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Austin Guest on April 17, 2008 - 5:47am
By Adam Thompson
Turn on the news or open up the paper, and you'll read countless stories about how families and small businesses in Colorado are being hit hard by everything from rising gas prices to home foreclosures to the cost of health care. It seems like every sector of the economy is in trouble except, perhaps, the health care industry and health insurance companies in particular. They've never had it so good. Insurance industry profits continue to rise, fueled by higher insurance premiums, and Coloradans have little recourse to push back.
To shed light on health insurance rates and ensure premiums are paying for medical care rather than undue industry profits, a bill has been introduced in the Colorado State Legislature that would require insurance companies to justify rate increases and get state approval before they go into effect.
Authored by State Rep. Morgan Carroll (D-Aurora), the FAIR Act is a fair and steady approach to make sure Coloradans and small businesses get real value for the health insurance premiums they pay each month. Over 30 states already have laws similar to the FAIR Act that help prevent the insurance industry from putting profits before people.
Family and small business budgets across the country - and no less in Colorado - are crippling under the burden of fast-rising health insurance costs. In the Denver area, small business premiums for a family of four jumped a staggering 140% from 2000 to 2005. This is causing more families and small businesses to forego health insurance coverage.
As Rep. Carroll has pointed out, Colorado is paying more for less. Despite being one of the healthiest populations in the US, insurance rates are 7th from the top. And, despite spending less per person on health care than the US average, Coloradans spend more on insurance premiums than the US average. It is clear that something more than the cost of health care is driving health insurance premiums in Colorado.
To be sure, the health insurance industry is in the business of making money. According to the Consumer Federation of America, the insurance industry has more than $600 billion in retained surplus, money the industry holds onto and expands each year. The insurance industry goes to great expense to protect its financial wealth.
In 2006, according to the National Institute on Money in State Politics, the insurance industry contributed $33.5 million in campaign contributions to state legislatures. In the same year, according to OpenSecrets.org, the industry (at $133 million) was second only to the drug industry (at $182 million) in money spent lobbying the Congress to beat back sensible insurance reforms.
Any state legislator, state house reporter, or concerned individual who has made the trek to Denver to testify on an important piece of legislation knows that the insurance lobby's influence in states is just as strong.
Despite this spending and in the face of federal inaction to address the cost of health insurance, states across the country have stepped up to help ensure consumers and small businesses get value for their health insurance premiums. Over 30 states have laws already on the books similar to the FAIR Act. And, in 2008, states are continuing to rein in the insurance industry and put people above profits.
Earlier this year, Washington State lawmakers gave the insurance commissioner the authority to reject unjustifiable premium increases. This legislation was fueled after reports that a non-profit insurer based in Washington, Premera Blue Cross, had funneled $49 million in premium revenue over three years to a faltering for-profit subsidiary in Arizona. Pennsylvania lawmakers are also moving legislation that would allow state regulators to reject unjust premium increases. Recent news that one of the state's largest insurers, Highmark, posted a $3.5 billion surplus will only fuel support for the legislation. The surplus is 3.5 times more than what is needed in the event of unforeseen medical claims, according to the National Association of Insurance Commissioners.
It is time for Colorado to join the growing number of states protecting consumers and small businesses from unjust premium increases. By enacting the FAIR Act, Colorado legislators will put people before insurance industry profits and reject the undue influence of the insurance industry lobby.
Adam Thompson is the Senior Health Policy Specialist at the Progressive States Network