‘Obamacare’ not the cause of Colorado rate hikes

In the wake of the contentious health care reform legislative battle waged in the media and on the political stump most of last year and this year, health insurance premiums are rising in Colorado. State Insurance Commissioner Marcy Morrison has been fielding phone calls from angry consumers and wants to be clear: Insurance companies are hiking rates just as they have been doing consistently for years and not because of “Obamacare.”

“The new reforms contributed from zero to a maximum of five percent of increases. It’s not the primary cause for increasing rates,” she wrote in a release Tuesday.

Morrison sent out the release (pdf) late last week, explaining that the Commission had received lots of questions about the effect Health Care Reform has had on premiums. The release hit the politics blogosphere Tuesday morning.

Every insurance company operating in Colorado has to turn in a request for permission to raise premiums, and most of the those requests come in near the end of the year. As part of that process, insurance companies have to spell out exactly why they need to raise premiums.

“What we found isn’t surprising: health insurance premiums continue to rise but what may be eye-opening for some people,” Morrison said in the release, is that the cause is not reform.

Jo Donlin, director of external affairs at the Division of Insurance, told The Colorado Independent that the Division has specifically required insurance companies submitting requests for higher rates to spell out how much each provision of the Health Care Act has been responsible for higher costs.

For instance, she said the requirement that insurers allow families to keep children on their family plans until the age of 26 has caused costs to rise by no more than 3 percent, depending on the company and the type of plan.

She said that as of today only 23 companies have submitted their requests for rate increases, but she said those include some of the largest insurers in Colorado. “This includes some of the companies that affect the market the most,” she said in explaining that the Division is fairly confident that the numbers they are seeing so far will stand up.

She sent us a document that details the effect on premiums of six provisions of the Health Reform Act, each of which became effective on Sept. 23.

The other provisions and their effects on costs are:

Elimination of pre-existing conditions for enrollees under the age of 19 has affected premiums at a rate between 0.0 percent and 3.0 percent.

Removal of annual benefit limits: 0.0 percent to 1.2 percent.

Removal of lifetime benefit limits: 0.0 percent to 1.8 percent.

Rescission prohibition: no effect.

Coverage of all preventative services without cost sharing: 0.0 percent to 3.0 percent.

On renewals, the cumulative effect of all mandated reforms this year is 0.0 percent to 4.0 percent.

On new policies, the effect has been to increase premiums by 0.0 percent to 7.8 percent.

Health insurance premiums are going up in Colorado and around the nation. Colorado’s Department of Regulatory Agencies (DORA), of which the Division of Insurance is a part, issued this document (pdf) last week detailing all of the factors that go into rate increases, including new federal regulations.

In 2009, Colorado ranked 26th in the amount paid by the average family for health insurance. The annual premium for a family getting coverage through an employer was $13,360 in 2009, compared to $9,522 in 2004.

Linda Gorman, executive director of the Health Care Policy Center at the Independence Institute, says the studies she has seen forecast that HMO and PPO customers will each see premium increases of about 11 percent next year. Even if only half of that is attributable to the Patient Protection and Affordable Care Act of 2010, it is too much, she says.

The free-market Independence Institute was the primary sponsor of Amendment 63, which would have prevented the Federal government from mandating health care in Colorado. It fell 53 percent to 47 percent, indicating that a majority of Colorado voters either favor Obama Care, or at least want to let it run its course.

Gorman said she didn’t think Morrison had the facts to back up the assertion that Health Care Reform has had only a small effect on premiums. “She is just repeating talking points,” Gorman said.

She said the Act will cost corporations an enormous amount of money.

“Health Care Reform has already been successful in Colorado,” said Denise de Percin, executive director of the Colorado Consumer Health Initiative.

“People are still learning about it. There is a real lack of information for people and there is also a lot of misinformation being spread by people who opposed reform,” she said.

“Even if this adds less than 5 percent to someone’s insurance bill, that can still be significant in this economy, but at least people actually get something for this 5 percent,” she said.

One family that stands to benefit enormously from the Reform is Nathan and Sonji Wilkes, of Arapahoe County. Their son was born with severe hemophilia. Nathan Wilkes said his son’s condition is manageable, but only with the right medications, which cost about $40,000 a month. At some points in his son’s life, complications have arisen which have jacked that cost to more than double.

He essentially had to quit a good job because his family’s medical bills were driving up premiums and deductibles for everyone at the company. He started his own consulting company and now pays about $20,000 a year in premiums. Even at that rate, though, his son’s benefits are capped and once those caps are reached, Wilkes said his family would be in a very difficult place.

With health care legislation, there are no longer any caps. Also, companies can no longer exclude someone under 19 from a plan because of pre-existing conditions.

Certainly Health Care Reform has been both political and controversial, and is no doubt part of what cost Democratic Representatives Betsy Markey and John Salazar their jobs.

With the election over, the issue continues to draw attention. In a recent interview with National Public Radio, Senator Michael Bennet said Health Care Reform needs more work and that he expects the Senate to get back to work fine-tuning the program soon.

“The burden of the reforms lies on the shoulders of the reformers,” he said regarding Congress’s responsibility to get reform right.

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