The Daily Dose, a blog that is published by the Denver Post covers a mix of news, features and consumer issues that impact medicine and health care. A recent post reported that state regulators were seeking permission from the federal government to change the geographic rating system in Colorado.
What is Colorado’s Geographic Rating System?
Under the Affordable Care Act, the state of Colorado was divided into 11 “rating areas,” or geographic zones, based on the cost of obtaining medical care. This system, developed by the Colorado Division of Insurance, was what ultimately determined the range of healthcare premiums on the state’s health insurance exchange.
The rates that were determined by this rating system were higher than expected for certain areas, particularly mountain and rural areas. As a result, the division is requesting that the number of rating areas is reduced from 11 to nine. By combining four rural areas into two larger rating areas, the rates will be more in line with state averages. However, the change will require approval from the Department of Health and Human Services.
The request from the division is as follows: combine two Western Slop mountain areas, which include some of the pricier mountain resorts, into a single, more affordable, rating area; and combine two Eastern Plains rating areas into one less expensive region.
In a statement for the Denver Post, Colorado Health Insurance Commissioner Marguerite Salazar commented, “Consolidating the higher health cost regions into larger rating areas will spread the risks and the costs of providing health care more equitably over a larger population."
While there is no guarantee that the new rating areas will reduce premiums, Salazar believes this will address the “high-cost pockets” around the state. In fact, she expressed some concern that this approach could cause premiums to rise for some areas because the insurance carriers will also factor in their own data about the areas. However, if the insurance carriers cannot justify increases, the state can still reject them.
Where are healthcare costs highest?
According to the Kaiser Family Foundation’s study, the Colorado counties of Garfield, Pitkin, Eagle and Summit were had the highest health care premiums in the country. For example, a 40-year old person in these counties would pay $483 per month for health insurance, where the same person in Denver would pay $280. For those who qualify for subsidies under the Affordable Care Act, that gap is narrowed or even eliminated, but for those who don’t qualify it hardly seems fair.
Shortly after this study was released, the division of insurance put together the Health Care Cost Study Group, which used $45,000 in federal grant money to improve the rating review process in the state.
Since this process began, the insurance division has received much public support on restructuring the state into nine rating areas. As a result of this change, the deadlines for insurance carriers to provide rates for 2015 have been extended, allowing them time to adjust to the new rating areas.