Bills add insurance rate hike, claims oversight

DENVER - The Colorado Division of Insurance's ability to reject proposed rate increases by private insurance companies could expand greatly under a bill that is set to be introduced this week by the House Majority Caucus chairwoman.

Also, the division would have more power to penalize companies that deny prompt payment of claims under another bill to be run by House Speaker Andrew Romanoff, D-Denver.

The first measure covers health and auto insurers; Romanoff's bill pertains to all forms of insurance. Republicans warned that the bills will further burden an already heavily regulated industry and could lead to premium increases or to some insurance companies choosing to leave the state.

But Majority Caucus Chairwoman Morgan Carroll, D-Aurora, argued the effect will be just the opposite. By requiring private insurers to justify proposed increases and using the state as an enforcer of new rules, companies are likely to bring down or at least slow the rate of premium increases that have forced thousands of people to drop insurance coverage in recent years, she said.

"There is literally no way you slice this up where you can explain why we have the seventh-highest health care premiums (in the country), except that we let them get away with it," Carroll said. "At some point, we have to look at what they're doing with our money."

Health insurance premiums in Colorado have risen by 60 percent since 2001, while wages have gone up just 13 percent and inflation 10 percent over that time. Colorado has some of the highest premiums in the country despite having a population that is far healthier than the national standard, Carroll said.

Carroll's bill would change insurance regulations from a file-and-use system under which companies can raise rates as soon as they inform the state of the changes to a prior-approval system where the insurance division must consent to increases before they go into effect. Insurance Commissioner Marcy Morrison, a former Manitou Springs mayor, would be able to examine if the hikes are justified by circumstances such as higher health care costs or if companies are overestimating usage increases and unnecessarily inflating costs, she said.

Romanoff's plan changes the standard by which the insurance division can fine or punish companies that haggle with customers rather than paying claims promptly. While the current standard for penalties requires a customer to prove the insurer denied the claim in a willful and malicious manner, the new standard would require only that the company was negligent.

Michael Huotari, Colorado Association of Health Plans executive director, said the insurance division already can deny rate hikes if they are deemed excessive or discriminatory and noted that such rulings caused health insurers to cut premiums by $2.5 million last year. Without companies being able to get approval automatically for rate hikes, proposals must be submitted earlier and are likely to raise administrative costs and, thus, costs of health plans, he said.

Rep. Bob Gardner, R-Colorado Springs, predicted some companies might pull out of the state rather than deal with excessive regulations. Passage of Carroll's bill would make insurance the first nonmonopolized private product for which Colorado could be able to set prices, he said.

"We're getting into the micromanagement of insurance and the micromanagement of the market," Gardner said. "The very best thing we can do is maintain the most competitive and open market we can."

CONTACT THE WRITER: (303) 837-0613 or ed.sealover@gazette.com.