A survey conducted by the Lockton Benefit Group found that premiums for employer-sponsored group health insurance policies in Colorado were increasing by an average of 14.4% for 2011, which was “significantly higher than reported nationally.” This was the tenth year in a row that premiums saw double digit increases, but the current increase is the largest in five years, and most employers surveyed (more than 73%) plan to make plan changes or increase employee contributions to offset the large rate increases.
In yesterday’s post, I linked to an FAQ page provided by the Colorado Division of Insurance. In it, the DOI noted that in Colorado as of 2009, health insurance premiums across employers of all sizes were ranked 26th in the nation, with policies costing more in 25 states. If the rise in premiums for 2011 is truly significantly higher than the increases in other states, Colorado might find itself higher on that list next year.
I have to wonder if Colorado House Bill1355 – which applied to small groups and outlawed the practice of discounting premiums for healthy groups and increasing premiums for unhealthy groups – has anything to do with the higher than average rate increases that Colorado employers are seeing for 2011. The law has been impacting all small groups in Colorado now for a year, and the concern when it was enacted was that small groups that had been getting a discount (which was the majority of small groups) might find themselves unable to afford coverage after they lost their discount. In that case, the healthier groups might have elected to drop out of the group market and either leave their employees to pay for health insurance on their own, or set up an HRA to reimburse the employees for individual health insurance. Either option would decrease the number of healthy groups and premiums could be expected to rise faster for the remaining groups. The Lockton study did not include only small groups, and HB1355 did not apply to large groups – but it’s reasonable to question whether the rate increases for 2011 might be at least partly tied to ripple effects from HB1355.