NU Online News Service, May 6, 3:29 p.m. – The Colorado Division of Insurance has released results of an annual survey that paint a dismal picture of the state’s small group health insurance market.
The Colorado division defines a small group as a group with one to 50 employees.
Carriers operating in the state’s small group market reported serving 65,590 small groups Dec. 31, 2001, 6.7% fewer than they served a year earlier. Over the same period, the number of individuals covered by small group plans fell 15%, to about 457,000.
Only 34 carriers reported having small group business at the end of 2001, down from 44 a year earlier. Many of the remaining plans are HMOs with limited service areas.
“These numbers, along with an increase in the number of business groups of one, continue a disturbing trend of larger, healthier groups leaving the small group market and a disproportionate number of smaller, less healthy groups entering the market,” Colorado Insurance Commissioner William J. Kirven III says in a statement accompanying an announcement of the survey results.
Colorado remains one of a small number of states that offer limited guaranteed issue coverage to self-employed individuals, or business groups of one. Self-employed insureds and their dependents accounted for 78,610 of Colorado’s small group market lives, or 17.2% of Colorado’s entire small group market, the Colorado division reports.
The number of business groups of one actually increased to 36,436 in 2001, from 28,805 in 2000. That means that most of the decline in the number of small employer groups was concentrated in groups with two to 50 members, the Colorado vision says.
“Since healthier self-employed people find their way into the individual and self-funded markets, the small group market continues to be adversely affected by an increasing percentage of higher risk business groups of one,” Kirven says. “These numbers and their trends indicate a ?death spiral’ in the small group market where the coverage becomes unaffordable as the healthier groups seek coverage elsewhere.”
Colorado Gov. Bill Owens, a Republican, has asked lawmakers to change the state’s insurance laws, but the reform process has dragged on as proposed House Bill 1163 and a companion Senate bill have been continuously amended, according to local press reports.
H.B. 1163 and its companion bill were written to set guidelines that would keep healthy, low-risk consumers from fleeing the small-group market. Rep. Debbie Stafford, R-Aurora, Colo., is the lead sponsor in the state House, and Sen. Rob Hernandez, D-Denver, is the lead sponsor in the state Senate.
Special Assistant to the Commissioner Susan Gambrill says one of the concerns of having a shrinking small group market is the fact that that is “the guarantee issue market in our state.
“That pool will become smaller and sicker, and our concern is whether insurance companies will want to go to that market, because it will be hard for them to set a premium that’s affordable.”
She says that although the bills in the legislature have not yet passed and this year’s session has only a week to go, “they’re still alive and being considered.”
Daryl Edmonds, president of the Colorado Association of Health Plans, Denver, was unavailable for comment.