HB 1389, the Fair Accountable Insurance Rates Act of 2008, has passed the Colorado House and Senate, and is headed to governor Bill Ritter for his signature next month. Health insurance companies doing business in Colorado will now be required to get approval from the state before enacting rate increases, and will have to disclose what portion of premiums are being used to pay claims. Consumer advocacy groups are claiming a huge victory, and I’m sure health insurance carriers are shaking their heads in frustration, as this was a heavily debated bill with passionate support on both sides.
It will be interesting to see what the effect of this bill will be a few years from now. Colorado currently has a very diverse health insurance market. We have a long list of carriers that market policies here – many more than we’ve seen in other states. This is good for the consumers, as the wide array of options forces carriers to keep their rates competitive in order to continue to attract new applicants. But with the passage of HB1389, I wonder if some of those carriers will decide that the extra hassle makes doing business in Colorado not worth the effort. I hope that we don’t end up with carriers leaving the state, but I think it’s a distinct possibility. Obviously a loss of health insurance carriers is bad for their existing policy holders (who have to find new coverage) and bad for the competition aspect of our “free market” health insurance system. Let’s hope it doesn’t happen.
On the surface HB1389 does seem to be good for consumers. We would all like to see less waste and lower profits for top management at health insurance companies. We want our premiums to be used primarily to pay claims, and we want to feel like our health insurance providers are working with us and for us, rather than just making money at our expense. I’m not sure that HB1389 will do all that, but we’ll see.