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Fact Check: Will HB19-1168 Reduce Insurance Premiums?

March 11, 2019 / Jared Polis
Rating: Flatlining

Gov. Jared Polis made a number of healthcare claims, including that HB19-1168 will reduce insurance premiums for individuals and families and that the bill will provide immediate relief by lowering costs for Colorado families.

CLAIM #1: HB19-1168 will reduce insurance premiums for individuals and families.

FACT: There is nothing in the bill that requires insurance companies to lower premiums. Instead, the legislature and the public is relying on the “good will” of insurance companies to reduce premiums for consumers.

CLAIM #2: This reinsurance program is a strategy that will help provide immediate relief by lowering costs for Colorado families.

FACT: There is no evidence that this bill will provide immediate or long-term relief. As noted above, a reduction in costs is dependent upon insurance companies doing the right thing. Additionally, lawmakers are considering this bill without the benefit of any actuarial analysis or financial studies, making any cost projections speculative.

CLAIM #3: The bill would require Colorado to request a waiver from the federal government to implement and fund the program. Eight other states have stood up similar programs.

FACT: Eight other states have what are known as state innovation waivers, which provide opportunities for states to modify existing laws or create something entirely new to meet the unique needs of their communities. Only one of those states, Maryland, has anything “similar” to what Colorado is proposing, namely government rate setting for providers. However, Maryland administers its program in a completely different manner. Rates are not set by a political appointee, as this bill proposes, but instead, are determined by an independent commission set up in 1974 that currently has 39 employees and a $16 million annual budget. Rates are set for all payers, including Medicare and  Medicaid, unlike the Colorado bill. Even so, Maryland has struggled to control costs. Colorado has both lower per capita health spending and a lower growth in health spending than Maryland.

CLAIM #4: Reinsurance works by protecting insurance companies against some of their high costs claims. Premium costs go down for everyone when that happens. Once premium costs go down, Coloradans will be able to afford health insurance.

FACT: This argument again relies on insurance companies passing on their savings to consumers. Additionally, it does not account for the actual costs associated with specialized care, such as neonatal intensive care units, trauma care and cancer treatments. Placing the burden on hospitals and medical care professionals to cover the difference between the actual cost of care and the set rate cost will force some providers to stop offering those critical care services because they cannot afford to do otherwise. Consumers will suffer from quality and choice of care.

Claim Source: https://www.colorado.gov/governor/news/gov-polis-joins-legislators-highlight-bipartisan-reinsurance-proposal