Across the US, employers will see a 9% increase in health insurance premiums next year. But in Colorado, the increase will be an average of 11.8%. The Lockton Group has released its 2010 Colorado Employer Benefits Survey Report, and it indicates that Colorado will see bigger premium increases than the country as a whole. This puts Colorado businesses at a disadvantage in terms of direct operating expenses, as health insurance makes up a large portion of business overhead. It also makes it harder for Colorado businesses to compete for the best employees, since premium increases are being passed along to employees in the form of higher premiums and fewer benefits. Not surprisingly, Colorado businesses are much less likely to offer pricey HMOs than they were a decade ago (32% now, versus 89% in 2000), and far more of them are offering HSA qualified, high deductible health insurance policies (which have lower premiums) for their employees (27% now, versus only 3% in 2003).
The good news is that the 11.8% rate hike is the lowest percentage increase Colorado businesses have seen in this decade (the next lowest were in 2000 and 2005, when rates jumped by 12%). So while the increase is higher than the national average, perhaps it’s headed in the right direction. Maybe one of these years, we’ll see a single digit rate increase.
Colorado residents tend to be healthier than the average American. We’re thinner, and have lower incidence of hypertension and diabetes than most of the rest of the country. So why would health insurance rates be rising faster here than in the rest of the country? My guess is that it has something to do our higher-than-average percentage of the population without health insurance. 17.2% of Colorado residents are uninsured, compared with national numbers that tend to be in the 15 – 16% range. When uninsured patients are treated by our health care providers (emergency rooms are a good example of this), the providers have to recoup their losses somehow. This usually translates into higher reimbursement rates being negotiated with health insurance companies. The insurance companies pass on their higher costs to customers in the form of higher premiums and/or reduced benefits.
Since Colorado has a higher percentage of the population without health insurance than the country as a whole, I imagine this has to have something to do with our health insurance premiums rising faster than the rest of the country. Unfortunately, this is a self-perpetuating cycle: higher premiums mean that more businesses drop their health insurance policies, leading to more uninsured people, which leads to higher premiums for the people who still have coverage. Not a good scenario, any way you look at it.