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Mon May 5, 2014
Colorado Redraws Insurance Map To Cut Sky-High Ski-Town Rates
Originally published on Tue May 6, 2014 7:08 am
Relief is in sight – and it won't involve a lawsuit – for the four counties in Colorado that have the the highest Obamacare health insurance premiums in the country.
Local officials in the ski resort region in the mountains west of Denver had threatened to sue over the high rates. But on Friday, Colorado Insurance Commissioner Marguerite Salazar said she wants to redraw those boundaries, making the resort counties part of a much larger 22-county pool.
The Affordable Care Act sets a lot of limits on what insurers can do. They can't charge sick people more, for instance. But one thing that still counts is location, location, location. Premiums can be higher or lower based on how much doctors and hospitals cost in a specific area. And states get to draw those geographic boundaries. When Colorado lumped the four resort counties together, it created the most expensive market in the U.S., almost by accident.
"It is about fairness," Salazar said, explaining the new boundary. "When we put (the resort counties) together, we didn't know what the difference and disparity was going to be. We found out pretty quick"
That's a switch from what Salazar said in December, when she argued that it wouldn't be fair for some of the state's poorest counties to subsidize its richest by lumping them together in the same risk pool.
Resort county commissioners like Dan Gibbs welcomed Salazar's proposal. "The status quo was killing our middle class," he said.
But if redrawing the rating map has the effect Salazar predicts, resort county residents will still have some of the highest ACA premiums in the country.
The current premium for a 40-year-old nonsmoker in the resort counties is $483 a month. Salazar says her best guess is that rates would drop 4- 8 percent in those counties, bringing the premium down to between $444 and $464 a month.
Rates would go up in the non-resort counties. Salazar says prices could rise 4-6 percent, which would drive the cost of a comparable plan up from $349 a month to about $366.
The new scrutiny of premiums and what drives the costs has some county officials meeting with local hospitals to at least study costs and look for strategies to bring them down.
Resort county hospitals have long worked with local elected officials and businesses to bring health care costs down, says Steven Summer, president of the Colorado Hospital Association. "That's ramped up as a result of the transparency" around new premiums, he says.
Summer also says labor and supplies are significantly more expensive in resort areas. "There's a higher cost in maintaining the surge capacity they need (to care for tourists) seasonally," Summer says. Hospitals have to stay open and pay staff year-round, even though there's little demand much of the year. "You can't just flip a button and be ready," he says.
Talk about rates for next year is pure speculation until June 6, when insurers have to submit proposed premiums for 2015.
So far there's been no backlash from people in counties whose premiums are likely to rise. Commissioner Salazar is taking public comment until Wednesday, and plans to issue a decision Friday.
Beyond next year's rates, another announcement Friday will surely influence health care prices in Colorado's resort area. Kaiser Permanente, the state's dominant health insurance company said it will enter the western Colorado market in 2016. Kaiser hasn't said which towns it will serve or to which facilities it will send members for care, but increased competition could drive prices down.
This story is part of a reporting partnership between NPR and Kaiser Health News.