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FAQ on Colorado Health Insurance Rates

FAQ on Colorado Health Insurance RatesOctober 29th, 2010 – Colorado’s Division of Insurance just published an informative article on health insurance premiums in Colorado.  Here are some answers to popular questions from Coloradans.

How do Colorado’s health insurance rates compare to other states?
In 2009, Colorado’s health insurance premiums ranked 26th in the country. Colorado’s health insurance market is one of the most competitive in the nation, but the top 10 health insurance companies still have 72.3 percent of the market.

What consumer protections are there for people with individual health insurance plans?
Individual health benefit plans are “guaranteed renewable,” meaning these types of policies cannot be cancelled due to the health condition or claims of the person insured.

What makes health insurance premiums go up so much?
Health care costs drive up insurance rates, so rising health care costs affect  the affordability of health insurance. Health insurance carrier profits, as expressed as a percentage of revenues, have been fairly flat for years and are lower than many other industries. The average net income for the ten largest health insurers in Colorado was 4.6 percent in 2009.

I never even went to the doctor last year and my rates still went up. What’s the deal?
Insurance shares risk among a larger group of people. This means that when you are fortunate enough to be blessed with good health, the rates may still go up because many other people with the same plan were not so fortunate. However, if you are the one with the huge claim you have the peace of mind that your rate increase will be no larger than other individuals of the same age and in the same area with the same plan.

Okay, but why are health insurance premiums increasing by double digit percentages?
Increasing health insurance premiums are driven by increased medical spending, which includes increased use of health care services, new technologies, prescription drugs, an aging population, and unhealthy lifestyles. Rate changes may vary based on a company’s financial situation and whether its existing premiums cover its anticipated claims and administrative costs.

It pays to use a broker to shop for health insurance, as there is no extra cost and a rates do not vary from one broker or Agent to the next for the same plan.

How does the Colorado Division of Insurance help control the rates charged by insurance companies?
When a health insurance carrier in Colorado requests a rate increase, the Division of Insurance looks at many factors, including the cost of medical care and prescription drugs, the company’s past history of rate changes, the financial strength of the company, actual and projected claims, premiums, administrative costs, and profit.

The Division of Insurance approves the request if the health insurance carrier can show that the new rate is reasonable in relation to the benefits provided. If the carrier’s data does not fully support the increase, the Division of Insurance can ask for more information, approve a smaller increase, or reject the increase altogether.

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