by Matthew Valeta, Health Policy Analyst

From 2007-2012, individual health insurance plans in Colorado went up an average of 8% a year.

In 2014, the plans and their rates were all new and everyone freaked out a little bit.

In 2015, rates in the individual market went up on average less than 1% (0.71%) in Colorado.

Monday, Colorado became one step closer to finding out what we might pay in 2016 for health insurance premiums.

1,221 health insurance plans were submitted for review and approval to the Division of Insurance with 425 plans proposed to be sold through Connect for Health Colorado, the state-based marketplace. Colorado’s Division of Insurance has reviewed proposed health insurance rates every year since 2009 (before Obamacare began I might add) to ensure that they are not excessive, inadequate, or unfairly discriminatory. This process, called rate review, has saved consumers $240 million since 2009, $46.5 million in 2014 alone. Hope you took your allergy medicine so you didn’t sneeze while reading about all those savings.

Many shoppers who used Connect for Health Colorado will be especially interested in the proposed rates for the Colorado HealthOP and Kaiser. While the Colorado HealthOP’s plans are proposing an average increase of 21.6 percent, they will likely be, again, the lowest cost option for many parts of the state. Kaiser, the second lowest cost insurer for many Coloradans has submitted a proposed rate increase of only 2 percent.   

While there are still lower cost options for consumers, several large proposed increases this year in the individual market deserve especially close scrutiny. The Colorado HealthOP (21.6 percent), Humana (20.9 percent- On and Off exchange filing, and 14.9 percent- Off Exchange only filing), Rocky Mountain (34.4 percent), Denver Health (12.7 percent) and Colorado Access (26.6 percent) all have proposed double-digit percentage increases. These insurers’ proposed rate increases deserve especially close scrutiny to ensure that insurance companies are not passing unnecessary costs onto consumers.

The Division of Insurance’s public comment period lasts until July 6 and consumer comments are factored into the Commissioner’s final decisions about rate increases. The Colorado Consumer Health Initiative will be submitting comments on several insurers’ proposed rates. There are several market wide factors that the Division of Insurance should consider when evaluating insurer rate requests:

  1. New enrollees are likely to be healthier in 2016 than they were in 2014. Consumers with the most significant health needs were very likely to have enrolled as soon as the ban on pre-existing conditions went into effect.
  2. There should be a decrease in pent-up demand from insured consumers. Health claims were higher in 2014 as consumers sought care they may have had to delay. With many of these health needs finally filled, insurers should see more typical usage of the health care system in 2016.
  3. The individual mandate is going up again to 2.5 percent of an uninsured person’s income. This higher mandate will likely push even more healthy Coloradans into the insurance market.
  4. An insurer’s surplus levels. Some insurers have been holding millions of dollars in reserves while also continuing to raise premiums. One particularly alarming example is Rocky Mountain, who is requesting a 34.4 percent increase this year, while recent reports show a 1,553 percent surplus level (200 percent is the absolute minimum).  

While Colorado’s review process has saved consumer’s money in the past, there are several ways to better engage consumers in the process. In other states, the Division of Insurance has held public hearings that allow the public to directly ask insurance companies questions and testify to how an increase in premiums would impact them. Next, while rate review makes insurance carriers justify their rate increases, they do not have to extensively report on how they are working to contain costs and improve quality in the health care system. Upfront consumer notification would ensure that they are not left in the dark about proposed increases from their insurance carrier until open enrollment starts. Finally, there is variation between what insurers have claimed as trade secrets when they submit their filings for review. Making an entire filing publicly available, with the possible exception of provider contracts, would ensure that consumers have meaningful transparency about how all insurer’s proposed rates were created. 

Check out the Division of Insurance’s summary of proposed 2016 rates here:

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