A controversial health insurance bill gained initial approval in the Senate Monday, having already passed the House. House Bill 1355 would repeal a 2003 measure that allows insurance companies to consider the health status and claims histories of employees of small businesses when setting rates.
Supporters of the new bill say one employee with a large claim can drive up insurance costs for a small company to the point where it’s not affordable. From the April 17 Rocky Mountain News:
More after the jump…
Cindy DeSplinter is an employee whose 5-year-old son, Micah, has cerebral palsy. Premiums at her 11-person interior design firm, Waring Associates, soared 20 percent – $45 a month per employee – when she added her son to the plan.
Jim Noon, owner of packaging company Centennial Containers, said his company’s premiums jumped from around $200 a month in 2003 to $481 a month now after one employee suffered a serious car accident and another survived cancer. “There’s nothing I can do to keep my costs down,” he said.
But insurance companies can also currently give discounts to companies with healthy employees, which some say is only fair and provides incentives for businesses to encourage healthy lifestyles for their employees. Former legislator Mark Hillman wrote in an Apr. 20, Colorado Springs Business Journal article:
Let’s take two similar groups: Healthy Group and Sick Group. Healthy Group gets the maximum discount, pays $20,000 a year for insurance coverage, and submits claims of $10,000. Sick Group is “rated up” and pays the maximum premium of $29,400, but it submits claims of $60,000.
Sick Group essentially gets $30,600 of health care at someone else’s expense. Healthy Group subsidizes $10,000 of Sick Group’s costs, but needs two more Healthy Groups just to break even.
If HB 1355 passes, all of those groups will be charged the exact same premium next year. How is that fair to businesses that work hard to control costs?
A Senate amendment would have the change eased in over two years. HB 1355 will now go back to the House for consideration of this and other amendments.