How Healthy is Your Health Insurance? - April 2001

Denver Women's Commission
How Healthy is Your Health Insurance? - April 2001

April 3, 2001
Prepared by Chaer Robert
For Colorado Woman News

How Healthy is Your Health Insurance?

How much are you paying each month for health insurance? If you don't know, you are probably one of the lucky ones whose employer has picked up the tab, paying most of your premium. Businesses are coping with double digit increases in premiums, balancing how much more they can absorb with how much more to ask of the employee.

Many businesses simply do not, or cannot afford to, provide any health insurance for their employees. If you work for one of those businesses, you can pay hundreds of dollars each month for individual health insurance, if you are healthy. If you have medical conditions that make it impossible to get, or too expensive to afford, individual health insurance, you can apply to the CoverColorado program. With a state subsidy, their premiums run 20% above the average premium. For example, a Denver woman in her late 40s would pay $254/month for a Health Maintenance Organization (HMO), or $472/month for a Preferred Provider Organization (PPO) just to cover herself.

Not all who qualify for CoverColorado can afford the premiums. Even healthy people can't afford health insurance if their wages are low. In that case, you might rely on "safety net" providers-- community health centers, public programs and private "charity care". Safety net providers are good about preventative care and routine care. But there is no certainty of treatment for serious illness for Coloradans without health insurance. Life threatening injuries from a car accident will get you in the door of the emergency room, but even potentially fatal long-term illness may not.

Statewide reforms in 1994 were designed to keep health insurance affordable for small business owners and the self employed. It required insurers in the small group (1-50 employees) market to sell you health insurance (guarantee issue) and the rates are based on the community average for all small businesses (modified community rating). Insurers can adjust rates based on age, geographic location and family status. They cannot charge more for a construction firm or interior decorator than an accounting firm. They also cannot raise rates disproportionately to other small businesses if one employee had a heart attack, cancer, a complicated pregnancy or any other medical condition. All small businesses shared the risk.

Subsequent public policies have allowed small businesses to defect to the individual market. This leaves more individuals with health problems in the small business market. Some healthy self-employed people realized their health insurance would be cheaper if they bought individual policies. However, individual policies are not guarantee issue, and are individually underwritten. So if a previously healthy person developed a medical problem, their health insurance might not be renewed, or the cost could skyrocket. Laws prevent a business group of one (BG-1) who has opted for individual insurance from returning to the business rates and conditions for three years.

Federal Law protects employers of 2-50, requiring that they be issued health insurance. So here in Colorado many of the legislative proposals have centered on BG-1s. Many insurers have lost money on these people, so some insurers back different legislative approaches:

1. Getting permission to raise rates for those with, or who develop, one of the serious health problems which would qualify them automatically for CoverColorado--e.g. cancer within the last four years, stroke, M.S., insulin dependent diabetes, etc. Current proposals are 150% of the index (median) rates. Since this is substantially more than the rates for the public program, most people would either move to CoverColorado if they had the money, or go uninsured if they didn't, or seek additional employment that offered health insurance.

2. Getting permission to sort applicants (including renewals) into those with and without health risks. Those with asthma or allergies, or who take hormone replacement therapy, could end up in the health risk pool. These people could be charge 120% of the index rate.

Leading the opposition to substantial rate increases is the Colorado Consumer Health Initiative. About 40 organizations have combined their strength to increase the consumer voice in the health care debate. Traditionally health insurance policy has been developed by insurers and health care providers. The Colorado Consumer Health Initiative adds balance to these interests.

By the time you read this the legislature may have passed new legislation regarding business groups of one. Or the Governor may call a special session to deal with a variety of health insurance issues. Or the legislature may have created an interim committee to study health insurance problems. Or action may have been delay until