Colorado To Tighten Regulations On State Health Insurers

ColoradoHouse and Senate Democratic lawmakers on Sunday unveiled legislation that wouldimpose stricter rules on how health insurance providers set premium rates andrequire them to pay claims in a timely manner, the DenverPostreports. One bill would allow the state Division of Insurance regulators to reject premium rateincreases. Under the bill, insurance companies would have to justify rateincreases and the Division of Insurance would have the right to consider thefrequency of claims, surplus reserves and other financial factors, in rejectingor approving the rate. Current state regulations require insurers to discloserates but do not require state approval to increase rates.

Bill sponsor state Rep. Morgan Carroll (D) said that while state insurancepremiums have risen 60% from 2001 to 2005, average wages have increased just13% with an inflation rate of 10% in the same period, adding that the insurancecompanies have continued to experience multibillion-dollar profits and paytheir chief executives large compensation packages.

A separate bill would strengthen laws that require insurers to pay claimspromptly, and a third bill would allow the state insurance commissioner toimpose stricter penalties on insurers that deal with customers dishonestly.

Michael Huotari -- executive director of the Colorado Association of Health Plans, which represents 11 of the state'slargest insurers -- said Carroll's proposal is misguided because 85% of thepremiums are used to cover the costs of health care. Huotari said, "It'sthe right problem but the wrong solution," adding, "Insurancepremiums are high, and they have been increasing because health care costs arehigh and increasing. Prior approval (of premium increases) is not going tochange that dynamic." He also said that there are sufficient laws in placethat require insurers to make timely claims payments (Hoover, Denver Post, 3/31).

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