Bill would allow insurance-rate flexibility to increase availability

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DENVER (AP) Health insurance companies would gain flexibility in setting rates for certain policies under a bill designed to stop the flight of insurance carriers from Colorado.

The House Business Affairs and Labor Committee on Thursday approved that measure, House Bill 1374 by Rep. Lola Spradley, R-Beulah. It now goes to the full House for debate.

Spradley said the measure would provide a limited solution to a problem that Gov. Bill Owens has said might prompt a special legislative session later in the year. The key issue is the decreasing availability of health insurance in rural areas and for the self-employed.

The number of insurance companies in Colorado has dropped from about 85 in 1994 to fewer than 20, said James Scholl of the Colorado State Association of Health Underwriters.

"I believe it addresses the critical issues we have now, and it will give us a chance to look at the problem through the normal process," Spradley said of the measure.

Opponents said the measure would drive up insurance premiums for people with health problems, forcing them into public programs such as Medicaid.

"If we get premiums this high, granted, the insurance companies will go into these areas, but will anyone buy it?" said Hal Prink, who said his premiums could rise from a maximum of $1,200 per month to $1,440 per month under the bill.

Polly Anderson of the Poudre Health Services District in Larimer County added: "It seems impossible that the solution to rising insurance rates is rising insurance rates."

Current law requires insurance companies that provide policies for "groups of one" to charge a single rate for each policy holder. That rate is based on the general health and other characteristics of the pool of policy holders.

But many relatively healthy people are abandoning such policies in favor of cheaper individual insurance. That in turn forces insurance companies to raise rates for groups of one because there are fewer, less-healthy people covered in the "risk pool," or the group of people whose premiums are used to pay for health care.

Under the bill, insurance companies would gain the ability to raise rates for groups of one up to 20 percent over the calculated community rate, or discount them by up to 40 percent under that rate.

Spradley said the idea is to attract more healthy people into the risk pool by providing companies with the ability to offer lower rates, while attracting more insurance companies into the market by offering the ability to raise rates.

"The fear is that the pricing flexibility will only work to the negative," Spradley said. "But prices are going up now, and we're losing carriers because there's no choice."

The bill also would expand the geographic area in which an insurance company must put together a network of physicians to provide coverage, a provision designed to increase access to health coverage in rural areas.

Supporters said allowing rate increases _ along with discounts _ for groups of one is the only way to begin stabilizing a market that has seen dramatic declines in the number of insurance carriers.

"The only thing worse than delivering high rates to clients is telling a client they have no more insurance options," Scholl said.

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