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Senate panel advances health insurance bill

Joyzelle Davis, Rocky Mountain News

Published April 19, 2007 at midnight

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A Senate committee on Wednesday approved a controversial health insurance bill that would prohibit insurers from using health status and claims history in determining rates for small businesses.

The Senate State Veterans and Military Affairs committee voted 3 to 2 to let the bill move to the Senate floor. The House approved it last week.

Supporters of the bill call it a crucial step toward reforming Colorado's health care system, saying it will make health insurance more affordable and accessible for businesses with 50 or fewer employees. Critics argued the bill would undermine efforts to stabilize rates that are encouraging major insurers to re-enter the small-company market.

Under a law passed in 2003, insurers can offer discounts of up to 25 percent for healthy groups but can charge less healthy groups up to 10 percent more. That penalizes people who have genetic conditions that are beyond their control, said sponsor Sen. Bob Hagedorn, D-Aurora, and encourages workers to ignore potentially life-threatening health issues like chest pains for fear of driving up their co-workers' costs.

"The intent of insurance is to spread risk. It is not to eliminate risk at the expense of people's health," Hagedorn said.

More than a dozen people, including small-business owners and insurance brokers, testified against the bill. The Colorado Association of Commerce and Industry also opposes it.

Critics say that most small businesses will see rate increases if the bill passes, pointing to a recent report from the Colorado Division of Insurance that showed nearly two-thirds of groups received a discount because of their health status.

Lee Brown, who owns a 15-employee tanning salon in Castle Rock, said she couldn't afford to offer insurance without her group discount. "Being able to offer health insurance allows me to attract better, committed employees," she testified.

Insurance Commissioner Marcy Morrison testified on behalf of the bill, saying it should be passed now rather than waiting for results from a blue-ribbon panel that's examining solutions to the state's health care problems.

"I think this is a piece that's doable and I don't think the sky will fall," she said.

Small business health insurance

House Bill 1355

• What it does: Prohibits health insurers from using health status and claims history in determining rates for small businesses.

• Supporters say: It prevents insurance companies from penalizing small businesses if employees or their families have been sick.

• Opponents say: Since rating flexibility was implemented, rates have stabilized and more health insurers are doing business in the state. This bill would reverse that.

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