Insurance commissioner sets record straight

DENVER – There’s still a lot of confusion and misinformation surrounding new provisions of the federal health care reform act enacted by Congress earlier this year.

In an attempt to clear up some of that muddy water, Marcy Morrison, Colorado’s outgoing insurance commissioner – she is stepping down at the end of the month – on Nov. 4 released findings that refute the notion that the new health-care act has become the primary cause of ever-rising insurance rates.

While some businesses and individuals are seeing their policy rates going up 10 percent to 30 percent in 2011, Morrison’s office analyzed insurance company rate hike requests and found that increases being sought due to new benefits that went into effect Sept. 23 amounted to no more than 5 percent.

Those new benefits included such things as allowing children to stay on a family insurance plan until age 26 and removing lifetime limits on payouts.

“It’s a hot issue for many people, and we figured the best way to address the rumors was to publish the facts so people could see for themselves what is driving the price of health insurance,” Morrison said.

“What we found isn’t surprising,” she added. “Health insurance premiums continue to rise. But what may be eye-opening for some people is that federal health reforms have contributed from zero to a maximum of 5 percent of those increases. It’s not the primary cause for increasing rates.”

Morrison said the main drivers of cost increases are the same that have pushed rates up by an average of 10 percent or more every year for the last decade: People going to the doctor more often and receiving more expensive tests, an aging population and general decline in the health status of Americans.

In other words, everyone shares the blame: Public over-consumption of health-care services, continually inflating prices by health-care providers and insurance companies driven by sometimes-obscene profits.

Morrison, who has served as insurance commissioner since her appointment to the post by Gov. Bill Ritter in 2007, said she felt the need to try to clarify what has become a highly charged political argument about the impact of health reform.

“The reason I put it out was I was reading about increases of 15, 20, 25 percent and higher,” she said. “I’m not saying people’s insurance rates have not gone up that much, but it hasn’t been attributable to the health-care reform impacts.”

Aggressive pricing

Part of the problem, Morrison noted, is some insurance companies use low prices to capture new customers and then raise rates dramatically the next year.

“We see companies who use aggressive pricing at one point to be competitive, but they will adjust premiums in future (rate) filings to increase their profits the following year,” she said. “There needs to be a balance between what companies charge and what the public can afford in order to buy health coverage.”

The Division of Insurance is charged with reviewing insurance rate hike requests. The Division must approve the request if the carrier can show that the new rate is reasonable in relation to the benefits provided. A law passed by the state legislature in 2008 gave the DOI more teeth in its reviews, allowing the division to consider an insurance company’s overall finances, including profits, investment income and surplus when reviewing a proposed rate increase.

“We can drill down to ask more questions of a company,” she said. “For instance, now we can ask about bonuses for senior executives.”

The DOI acts as a watchdog for the consumer, taking more than 5,000 formal complaints in its 2009-10 fiscal year and returning more than $12 million to policy holders for overturned denials of benefits, reinstatements of coverage and cancellation of policies.

A former El Paso County commissioner, state representative and mayor of Manitou Springs, Morrison is leaving her post at the end of November.

Morrison, who confesses to being in her 70s, says she’s not retiring but simply ready for another challenge. “I’m looking forward to not having to drive the I-25 corridor as often as I do and to getting back to my community,” she said.” Somehow, I’ll find something to do. When you close one door, another usually opens up.”

Morrison said her tenure as insurance commissioner was a challenging period with health reform in the forefront most of the time.

She said she wishes the next insurance commissioner well in dealing with an ever-more-complex insurance landscape.

“I feel good about as far as we’ve gotten,” she said. “I hope the next commissioner has that enthusiasm to finish the race, because there’s still a long way to go.”

Steve Porter covers health care for the Northern Colorado Business Report. He can be reached at 970-232-3147 or at sporter@ncbr.com.

on Facebook on LinkedIn