Last month, the Colorado Division of Insurance released a report on health insurance in the state, and it is definitely be a good read for anyone interested in how health insurance works in Colorado. There are all sorts of interesting facts included, and some may be surprising to people. For example, only a third of Coloradans are covered by a health insurance policy that is regulated by the Division of Insurance. The rest are either covered by a self-insured employer plan or a government plan, or are uninsured.
Pages 21 and 22 of the report focus on loss ratios – the percentage of premiums that are used to pay claims. Based on the data collected from 325 carriers, the average loss ratio was nearly 81%. That means that for every dollar of premium collected, nearly 81 cents is paid out in claims. The minimum acceptable loss ratios in Colorado currently range from 65% for individual policies to 75% for large group plans (and are a little lower, at 60%, for coverage like dental and disability). So 81% of premiums being spent on claims is well above the current minimum standards, and would seem to indicate that most of the work in lowering health insurance premiums has to be done at the cost of care level.
Another part of the report that I found particularly interested was the pie graph on page 24 that shows the market share of the ten biggest insurers in Colorado. 70% of the market here is divided among ten insurance companies. Over the last couple years as the health care reform debate played out on the national stage, I often heard people talk about states with near-monopolies, where just one or two insurers held nearly all of the market share. That is obviously not the case here, and it’s nice to see that we do indeed have a pretty good amount of competition going on in our insurance market.
Check out the report if you’re interested in learning more about the nitty gritty details of the health insurance market in Colorado. It’s put together well, and has lots of graphs and charts that make it very readable, despite the huge amount of information it contains.