Colorado regulators have done the math on health insurance premium hikes and are warning insurers and consumers that blaming steep increases on health care reforms is a convenient myth.

While insurers and politicians said new benefits and consumer protections were helping drive premium hikes of 10 percent to 30 percent for 2011, the actual requests for such new items in mandatory rate filings often required no increase at all.

The impact of the new benefits amounted to a 5 percent increase for some small-group new policies but topped out at 1.2 percent in large-group renewals, the state insurance division said.

The real driver of big insurance hikes remains high inflation for hospital care, doctor fees, new medical devices and increased testing, regulators and consumer advocates said.

"There's been a lot of hyperbole and a lot of hype about health reform driving up the cost of care," said Dede de Percin of the nonprofit Colorado Consumer Health Initiative. "Now that we have the facts, people really need to start paying attention to them and stop putting out misinformation."

Hospitals take most of the ongoing criticism for annual premium increases. A Milliman Medical Index report said costs rose fastest in outpatient hospital care for 2010, at 11.6 percent. Milliman said the hikes were not primarily from increased use but from jumps in the "unit price" of each individual service, device or drug.

Gross hospital charges in Colorado rose an average of 7 percent from September 2009 to September 2010, said Ron Zwerin of the Colorado Hospital Association. The top reasons include an aging workforce with more illnesses, expensive new technology and replacements of aging equipment, pharmacy costs and the use of costly emergency rooms for routine care, Zwerin said.

National requirements that went into effect this fall include expanding policies to cover children up to age 26, removing annual or lifetime limits on payouts, covering more preventive services and allowing pre-existing conditions for children 18 or under. More changes from the health reform law roll out in coming years, with controversial measures including the insurance mandate arriving in 2014.

The Colorado study found large-group insurers filed documents asking for increases of zero to 0.4 of a percent for covering children up to age 26, according to state Insurance Commissioner Marcy Morrison. Small-group insurers, up to 50 employees, said allowing pre-existing conditions for kids under 19 would cost them nothing.

Yet insurance companies are asking for annual premium increases up to 30 percent, Morrison said. A recent study said Colorado businesses face an average increase of 14.4 percent for health costs in 2011, higher than the national average.

Approving the rate requests is not automatic, with Colorado beefing up its review staff and enjoying expanded powers to deny increases. Morrison's reviews can now look at everything from illness levels of employee groups to an insurance CEO's salary to decide what is fair.

"Our folks are drilling down as best they can and looking at what is pushing that 30 percent" in the higher cases, Morrison said.

From the Denver Post November 10, 2010