Bill on actuarial review of health benefit mandates makes it out of committee, but not quite to the sponsors’ wishes

Update: the hearing on House Bill 1232, the Colorado option bill, has been postponed to allow for negotiations to continue. 

An effort to allow lawmakers to find out how much a health benefit mandate will cost consumers is awaiting action from the Senate Appropriations Committee, but the bill’s sponsors are less than pleased with amendments, added by Senate Finance Committee Democrats Tuesday, that they say make the process more difficult.

Senate Bill 85, sponsored by Sen. Jim Smallwood, R-Parker, and Sen. Joann Ginal, D-Fort Collins, requires the Division of Insurance to hire a third-party contractor who would conduct up to five reviews per year on benefit mandates being proposed through legislation.

The review would have to be requested by the proposed bill sponsor and would cover costs for the first five years. The analysis would then be incorporated into the bill’s fiscal note, issued after the bill is introduced.

The bill does not include Medicaid or the Children’s Health Plan +, although Smallwood said mandate reviews for those programs are already included in fiscal notes since higher costs became state expenditures.

SB85 is backed by health insurance plans, the Colorado Hospital Association, the Colorado Chamber of Commerce and the Denver Metro Chamber of Commerce. It is opposed by progressive organizations such as the Colorado Center on Law and Policy and the Colorado Consumer Health Initiative.

Gov. Jared Polis last year indicated he would support such an actuarial review. He told lawmakers during the 2020 session that he did not want to see any more benefit mandates added to health plans, based on concerns that those mandates would drive up the cost of health insurance premiums. Polis  also told lawmakers that he would not sign any more mandate bills that would drive up health insurance costs unless directly tied to the COVID-19 pandemic.

In an April 1, 2020 signing statement, Polis called on lawmakers to create a process for actuarial reviews of benefit mandates, warning that without that review “I will be disinclined to sign future legislation creating new insurance mandates.”

There was a bill in the 2020 session to create that process and while Polis ordered the Division of Insurance to work with the bill sponsors, which included Smallwood, SB 20-127 died in the Senate Appropriations Committee in the pandemic-shortened session.

The 2021 version went through its first hearing in the Senate Finance Committee on March 24, but requests for amendments delayed final action until March 30.

Every year, Ginal told the Senate Finance Committee on March 24, the General Assembly considers a number of bills that would impact health care coverage, as well as impact the cost of premiums. For legislators to make sound decisions to improve the affordability of health care, “we need to have relevant, independent data to make informed decisions,” which would be provided by the actuarial reviews requested under the bill, she said.

During the March 24 hearing, Bethany Pray of CCLP said they opposed the bill because it would affect the ability of community members and organizations to engage in legislative changes for insurance coverage. Lack of actuarial analysis of a bill would become a major hurdle to passage, she said.

The cost of mandates is not the only consideration, Pray said; the emphasis on short term costs would overshadow the need to identify gaps in care. Filling those gaps may result in premium costs but would improve health and reduce disparities for communities of color, she said.

Adam Fox of CCHI said that the bill would quash health care innovation.

Amanda Massey of the Colorado Association of Health Plans told the committee that every year, bills to expand mandatory coverage in Colorado increases premiums for every one. Those mandates may help some Coloradans, but there’s always a cost for additional services, she said. Lawmakers should understand the benefits and costs in those bills, the purpose of SB85.

In the last two years, mandate bills have increased premiums by $150 million, or about 2% to 2.5% per premium, Massey explained.

Amendments adopted by the committee included one that would require equity as part of the actuarial review. The committee also approved an amendment that in addition to how much the mandate would drive up costs, to look at who would benefit from the mandate, based on race, ethnicity, sex, gender and age, and whether it would drive up copays for consumers.

One of the amendments that caused Smallwood consternation: a requirement that the review be requested by September 1 of the year prior to when the bill is introduced. Smallwood objected, pointing out that fiscal notes are not issued until after the bill is introduced. Those reviews are not likely to take more than a month or two at best, Ginal said later.

An amendment proposed by committee Chair Sen. Brittany Pettersen, D-Lakewood*, was a bigger problem. It requires the bill sponsor to get approval for the review from both the Speaker of the House and the Senate President.

Both Smallwood and Ginal said the bill, after the amendments put on by committee Democrats, was not quite what they preferred.

“I’m surprised it got to this point,” Ginal told Colorado Politics. “This isn’t an evil bill. It’s to look at cost benefits or cost losses. It’s not mandatory.”

The limitations placed on lawmakers who want to run solid health policy have been increased exponentially by that amendment, Smallwood told Colorado Politics after the Tuesday hearing. The idea was to make it easy for a lawmaker to figure out the dollars and cents of policy that they’re thinking of running. To make them jump through the hoops of getting approval from the Speaker or President, especially for a minority party member, helps no one, he said.

Though he isn’t happy about the amendments, he plans to keep the bill moving forward. “It’s the tool so many of us who are serious about health policy have really wanted and needed. I still think it’s one of the best tools we’ve created” to provide hard data.

“It’s a nonpartisan bill and simply a tool for legislators of any party,” Smallwood said. As to the amendment, “I don’t think we should have to ask permission to do our jobs.”

The issue of health insurance benefit mandates is likely to get a lot hotter this week. On Wednesday, the House Health & Insurance Committee will hold the first hearing on House Bill 1232, the Colorado Option Health Benefit Plan.

Among the changes made to the bill between an early March draft and the introduced bill is one that has the health care industry up in arms: the bill would allow health benefit mandates to be added during the two-year period when the health care industry is supposed to be simultaneously reducing health insurance premiums in the individual and group markets by 10% per year. Opponents of the bill have claimed this sets up the industry to fail to meet those targets.

Correction: an earlier version identified Sen. jeff Bridges as the sponsor of the amendment to seek approval from the senate president and speaker of the House. Bridges suggested severing the amendment; Pettersen was the amendment’s original sponsor.