Colorado proposes fix for high health insurance premiums in mountains

Posted: 05/09/2014 10:46:13 AM MDT

Updated: 05/09/2014 10:56:14 AM MDT

State regulators said Friday they are seeking permission from the federal government to change Colorado's geographic rating areas for health insurance, a move that could reduce premiums in high-cost mountain and rural areas.

Geographic rating areas are used by insurance carriers to price premiums. The Colorado Division of Insurance wants to reduce the number from 11 to nine for 2015, combining four rural areas into two larger rating areas, while retaining the seven urban rating areas. The change requires approval from the U.S. Department of Health and Human Services.

'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,' insurance commissioner Marguerite Salazar said in a statement. 'We understand that people across the state are concerned about high health care costs and the impact on health insurance premiums. This is the fairest way of addressing the issue and working toward stable premiums in all regions of the state.'

The Kaiser Family Foundation released a study in February that found Garfield, Eagle, Pitkin and Summit counties have the highest health care premiums in the country. In those counties, a 40-year-old person would pay $483 a month. In Denver, a similar premium would be about $280. The gap is narrowed or eliminated for those who qualify for subsidies under the ACA.

The insurance division considered three options for rating areas. It received 306 comments from the public, of which 138 addressed the rating area options. Of those, 117 were supportive of the nine rating areas structure.

Due to this change, the insurance division will extend its deadline for insurance carriers to provide plans and rates for 2015 from May 15 to June 6, providing time for insurance carriers to adjust to the new areas.