Final
Division of Insurance
HEALTH INSURANCE
Votes:
Action Taken:
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02:21 PM -- Presentation by the Colorado Division of Insurance
Susan Gambrill, Colorado Division of Insurance, began her discussion of Colorado's small group market and distributed a number of handouts to the committee, including an overview of her presentation (Attachment E), small group premium comparison reports (Attachments F and G), and a press release regarding the decline of Colorado's small group market (Attachment H). She discussed the climate in Colorado preceding small group reforms including: unaffordable premiums; small employers not offering or dropping coverage; insurance scams on the rise; high use of PPOs and HMOs; and the rating up of sick groups. Further, sick employees and dependents could be excluded from coverage and some carriers refused to write policies for very small groups. Currently, sick employees and dependents cannot be excluded from coverage, all small group products are offered on a guaranteed issue basis, and portability provisions minimize pre-existing condition limitations. She discussed trends in the insurance marketplace which include: market consolidation; changes in rating flexibility; decreasing benefit levels; greater consumer cost sharing; carriers constricting marketing forces and commissions; the shrinking small group market; and increased provider clout. She responded to questions from the committee regarding which recent legislative proposals have increased provider clout. She further responded to questions from the committee regarding constricting market forces.
02:31 PM
Ms. Gambrill continued her presentation by discussing legislation that made changes to small group regulation in the past 15 years. She discussed House Bill 94-1210, which created guarantee issue for basic and standard plans, phased in a modified community rate, enhanced pre-existing condition benefits, and included business groups of one. Additional legislative changes were necessary after the implementation of the federal Health Insurance Portability and Accountability Act (HIPAA), including the elimination of pregnancy from the definition of pre-existing condition, expansion of small group guaranteed issue to all products, provision of limited guaranteed issue in the individual market, and prohibition of eligibility based on health status for all groups. She described other legislative adjustments, including: open enrollment periods for business groups of one; exemption from small group laws for certified leasing companies; exemption from small group laws for MEWA pilots; rate banding for health status; and re-entrance penalties. She discussed a survey of small group health plans conducted by the Division of Insurance to determine if small employers experiences premium decreases as a result of small group rating reforms. She responded to questions from the committee regarding rating discounts and the effect of rating reforms on increasing health insurance coverage. She stated that the rating reforms have not increased the number of lives insured in the small group market, but may have made the small group market healthier. She stated that the Division of Insurance will monitor the effects of small group rating reforms, including rate banding.
02:50 PM
Ms. Gambrill stated that healthy business groups of one are still more likely to be part of the individual market than the small group market. She stated that leasing companies are attracting some small groups, limited use of individual policies in the small group market is affecting enrollment, and self-funded plans are marketing to smaller and smaller groups. She emphasized that although the number of small groups covered in the small group market is declining, that doesn't necessarily mean that all of the groups are losing coverage. She described the adversarial relationship between providers and plans. She stated that originally, health insurance was intended to cover unexpected risks, but managed care and mandates have added anticipated costs. She discussed the impact of small group reforms. Although small group reforms did not decrease the number of Colorado's uninsured, they enhanced access to the small group market. Winners of the reforms included: self-employed business groups of one; unhealthy groups; employers switching jobs; and larger carriers. Losers in the reforms included: small carriers without market share to support guaranteed issue; unhealthy groups; some agents; and employers who leave the market for non-small group coverage and then want to reenter.
03:00 PM
The committee recessed briefly.