This bill would allow a Colorado resident to purchase or enroll in a health insurance policy lawfully sold, offered or issued in any other state, from any health insurance company licensed to do business in another state, even if the company is not licensed to do business in Colorado, and even if the policy benefits are different, i.e., more or less, than those benefits required in policies issued by Colorado licensed companies. It would subject these companies to regulation by the Insurance Commissioner only with regard to the enforcement of contractual benefits, including those for prompt payment and the procedure for denial of benefits.
Why is this bill a positive step?
Currently, Colorado residents are required to buy policies 1) with these specific mandated benefits and with policy forms approved by the Colorado Dept. of Insurance, and 2) sold by companies licensed by the State of Colorado. This means that residents are limited to only those policies with all of the benefit mandates and limited to about 35 companies in the individual and small group markets. By necessity, these policies are more limited in benefits and prices than those provided by the hundreds of insurance companies licensed in the various 50 states.
The economic argument for this bill is clear. According to the Council on Affordable Health Insurance 2008 research, Colorado currently mandates 50 benefits, including treatment for alcoholism. However, three surrounding states do not require that treatment benefit. So, if you completely abstain from alcohol, or you know you will never need that coverage, then you could purchase a policy from at least six states including Arizona, Idaho and Wyoming that do not require that benefit. It is estimated that this one benefit raises the cost of health insurance from 1 to 3%. Likewise, if you know you will never need maternity benefits, why buy them? Colorado says that all policies must offer those benefits, but 30 other states make them optional. Maternity benefits also raise the cost by 1 to 3%. Individually, each mandated benefit may not raise the cost of a policy much, but combined, they make a significant difference, costing the consumer from 20% to 50% more, according to CAHI, depending on the mandates involved.
Alternatively, astute individuals would be able to find policies offered in other states that provide benefits that may not be offered in Colorado -- which means they could get insurance for something that is not covered now, and, at the same time, save money on their medical costs. For example, if an individual wanted in Vitro Fertilization covered by insurance and if she could not find a company in Colorado wiling to offer same, she probably could purchase the policy from an insurer outside the state.
In addition to cheaper health insurance, this freedom to purchase policies outside the state could provide peace of mind and the particular benefits that individuals and their families want and in some cases, need.
This bill also offers Colorado residents the opportunity to seek the most affordable and best of the regulatory schemes offered by the 50 various states.
This is a great opportunity for Colorado to lead the nation in allowing its residents greater freedom, real choice, and more personal health insurance, and I urge you to speak up and write about it -- write letters to the editor and op-eds. Let's get people talking about this consumer oriented, free market option to decrease the cost of health insurance. There really is no downside to this bill as it is currently proposed.
The Colorado House Business Affairs and Labor Committee meets next Monday at 1:30 to discuss this bill. The members of that Committee are:
Rosemary Marshall-Chair (D) 303-866-2959 rosemary.marshall.house@state