Lawmakers approve major health insurance reform
18 04 08 - 14:18
Apr 18 2008 11:47AM EDT
A House committee approved a bill that would require health insurance firms to get prior approval for rate hikes, punish them for improper denial of claims and encourage efficiencies, despite claims from the industry that it will drive up costs.
The plan, dubbed the Fair & Accountable Insurance Act (House Bill 1389) was approved Thursday by the House Business Affairs & Labor Committee. It now goes to the House Appropriations Committee.
Rep. Morgan Carroll, a Democrat from Aurora, said insurance companies currently are allowed to increase rates at will and get approval from the Division of Insurance later. She said they are rarely punished if increases are found to be unjustified.
"If it seems like we are paying more for less, it's because we are. Consumers are unhappy with ever-increasing rates and ever-declining coverage. The FAIR Act begins to address that by making sure that our health care is the insurance industry's bottom line," Carroll said.
She said for a typical family of four in Denver, premiums increased more than 140 percent in five years while wages increased only 15 percent.
Mike Huotari, spokesman for the Colorado Association of Health Plans, opposed the bill, saying Colorado law already requires health insurance carriers to submit rate increases with supporting information and that the Division of Insurance has the authority to reject rates that are inadequate, excessive or discriminatory.
Carroll said Colorado's health insurance rates are seventh highest in the nation, according to the Kaiser Family Foundation, even though Coloradans are healthier than residents in most states.
The committee voted to remove a provision of the bill that included auto insurance in the new regulations after opponents said those rates are set under a different set of rules.
Carroll said auto insurance rates also are too high, even though the state went from no-fault insurance to a courts-based system. She said that in 2002, one dollar of a typical insurance premium purchased $188 in benefits. In 2007, that same dollar only bought $46 worth of coverage.
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