Colorado Lawmakers Unveil Legislation To Tighten Regulations on State Health Insurers
Colorado House and Senate Democratic lawmakers on Sunday unveiled legislation that would impose stricter rules on how health insurance providers set premium rates and require them to pay claims in a timely manner, the Denver Post reports. One bill would allow the state Division of Insurance regulators to reject premium rate increases. Under the bill, insurance companies would have to justify rate increases and the Division of Insurance would have the right to consider the frequency of claims, surplus reserves and other financial factors, in rejecting or approving the rate. Current state regulations require insurers to disclose rates but do not require state approval to increase rates.
Bill sponsor state Rep. Morgan Carroll (D) said that while state insurance premiums have risen 60% from 2001 to 2005, average wages have increased just 13% with an inflation rate of 10% in the same period, adding that the insurance companies have continued to experience multibillion-dollar profits and pay their chief executives large compensation packages.
A separate bill would strengthen laws that require insurers to pay claims promptly, and a third bill would allow the state insurance commissioner to impose stricter penalties on insurers that deal with customers dishonestly.
Michael Huotari -- executive director of the Colorado Association of Health Plans, which represents 11 of the state's largest insurers -- said Carroll's proposal is misguided because 85% of the premiums are used to cover the costs of health care. Huotari said, "It's the right problem but the wrong solution," adding, "Insurance premiums are high, and they have been increasing because health care costs are high and increasing. Prior approval (of premium increases) is not going to change that dynamic." He also said that there are sufficient laws in place that require insurers to make timely claims payments (Hoover, Denver Post, 3/31).
