NU Online News Service, June 4, 2003, 6:01 p.m. EDT – Colorado Gov. Bill Owens, a Republican, has signed a bill that eases restrictions on the state’s small-group health insurance market.

The bill, H.B. 1164, was introduced by Rep. Lola Spradley, Beulah, Colo., the speaker of the Colorado House.

Now that H.B. 1164 has been enacted, one section will let businesses with 50 or fewer employees buy basic policies that are exempt from state mandates requiring coverage for mental health care and hospice care, according to the bill text.

The new law also will give insurers some flexibility in setting rates for small groups and their employees.

Starting Sept. 1, 2004, for example, an insurer will be able to add up to 15% to a small employer’s renewal premiums to reflect claims experience, employee health status and other case characteristics.

Health insurers also can add up to 15% to rates for members of small plans who smoke, according to the bill text.

Other sections of the new law:

? Encourage employers to use defined-contribution health plans, by explicitly letting small employers offer coverage with $2,500 deductibles as long as they also contribute $1,000 per year to each participating employee’s “personal care account.”

? Try to increase the stability of the small-group market, by prohibiting insurance regulators from changing the rules governing the basic and standard small-group plans more than once every two years.

? Create a pilot program that would let small businesses pool together to form “multiple-employer welfare arrangements,” or self-funded health plans sponsored by multi-company associations.

? Discourage CoverColorado, a state-sponsored “risk pool” health insurance program for Colorado residents with health problems, from shoring up its finances by imposing assessments on private health insurers. The CoverColorado board must increase rates for the insureds and consider reducing benefits before establishing any assessment, according to the bill text.

Owens says in a statement that the new law is needed because the state’s recent “all or nothing” approach to regulating small-group health coverage has failed.

“Affordable health insurance plans simply have not been available for many small businesses in recent years, primarily because state law had eliminated the possibility of offering basic coverage,” Owens says in the statement.

The bill won backing from the Colorado Press Association as well as the Colorado Association of Commerce and Industry and the Colorado State Association of Health Underwriters.

“Finding affordable health insurance is one of the most significant problems facing Colorado’s small and medium-sized newspapers today,” Ed Otte, executive director of the press association, says in a statement distributed by Owens’ office.

The press association hopes to work with Aon Corp., Chicago, to form a MEWA, according to the association Web site.

The text of H.B. 1164 is available on the Web at http://www.leg.state.co.us/2003a/inetcbill.nsf/fsbillcont/360CC2703C66247E87256C5A00673004?Open&file=1164_enr.pdf