Funding Cover Colorado

For nearly two decades, Cover Colorado has been providing health insurance to people in Colorado who don’t have access to group health insurance coverage and have pre-existing conditions the make them uninsurable (or unable to get coverage without exclusion riders or rate increases that put their premium above that offered by Cover Colorado) in the individual health insurance market.  While we’re lucky to have such a resource, it doesn’t come cheap.

Last year, the Cover Colorado Task Force issued a report indicating that Cover Colorado’s expenses were projected to increase significantly over the coming decade, and that expenses could exceed available funds by $150,000,000 by 2019.  Of course, if health care reform continues forward as currently written, there shouldn’t be a need for high risk health insurance pools as of 2014, because all policies will be guaranteed issue.  But there’s a lot of legislative and legal fighting that could go on between now and 2014, so who knows what the health insurance landscape will actually look like three years down the road.  If there is still a need for high risk pools going forward, funding will be a long-term issue that has to be addressed.

So where exactly does the funding for Cover Colorado come from?  The first page in the Task Force report breaks it down neatly.  Roughly 50% of the funding comes from premiums collected from people insured by Cover Colorado, state insurance premiums tax credit allocations, the CoverColorado cash fund, and various gifts and grants.  25% comes from Colorado’s Unclaimed Property Fund, and the final 25% comes from fees assessed through all health insurance carriers regulated by the Colorado Division of Insurance.

The assessment on health insurance carriers is actually collected by the carriers, but it is paid by Colorado residents who are covered by any health insurance policy regulated by the Division of Insurance.  Carriers don’t make or lose money on the transaction – they simply collect the fee from their insureds and pass it along to Cover Colorado.  For 2011, all Colorado residents who have health insurance provided by a carrier regulated by the Division of Insurance will be paying approximately $3.22/month in Cover Colorado fees.  This will raise nearly $35 million for Cover Colorado.  The specific amount collected from each carrier can vary somewhat from that amount however, based on the actual number of subscribers each carrier has.  For example, Anthem Blue Cross Blue Shield members will see a charge of $3.76/month for Cover Colorado on their 2011 statements, because there are fewer Anthem insureds now than there were on January 1, 2010 when the amount was calculated.  This is likely to be the case with most carriers, as the number of uninsured people has increased across the board in the wake of the recession.  If you have questions about the Cover Colorado assessment, you can contact the Division of Insurance or Cover Colorado for more details.

Comments

  1. Louise, your blog article is inaccurate on one point. CoverColorado (it’s one word) wants to clarify that not “all Colorado residents who have health insurance will be paying….” Actually, less than a million policyholders in Colorado will be paying the assessment, because CoverColorado is not able to assess large, self-funded employers.

  2. Jon,
    Thanks for clarifying, and I apologize for the error. Earlier in the article I noted that the fee is only assessed via health insurers who are regulated by the Division of Insurance, but the sentence you noted was indeed incorrect. I’ll fix it – thanks!

  3. This is outrageous! Our family pays through the nose as it is, and because of Obamacare, our insurance rates are increasing so dramatically that we will probably have to go uninsured come January 1. I began my research to find a major medical catastrophic policy, and I am thoroughly disgusted to find out that a new fee will be forcibly assessed to my family for purchasing health insurance. When is our government going to realize that we are not a never-ending flow of cash for them to forcibly seize? This is a travesty for households who have to pay for their healthcare premiums on their own and out of their net pay!

  4. Mariann,
    The Colorado Division of Insurance recently analyzed the factors that are driving rates in Colorado, and federal health care reform only accounts for about 5% of the total increases this year: http://www.dora.state.co.us/insurance/pr/2010MediaReleases/newsHealthRates&FHCREffect110410.pdf

    The DOI has also published an extensive list of the factors that are contributing to rising health insurance premiums, most of which have nothing to do with federal reform: http://www.dora.state.co.us/insurance/consumer/fhcr/fhcrRatingDemographicFactorsAffectingHealthPremiums110410.pdf

    In addition, the DOI has released a detailed breakdown of how each of the already-implemented aspects of federal reform will impact policy pricing, and the numbers are quite small: http://www.dora.state.co.us/insurance/consumer/fhcr/fhcrFederalRequirementsAndEffectsonRates112910.pdf

    CoverColorado provides a guaranteed issue policy option for people in Colorado who would otherwise have no coverage option at all. We’ve been fortunate in Colorado to have had this option for many years now – not all states did until federal reform created temporary high risk pools in all states. As of 2014, when health insurance policies become guaranteed issue, high risk pools will presumably no longer be needed. But until then, most people we talk to have agreed that $3.22/month seems like a small price to pay to make sure that our fellow citizens with pre-existing conditions are able to obtain health insurance and many like knowing it’s there if they ever need it. There are a lot of ways for people to find themselves, through no fault of their own, with CoverColorado as the only option for coverage. And even with subsidies, it’s still not cheap; it’s a lot more expensive than underwritten insurance.

  5. Dan Gilmore says:

    Can you please explain to us why Anthem Blue Cross overcharges us for the CoverColorado Assessment?

  6. Dan,
    Definitely, if we’re your broker of record, we’ll look into it right away. Contact me and we’ll go over the details.

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