After an uproar from consumers facing the highest premiums in the nation, Colorado's insurance commissioner is offering to revamp the geographic rating system and to implement it lickity-split.
During the 2014 open enrollment period in the three county mountain resort region anchored by Aspen, the lowest-priced silver exchange plan for a single 40-year-old was priced at $483 per month before subsidies -- a $400 threshold for silver plan premiums shared with counties in only four other states.
A public outcry ensued. A rancher from Carbondale at a public hearing said he felt like he "traded a pre-existing condition for a pre-existing zip code," and Garfield County officials threatened to sue to overturn the rating system.
So in February, Colorado insurance commissioner Marguerite Salazar promised that a statewide study would get to the bottom of healthcare cost variation across the 11 rating regions for individual and small group plans, and help guide a revision in future years.
At the time, Salazar said the study would not be completed soon enough to alter the rating system for the 2015 plan year. But now she's hoping to switch to one of several new layouts in time for 2015 plans -- a change that has to happen before rate submissions start in late spring -- to bring the average premium prices down in the resort areas.
The study, by the actuarial firm Miller & Newberg, found that "regional costs vary dramatically," although the three county resort region is something of a high outlier with annual age- and gender-adjusted per-person costs of about $4,700 in 2012, compared to the statewide average of about $3,500. Only one other rating area has annual per-person costs above $4,000, the five-county northeast region.
The mountain resort rating area, comprised of Eagle, Garfield and Pitkin counties, has healthcare costs that are so high in part because of the seasonal variations in population that leave healthcare providers with an uneven distribution of volume across the year.
The availability of tax credits is also uneven. While about 40 percent of the population in the three resort counties are estimated to be eligible for tax credits -- putting the affordability on a par with plans in greater Denver -- a third of the region's residents have incomes above 400 percent of the poverty level and won't be eligible for any assistance, according to a study by the Colorado Center on Law and Policy.
Between 400 percent of the poverty level, about $95,000 for a family of four, and Aspen's rich and famous are the middle- and upper-middle-class residents for whom even bronze plans might be challenging to afford. According to the Colorado Center on Law and Policy's analysis, unsubsidized premiums in Summit and Garfield counties were 60 percent to 70 percent higher than in the greater Denver area, although it's not clear how many residents of those resort counties have had to turn to the individual exchange market.
Either way, the backlash has persisted, and to try to bring premiums down at least somewhat for those counties, Salazar now is going to ask the federal government to change its rating system to 11 rating areas to 9, with seven metropolitan statistical areas and two non-MSA areas, one combining the western part of the state, including the resort region, and another combining the southeast and northeast.
risks and the costs of providing health care more equitably over a larger population," said Salazar, a former regional HHS director and CEO of Valley-Wide Health Systems, a community health center. "We believe this option would lead to the fairest distribution of costs across these regions."
Salazar is asking the feds to approve the idea so that the 10 insurers who sold plans on the exchange last year, and any forthcoming entrants, can submit rates under a new system.