JP Wieske | May 21, 2021
JP Wieske is the executive director of the Health Benefits Institute. He previously served as Deputy Insurance Commissioner in Wisconsin. In this opinion, he draws on his considerable experience as a health executive to provide his perspective on HB 21-1232. the “Colorado Option” bill that is currently in the legislature.
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Denver lawmakers have the next $ 1 billion idea. They have solved the health dilemma. All we will need is a new committee that will design a “standard” health insurance plan, with richer benefits and with networks as broad or broader and that will force the insurance industry to sell it at a lower price. Premiums in 2025 will be 18% lower than 2021 health insurance premiums.
Sounds too good to be true?
Is. I support the goal, but there is no real-world basis for believing that the proposed plan will work. In fact, a similar effort made this year in Washington state led to higher health insurance rates for a standardized benefit plan than the plans insurance companies already offer.
Bill 1232 creates a so-called public option by requiring insurers to offer a standardized bronze, silver and gold plan to both the individual market and the small group. The plan will be created by a designated committee and its benefit and cost-sharing levels may be updated annually as the Insurance Division deems appropriate. Insurers are required to offer the plan at lower rates than their existing health insurance plans and, if they fail, undergo a public hearing to explain why the rates are not lower. Hospitals and physicians are required to participate in the standard plan and in some cases are subject to the rates set by the state insurance division.
While the above summary is fairly straightforward, the bill is not. For example, insurers selling on the same market through the stock market could be expected to have the same rules. No, it’s not true. Apparently, the Colorado health insurance cooperative has a special political status that deserves special treatment and is exempt from the rules. In another section, the commissioner may require an insurer to sell a standardized plan outside its market area, especially when no other operator believes it can offer a plan that meets the premium objectives of the invoice. In short, the bill has already chosen certain players and plans to “win” and gives broad authority for the state to decide which players and plans “lose”. The legislature has set hospital rates using a series of complicated rules that only a math teacher could estimate. Even more troubling is the expansion of the Insurance Division’s discretionary authority (the insurance commissioner is mentioned 62 times in the bill), each time it feels like a new expansion of authority. The details of the proposal are set aside so that the insurance commissioner can decide them later.
As a former insurance regulator in Wisconsin, I can tell you that these details are important. Health insurance rates are not just about ensuring that consumers can afford them, but it’s important to make sure they are sufficient. For example, in Wisconsin, our insurers lost $ 500 million combined in the first four years of the Economic Care Act. It was important for the state to take steps to ensure market solvency and find new ways to broaden consumer choice. Although we made some public efforts, our work with backstage insurers helped ensure a stable health insurance market.
The other important lesson is that stable markets do not allow the government to choose winners and losers. The same rules should apply to all insurers in the market without exemptions. It is not a good idea to allow the state government to force an insurer to generally offer a standardized benefit plan designed by the state government, but it is even worse when the commissioner has the power to hire an insurer. Doctors and hospitals have reason to worry that they will suddenly be under the authority of the insurance commissioner, a department that has no experience in providing health care or understanding the nuances of prices. doctors.
I understand. Health care is tough. Add insurance to the equation and math requires actuaries. Unfortunately, this bill seems more like a political program. An attempt to tick a political box without solving a problem. This is not the next billion dollar idea. Just as Washington state did this year, Colorado lawmakers should plan to try to fix the problems caused by this bill in early 2023.