costs of care, and can bring overall insurance premiums down for individuals.
This is especially relevant to Gunnison County, because most Western Slope communities have the highest insurance rates. The bill’s language states, “increasing costs of healthcare in Colorado have led to premium increases … that have created a financial burden for some Coloradans purchasing insurance in the individual market.”
The bill asserts that this financial burden is heightened in rural areas of the state where premiums are considerably higher than in metropolitan areas of the state and there is a lack of competition among providers and carriers. The goal is to encourage more participation and competition by carriers, particularly in rural areas, and to decrease the costs of care, leading to lower premiums.
Gunnison County commissioner John Messner took part in the process of advocating for the bill’s passage. “We heard from constituents that this was a major priority. So this particular approach, the reinsurance bill, would create an 18 percent reduction statewide, and 29 percent for Gunnison County and many Western Slope areas,” he said.
Gary Shondeck of Shondeck Financial Services and Insurance says from the perspective of a local insurance provider, the impact will be more for those in the individual market such as Connect for Health Colorado, than for those with group coverage.
“It’s a huge rate decrease, strictly on the individual market, but not on group policies,” he says. “We are hearing 18 percent to 30 percent discounted rates for the individual market. What we don’t know is how that will affect the rates in other aspects of the market,” Shondeck says, referring to both healthcare tax credits and subsidized healthcare such as Medicaid.
Shondeck predicts we won’t know until October or November what the exact rate will be. The marketplace opens on November 1 and runs through January 15, and 2020 plans become effective on January 1.
Messner spoke highly of those in the legislature who worked on passing the bill—particularly state representative Julie McCluskie, who was one of the bill’s prime sponsors.
“During this legislative session, I had the opportunity to be there as well as provide testimony, and work closely with representative McCluskie, as well as Michael Conway, our state insurance commissioner,” said Messner. “Because the bill did evolve, as far as different iterations and how it will be funded, I really will say that it was the dedication, the perseverance and the leadership of Julie McCluskie that made this happen. [The bill] hit a couple of hurdles; that took a lot of communication, and she was able to negotiate that in a successful fashion.”
Senator Kerry Donovan issued a press release on July 31, immediately following the federal government’s approval of the bill that ensures its enactment. “We made a promise to Coloradans that we would work to lower healthcare costs, and we delivered on that promise today,” said Senator Donovan. “I’m particularly proud to deliver on that promise for the rural communities with few options, little competition, and high prices.
“Reinsurance is a creative, Colorado solution that will have a real and immediate impact on people across this state. Families on the Western Slope could save as much as $9,000 per year thanks to the reinsurance program. Those savings are life changing for people like my neighbors, who couldn’t buy a new car after theirs broke down because of the cost of their health insurance,” added Donovan.
The bill will go into effect in 2020 and repeal in 2023 to allow for lawmakers to reassess its success and any other healthcare changes happening on a national level. Similar reinsurance bills have passed in Alaska, Minnesota, Oregon, Wisconsin, Maine, Maryland and New Jersey. An additional five states are implementing the programs this year and next.