Rep. McCluskie’s Bipartisan Reinsurance Bill to Help Lower Health Care Costs for Coloradans Passes Committee

DENVER, Colorado, Feb. 28 -- The Colorado House Democrats issued the following news:

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- McCluskie joined by Gov. Polis, Republicans, county commissioners in support of bill

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A bipartisan bill sponsored by Rep. Julie McCluskie, D-Dillon, that will lower health care costs for Coloradans across the state passed in the Health and Insurance committee. Earlier in the day, Rep. McCluskie was joined by Gov. Polis, county commissioners and Coloradans struggling to keep up with the out-of-control costs of health care at a press conference in support of this legislation. Reinsurance is a proven approach to helping cut health care costs

"I'm proud to partner with Democrats, Republicans, Governor Polis and Coloradans who are focused on driving down the cost of health care on the Western Slope and in every corner of our state," said Rep. McCluskie. "We must work together to protect our Colorado way of life and fix a broken healthcare system for the working people in our state."

Rising health care costs are driven in part by the underlying cost of care but are exacerbated by an insurance market that assigns the highest risks and highest costs to the individual market. This is particularly the case on the Western Slope and in rural Colorado, causing families and individuals to choose between putting food on the table and paying for their health insurance coverage.

Rep. McCluskie introduced the bipartisan bill in the House with Rep. Janice Rich, R-Grand Junction. Senator Kerry Donovan, D-Vail and Senator Bob Rankin, R-Carbondale are the Senate sponsors.

This bipartisan bill aims to reduce insurance premiums for individuals and families by January 2020 to provide much-needed relief to Coloradans, many of whom are paying up to a third of their income on monthly premiums. Our state, especially the Western slope, has some of the highest health insurance costs in the country.

Gov. Polis joined the bipartisan group of lawmakers this afternoon in a press conference and offered his support. "This has been done in red states and blue states and that's why it's a proven method to bring down rates in the individual market," Gov Polis said.

Reinsurance can be considered insurance for Colorado's health insurers. The bill will establish three tiers, from the highest cost areas of the state to the lowest cost areas, in order to pass savings on to Coloradans. The first tier, consisting of regions in the state with the highest costs, will experience the greatest reduction in premiums, by 30 to 35 percent. The second tier will experience reductions in premiums by 20 to 25 percent. Finally, the third tier, regions with the lowest costs, will experience reductions in premiums by 15 to 20 percent.

The bill passed through committee with a vote of 8-2. It now goes to the Appropriations committee.

Here's how a reinsurance program works:

The reinsurance program will pay a percentage of claims, also known as the coinsurance rate, once the claim reaches the minimum amount required in order to be eligible for reinsurance coverage. This minimum amount is called the attachment point. Claim costs that exceed a certain dollar amount, called the reinsurance cap, are not eligible for reinsurance coverage. By insuring this middle range of claims the bill will help reduce risk in the market and drive down healthcare costs.

The initial premium savings for Coloradans comes from a reduction in the amount paid to hospitals and other providers, which leads to a reduction in the amount paid by health insurers. These savings are then passed along to people insured on the individual marketplace through reduced premiums.

The state will request a section 1332 waiver from the federal government to implement and help fund the reinsurance program, like eight other states have done to implement similar programs.

The text of HB19-1168 can be found here (http://leg.colorado.gov/bills/hb19-1168).