Consumer group CCHI urges need to address underlying cost drivers
August 1, 2016
Contact: Adam Fox, (303) 563-9108
DENVER – This morning the Division of Insurance (DOI) released a study – commissioned as a result of legislative and public concerns about disproportionately high health insurance costs in the mountain and western regions of the state – that concludes Colorado should maintain its current geographic rating system. The Colorado Consumer Health Initiative (CCHI) agrees that moving to a single geographic rating system could pose significant market disruption and cost shifting risks and does not address the underlying cost drivers creating higher premiums in those regions.
“Health insurance coverage is clearly too expensive in western Colorado, but moving to a single geographic rating area could disrupt Colorado’s health insurance market and reduce competition,” said Adam Fox, CCHI’s director of strategic engagement. “We need to strike a balance between helping to lower costs and maintaining a competitive marketplace, and focus more on costs and how patients are using health care.”
The study recommends keeping the current nine geographic rating areas, but limiting the extent to which health insurers can charge higher rates using a geographic factor or “rating band” to help relieve the pressure of higher costs in the western region. This approach would not impose major regulatory or administrative changes, nor shift the higher regional costs to other areas of the state.
“Unfortunately, there isn’t a quick and easy solution to addressing the high costs in Colorado’s mountain and western regions,” says Fox. “Moving to a single geographic rating area would provide temporary relief from these costs, but would not get us any closer to addressing the real cost drivers.”
For example, the study shows significantly higher utilization and costs of outpatient care, including outpatient surgeries, imaging, and labs/pathology. While some of these services don’t show substantial cost variations compared with the rest of the state, the utilization of these services is in some cases 200 percent or more of the average statewide, leading to higher claims and costs for insurers in the region.
Colorado Consumer Health Initiative represents 45+ Colorado health organizations with more than 500,000 health care consumer members and advocates for access to affordable, high-quality, and equitable healthcare for all Coloradans.