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“The only thing necessary for these diseases to the triumph is for good people and governments to do nothing.”



The Health Insurance Cost Spiral: How It Happened


By: Sen. Mark Hillman



Visit a business any place in Colorado and people have plenty to say about the skyrocketing costs of health insurance.

Employers are frustrated because they want their employees to have access to quality health care but can no longer absorb annual premiums increases of 15 to 70 percent. So, employees, asked to share the rising cost of premiums, are unhappy, too.

While most people on Main Street don’t have time to figure out what’s wrong with Colorado’s insurance market, they do have time to tell legislators that they expect us to deal with the problem this year.

The problems contributing to our health insurance chaos were created by well-intentioned legislators who wanted help a particular group, but in doing so, they loaded additional costs onto all health care consumers.


While the health insurance market suffers from a multiplicity of factors which either drive up costs or shift costs from those who receive care to others who pay the bill, three elements must be addressed:

Community rating. Prior to enactment of “community rating,” premiums were directly related to the health of each person purchasing insurance.

Legislators enacted community rating in order to protect small business from wildly fluctuating premiums and to keep insurance affordable for consumers with existing health problems. Unfortunately, this replaced wildly-fluctuating costs with rapidly-increasing costs and disproportionately shifted costs to healthy consumers, causing many to simply leave the market.

Look at it this way: You and I go to lunch together everyday. Both of us pay $10 for lunch, but everyday, I get an $18 steak and you get a $2 cheese sandwich. How long are you going to subsidize my steak and be satisfied with your cheese sandwich? That’s the predicament which community rating imposes upon healthy consumers.

And it gets worse, because when healthy consumers leave the market, the high-risk consumers who remain now must bear an even higher cost.

We must allow insurers to offer a “good health discount” to attract healthy consumers back into the market.

Mandates. Everyone who purchases health insurance through the small group market in Colorado is required to pay for 17 mandatory coverages.


For example, everyone is required by law to purchase pregnancy and maternity coverage – that’s everyone, including men and women who are beyond child-bearing age. And everyone is required to pay for child health supervision services and for mental illness. Colorado law mandates virtually the best coverage money can buy. Trouble is, few people can afford it.

It’s time for legislators to trust consumers to make their own choices about what their family needs and can afford. Consumers who can’t afford every conceivable coverage are clearly better off with a basic policy than with no insurance at all.

Litigation costs. Runaway juries awarding lottery-style judgments are making medical malpractice insurance unaffordable for doctors in several states, causing physicians to refuse to perform certain high-risk procedures or to leave for states with liability limits.

Colorado reacted to a medical malpractice crisis in 1998 by limiting non-economic damages -- including pain and suffering, emotional stress, inconvenience and quality of life -- to $250,000, except in extreme cases. Injured patients are still entitled to fully recover medical costs and lost earnings.

Recently, the Colorado Supreme Court began to chip away at those limitations. Though juries may feel justified in awarding millions of dollars to a sympathetic victim, consumers ultimately pay the bill.

Colorado must head-off another medical malpractice crisis by re-affirming the limitations which allow injured patients to be compensated but limit runaway verdicts.

Sen. Mark Hillman (R-Burlington) represents 12 counties on the Eastern Plains and served on the Health Care Systems Interim Committee. Please see also: