The Greeley Tribune reports that small businesses in Colorado pay more for health insurance than companies in other states, with Greeley paying Colorado’s highest health insurance costs. The article does a good job of attempting to explain this, but misses the point.
A study of more than 650,000 businesses across the U.S. that had 50 or fewer employees found that they spent an average of $814 per month to insure an employee with a family, $311 for a single person. Colorado business owners typically shell out $950 per family and $362 for workers without a spouse or children.
“Health care premiums are a reflection of a couple things,” said Peg Brown, a spokeswoman for the Colorado Division of Insurance. “One of which is the cost of services. Nationally, but also in Colorado, the cost of health care services is increasing at a rate beyond that of other services.”
This doesn’t explain why Greeley pays more than other areas in Colorado for health insurance.
Industry experts say Colorado’s insurance regulations are responsible. The state uses an adjusted community health insurance rate with limited flexibility, which means insurers must keep premiums within a certain range for all businesses. A health insurance firm can charge no more than 10 percent above, or 25 percent below that figure, no matter how healthy its employees are.
This only shows why a company with healthy employees may be paying more than it needs to, but they would be subsidizing unhealthy groups who could be paying less.
Colorado also allows the self-employed to enroll in small business plans as a “group of one.” The AHIP survey says this too can raise rates. An industry analyst said that policy also can lead to fraud.“It can result in people basically creating businesses in order to get insurance,” said Alwyn Cassil, director of public affairs, Center for Studying Health System Change.
If a person is unable to get coverage through an employer and couldn’t attain individual coverage, Cover Colorado is usually a better bet for lower rates than a Group of One because it’s subsidized by tax dollars. So it would be pointless for somebody to fraud their way into a group of one plan when there is a less expensive option that is much easier to qualify for.
Also, it’s not as easy as just “creating businesses in order to get insurance.” Colorado health insurance companies have strict guidelines that an applicant must adhere to in order to qualify as a business group of one. The applicant must be self-employed for at least a year, and must submit tax records with the application in order to prove that the self-employment results in income (at least enough to cover the cost of the premiums).If all of the health insurance companies in Colorado are charging higher rates in Greeley compared to other areas of Colorado, it would mean that either usage is higher in Greeley, or the rates healthcare providers charge there are higher, or both.
Jay operates a health insurance brokerage in Colorado, where he helps individuals and small groups obtain and maintain health insurance coverage, provides data analysis, and creates visualizations that are easily understood by consumers and other stakeholders in Colorado’s health insurance market.
