Colorado Capitol Report

CACI-Opposed Health-Insurance “Reinsurance” Bill Dies in Senate Committee


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CACI-Opposed Health-Insurance “Reinsurance” Bill Dies in Senate Committee

On Friday afternoon, the Senate State, Veterans and Military Affairs Committee on a 3-2 party-line vote killed a CACI-opposed bill, HB-1392, that would have cost Colorado employers and their two million workers $202.5 million in the State’s coming two fiscal years to subsidize health-care costs for about 140,000 low-income individuals, especially those in rural areas, who face high premiums and costs in the individual health-insurance marketplace.

HB-1392 would have asked the Federal Government for approval to establish a reinsurance program to lower health-insurance premiums in the individual marketplace.

The Senate sponsors were Senator Don Coram (R-Montrose) and Senator Kerry Donovan (D-Wolcott).  The bill had both Democrat and Republican support.

In brief, the big question for employers that provide health insurance for two million workers was whether it was fair.   Was it fair to workers and employers to pay for the program while the legislature–busy this session figuring out how to spend a $1.3 billion tax revenue windfall–would not put up any money for HB-1392?

The program would have provided reinsurance to health insurers that take on low-income individuals with serious illnesses and high costs because of the Federal Affordable Care Act (ACA) mandate that no one with pre-existing conditions can be denied coverage.  Connect for Colorado is the state’s health-insurance exchange under the Federal ACA

Under the program, high-dollar claims from $25,000 up to $1 million would have been handed off to the State by the insurers, who then would have been able to lower premium costs for low-income individuals in the individual marketplace.  Rural Coloradans who purchase individual health-insurance plans have been especially hard hit by rising premiums and costs.

Higher-income people in the individual market and employers and workers who purchase insurance in the small-group and large-group markets would have been subject to the two percent fee on premiums.  A provision to levy an 8 percent fee on the “stop-loss” plans of self-insured companies was stricken from the bill in committee.

report by the Colorado Health Institute projects that, under HB-1392, two million working Coloradans would each have had to pay $100 more per year for health insurance while 124,000 would each have had to pay $1,300 less for their health insurance.

The bill was opposed by the CACI Governmental Affairs Council and the CACI HealthCare Council.

In the House, the bill’s co-sponsors are Representative Chris Kennedy (D-Lakewood)and Representative Bob Rankin (R-Carbondale).

On April 23rd, CACI’s Loren Furman testified Monday against HB-1392 before the House Finance Committee.  She also testified Friday against the bill before the Senate State, Veterans and Military Affairs Committee.  Here’s an edited version of her prepared testimony:

We understand the goal of the sponsor.  We know something needs to be done to address insurance premiums which continue to increase;

 

Our employers purchase group insurance or self-fund health-care costs for workers – and they continue to tell us that their biggest cost driver is health insurance.

 

However, those costs are not limited to the individual market, and we see this bill only benefiting those in the individual market;

 

This is not a new issue for us;

 

We supported the bill last year that required that a study be conducted on ways to fund a reinsurance program because we heard loud and clear from legislators and the Colorado Division of Insurance that this was an urgent problem;

 

We always expected the State would, however, kick in money to partially fund the program and “share the pain.”

 

Yet, when State agency budgets were submitted to the Joint Budget Committee, there was no appropriation for this idea.

 

When the State received a $1.3 billion tax revenue windfall due to the Federal Tax Reform bill and the strong Colorado economy, there was no supplemental request to appropriate dollars toward such a program.

 

Putting the costs solely on the backs of employers and workers who do not even participate in the individual market is not the right solution.

 

Our employers and workers would subsidize individuals who may not even be their own employees.

 

Consequently, we strongly oppose this legislation, but we do appreciate the problem that individuals are facing with higher health-care costs.  This bill simply exacerbates the problem that employers and workers are currently experiencing, and it doesn’t identify a sustainable solution.

 

The bill’s second Fiscal Note stated that the objective of the introduced bill was to generate $67.5 million from an assessment of up to two percent on health insurance premiums that would generate another $67.5 million from the Federal Government in fiscal year 2018-2019.  The $135 million total would then be paid to health insurers to reduce the “claims cost” of the highest health-insurance premiums paid by Colorado residents.  In fiscal year 2019-2020, the numbers would be $135 million from the Colorado premium tax to draw in another $135 million from the Federal Government for a total of $270 million.

 

The bill’s second Fiscal Note’s, issued on May 1st, provided this detailed analysis of the bill:

Summary of Legislation

This bill requires the Commissioner of Insurance to seek a State Innovation Waiver under the federal Affordable Care Act to create a state reinsurance program in Colorado.  If federal approval is received, the reinsurance program will apply to 2019 health plans sold on the individual health insurance market.  To fund the reinsurance program, the Commissioner is authorized to assess a fee on state-regulated health insurance carriers of up to 2 percent of premiums.  In addition, the reinsurance program will be supported by federal funds that would have otherwise been provided to consumers as federal advanced premium tax credits.

The bill directs the Commissioner to set the parameters of the reinsurance program so that claims costs are reduced as follows:

  • between 30 and 35 percent in geographic rating areas five and nine (Mesa County and western Colorado);
  • between 20 and 25 percent in geographic rating areas four, six, seven, and eight (Larimer, Weld, and Pueblo counties, and the eastern plains); and
  • between 15 and 20 percent in geographic rating areas one, two, and three (Boulder, El Paso, and Teller counties, and the Denver metro area).

Fees collected from health insurers and available federal funds under the State Innovation Waiver are to be deposited into the newly created Reinsurance Program Cash Fund.  The reinsurance program is created as an enterprise under TABOR and revenue is exempt from the TABOR revenue limits.  The Division of Insurance is required to report annually on the reinsurance program as part of the Department of Regulatory Agencies (DORA) SMART Act hearing.

Background

Reinsurance.  Reinsurance is a type of insurance available to insurance carriers to transfer a portion of the risk to one or more other carriers, thereby reducing the risk of having to pay high-cost claims.  By covering a portion of costs for high-cost claims, reinsurance can allow insurance carriers to charge lower premiums to consumers.

State Innovation Waivers.  Section 1332 of the federal Affordable Care Act (ACA) allows states to apply for a waiver of various requirements of the federal law to pursue innovative strategies for providing residents with access to high-quality, affordable health care.  To apply for a waiver, the state must enact a law authorizing a state agency to seek a waiver.  To receive a waiver, a state must show that the waiver provides access to quality health care that will be least as comprehensive and affordable as it would be provided absent the waiver; that coverage is provided to a comparable number of residents as would be provided coverage absent a waiver; and that the changes under the waiver do not increase the federal deficit.

Federal health insurance subsidies.  In 2017, Coloradans received about $375 million in federal advanced premium tax credits to purchase health insurance through Connect for Health Colorado, the state’s health insurance exchange.  These subsidies are based on household income, premium amount paid, and the cost of a benchmark health plan.  Subsidies are available to persons with income between 133 and 400 percent of the federal poverty level.

State Revenue

Conditional upon federal approval of a State Innovation Waiver, this bill increases state cash fund revenue by $67.5 million in FY 2018-19 and $135.0 million in FY 2019-20.  This revenue is from fees assessed on health insurance carriers and is based on the amount necessary to fund the reinsurance program.  The first-year impact is prorated to reflect a half year of implementation. The exact fee amount will be determined by the Commissioner of Insurance, but may not exceed 2 percent of premiums collected by health insurers.  This revenue is exempt from TABOR revenue limits.

For information on HB-1392, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

For news media coverage of HB-1392, read:

Proposed fee to stabilize Colorado’s individual health-insurance market dies in Senate,” by Ed Sealover, The Denver Business Journal, May 6th.

Legislature considers raising fees on employer health plans to stabilize individual market,” by Ed Sealover, The Denver Business Journal, April 20th.

Health-Reinsurance Bill Would Cost Employers and Workers $270 Million over the Next Two Years,” CACI Capitol Report, April 27th.


Senate Committee Kills House Democrats’ “Equal Pay for Equal Work” Bill

On Friday afternoon, a Republican-controlled Senate committee on a party-line 3-2 vote killed a House Democrat bill that sought to promote pay equity based on gender for equal work.

The bill, HB-1378, died before the Senate State, Veterans and Military Affairs Committee.

The measure would have opened employers up to lawsuits in district court while neutering the existing regulatory process for addressing workers’ pay-equity claims.  The bill also would have hampered the hiring process for employers by forcing them to publicize all openings and pay ranges.

Perhaps the most worrisome aspect of the bill is that it would have allowed a worker to file a lawsuit against a business if her or she believed that the employer was discriminating against him or her in terms of compensation compared to other workers performing the same jobs.  This “private right of civil action” provision has always been viewed by CACI as overly punitive.  It has often been a provision of anti-employer bills that focus on employer-worker relations.

Consequently, CACI’s Labor and Employment Council opposed the measure.

The Senate sponsors were Senators Kerry Donovan (Wolcott) and Rhonda Fields (Aurora).  The bill was co-sponsored in the House by Representative Jessie Danielson (D-Wheat Ridge) and Representative Janet Buckner (D-Aurora).

The bill is but one of a package of anti-business bills introduced late in the session by House Democrats that are partisan “messaging” proposals aimed at their party’s liberal base this election year.  The bills stand scant chance of survival, however, in the Republican-controlled Senate.

Here’s the legislature’s summary of the proposal:

The bill authorizes the director of the division of labor standards and statistics in the department of labor and employment (director) to administer and enforce the law that prohibits an employer from discriminating against an employee on the basis of sex and to issue awards to employees and impose penalties on employers for violations. The bill removes the director’s enforcement authority and instead permits an aggrieved person to bring a civil action in district court to pursue remedies specified in the bill. The bill allows exceptions to the prohibition if the employer demonstrates that a wage differential is based upon one or more factors including a seniority system, a merit system, or a system that measures earnings by quantity or quality of production or a bona fide factor other than sex.

The bill prohibits an employer from discharging or retaliating against an employee for actions by an employee asserting the rights established by the bill against an employer.

An employer is required to announce to all employees employment advancement opportunities and the pay range for the opportunities. The director is authorized to enforce actions against an employer concerning transparency in pay and employment opportunities, including fines of between $500 and $10,000 per violation.

The bill’s Fiscal Note also contains a summary of the bill.

For information on HB-1378, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

For more information on the bill, read:

Once again, Colorado pay-equity measures fail to advance,”  by Ed Sealover, The Denver Business Journal,” May 7th.

CACI-Opposed “Pay Equity” Bill Leaps First House Hurdle,” CACI Colorado Capitol Report, April 27th.


Bill Prohibiting Employers from Discussing Compensation Histories Dies in Senate Committee

On last Wednesday, May 2nd, the Senate State, Veterans and Military Affairs Committee killed a CACI-opposed bill, HB-1377, on a party-line 3.2 vote that would have barred employers from discussing prior compensation histories with job applicants.

CACI’s Labor and Employment Council opposed the measure, which labeled such an action a “discriminatory or unfair employment practice.”

As such, the bill would have allowed a worker to file a lawsuit against a business if he or she believed that the employer had violated the provisions of the bill.  This “private right of civil action” provision has always been viewed by CACI as overly punitive.  It has often been a provision of House Democrats’ anti-employer bills that focus on employer-worker relations that CACI battles each session.

CACI’s Loren Furman testified on April 23rd against HB-1377 before the House Finance Committee.

HB-1377 is but one of the package of anti-business bills introduced late in the session by House Democrats that are partisan “messaging” proposals aimed at their party’s liberal base this election year that, in one way or another, seek to close the so-called “income gap” by targeting employers.

The bill’s Senate co-sponsors were Senator Kerry Donovan (D-Wolcott) and Senator Dominick Moreno  (D-Commerce City).  The proposal’s House co-sponsors were Representative James Coleman (D-Denver) and Representative Brittany Pettersen (D-Lakewood).

Here’s the legislature’s summary of the proposal:

The bill makes it an unfair employment practice for an employer to seek wage or salary history information, including compensation and benefits, about an applicant for employment, unless the employer notifies the applicant of the wage or salary range for the current employment opening or the applicant agrees to discuss his or her wage or salary history.

The bill’s Fiscal Note also contains a brief summary of the bill and the impact on state government.

For information on HB-1377, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

For news media coverage of this bill, read:

Once again, Colorado pay-equity measures fail to advance,”  by Ed Sealover, The Denver Business Journal,” May 7th.

House Passes Bill to Bar Employers from Discussing Prior Compensation Histories with Job Applicants,” CACI Colorado Capitol Report, April 27th.


Legislature Sends CACI-Advocated Bill to Increase Air-Quality Permit Fees to Governor

This morning, the House agreed on a bipartisan 57-8 vote to concur with the slightly Senate-amended version of HB-1400, which sends the bill to Governor John Hickenlooper for his signature.

Last November, the Colorado Department of Public Health and Environment (CDPHE) made a presentation to the CACI Energy and Environment Council indicating that it needed an approximate 40 percent increase in air-quality permit fees to meet the needs of the program.

Given that there has not been an increase in these fees in the past ten years, CACI members recognized that some increase in fees might be warranted

CACI members, however, wanted more justification for (a) the size of the increase and (b) a stakeholder process to implement improvements and efficiencies in the Department’s operations

As a result, CACI worked with other stakeholders and the Department to:

  1. Reduce the size of the fee increase, and
  2. Develop a stakeholder process to implement improvements and efficiencies.

HB-1400, which was introduced April 18th, is the result of that work.  HB-1400 increases the fees by 25 percent and includes a Consumer Price Index (CPI) adjustment each year for the next ten years as well as outlining a stakeholder process to implement improvements and efficiencies.

The House co-sponsors are Majority Leader KC Becker (D-Boulder) and Representative Hugh McKean (R-Loveland).  The Senate co-sponsors are Senator Ray Scott (R-Grand Junction) and Senator Cheri Jahn (Unaffiliated—Wheat Ridge).

With bipartisan support, the bill has moved quickly.  Here’s the legislature’s summary of the introduced bill:

Current law sets the fees paid by stationary sources of air pollutants by statute and allows the air quality control commission to set the fees below the cap by rule as needed to comply with TABOR. The bill increases the statutory caps as follows:

Type of Fee Current Cap New Cap

Air pollutant emission notices$152.90$191.13

Per-ton fee for regulated pollutants$ 22.90$ 28.63

Per-ton fee for hazardous pollutants$152.90$191.13

Per-hour permit processing fee$ 76.45$ 95.56

The maximum statutory fees automatically increase by the rate of inflation on each January 1 from 2019 to 2028, but the actual fees collected will be set at or below the statutory cap by the commission by rule. The division of administration in the department of public health and environment shall prioritize its use of the revenues generated by the fee increases to reduce permit processing times.

The division will:

  • Engage affected industries to identify and assess measures to improve billing practices, increase accounting transparency, and assess potential efficiency improvements with respect to division activities financed by the fees; and
  • Report to the general assembly through 2022 to provide status updates on the stakeholder process.

The bill appropriates $1,555,293 to the department to implement the act.

The bill’s Fiscal Note contains further analysis and details about HB-1400.

 

For more information about HB-1400, contact Bill Skewes, CACI Contract Lobbyist.