Colorado Lawmakers Offer Reinsurance Plan To Cut Health Costs

Feb. 28-- Feb. 28--Lawmakers hope they can push down the cost of health insurance in Pueblo by as much as 25 percent for individual buyers by establishing a Colorado reinsurance program to pay for most costly hospital cases.

There is bipartisan support for House Bill 1168 as well as the endorsement of Gov. Jared Polis.

It was introduced Wednesday in the state House and could have enough momentum to pass this year.

When Polis was in Pueblo several weeks ago for a town hall meeting on health care, he called the reinsurance plan one important way to attack the high health insurance costs being paid by individuals on the Western Slope and in Southern Colorado.

The state would need a waiver from the federal government to establish the fund, but other states, such as Minnesota and Alaska, have already done so.

Reps. Julie McCluskie, D-Dillon, and Janice Rich, R-Grand Junction, are prime sponsors of the legislation. Rep. Daneya Esgar, D-Pueblo, is also a sponsor as is Sen. Bob Rankin, R-Carbondale.

"We hope that by January 2020, working families in Colorado will see a reduction in their insurance costs," McCluskie said.

Essentially, the reinsurance fund would work this way-- the state Department of Insurance creates a revenue fund of roughly $300 million a year that would be paid for from federal dollars coming to the state. There is language allowing the state to sell revenue bonds.

The state office would then create a reimbursement schedule for hospital costs and fees that would be lower than the reimbursement rate paid by the federal Medicare program.

One analysis said hospitals would lose about $130 million a year from such a program.

Participating insurance companies would benefit by being able to turn over their highest-priced cases to the state insurance fund after costs hit a to-be-determined level.

Speaking at a press conference Wednesday, Polis emphasized the program is only aimed at helping individuals and families who have to purchase their own insurance, which amounts to less than 10 percent of all state residents.

But it's those people who are struggling to find affordable insurance, he said, noting that prices on the Western Slope can be much higher than in the Denver area.

So the legislation sets targets for savings, too.

It says the program will aim at a 30-35 percent cost reduction on the Western Slope; 20-25 percent in Pueblo, Larimer, Weld and Eastern Plains counties; and 15-20 percent in Denver, Boulder and El Paso counties.

McCluskie said by paying for the most costly cases, the state can fairly expect private insurers to lower their costs.

Last year, the state paid for a study of reinsurance programs and the final report said they are effective.

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