Cutting Edge

Denver resident Steve Bieringer knows what it's like to suddenly lose insurance coverage that he'd previously taken for granted.

A longtime diabetic, Bieringer uses an insulin pump. After changing jobs several years ago, he transferred to his wife's insurance plan. He was under the impression that the new plan included insulin pumps, but when he filed a claim, the insurance company denied it.

"They said the employer didn't cover that," recalls Bieringer.

Because insulin pumps cost about $5,000 apiece, Bieringer panicked. He appealed the denial through the state insurance commissioner's office. After much bureaucratic wrangling, he was able to get the treatment he needed. But the experience left him convinced that state law has to back up citizens facing a medical crisis.

"People get diabetes all of a sudden, and they think it's covered," says Bieringer. "Then they're told at a time when the need is most severe [that] nobody will pay for it. They may not be able to work, and then on top of it, they find out insurance won't pay for anything."

Situations like Bieringer's have caused the state to mandate that insurance policies address more than a dozen different medical procedures. Each mandate was added to state law after countless consumers testified before the state legislature, expressing their anger at being denied what they thought was basic health care.

Colorado has fewer mandates than many other states, but those it does have would be considered essential to most people: basic maternity care, hospital stays for newborn children, mammography and treatment of birth defects, diabetes and biologically based mental illnesses such as schizophrenia.

Without proper treatment, chronic diseases like diabetes can become more severe -- and more costly -- over time. "Long-term complications are blindness, kidney failure and heart disease, all very expensive to treat," says Bieringer, adding that the legislature was persuaded to pass many of the mandates because they help to catch medical problems early on, preventing future hospitalization.

"What [each] mandate says is, this coverage will be included in any policy sold in Colorado," says Bieringer.

But these same mandates are now under the microscope at the State Capitol. Governor Bill Owens claims that the cost of fulfilling the legislature's requirements is driving the price of health insurance out of the reach of small businesses. He would like to see insurance policies that do not include the mandated benefits.

"Small employers are now required to offer a Cadillac health policy," explains Dan Hopkins, spokesman for the governor. "As an option, they should be able to offer a Chevy policy, so at least someone could get catastrophic coverage. The mandates have resulted in higher medical costs."

The governor's proposal is in response to exploding medical expenses that have outraged employers and consumers all over the state. Annual premium increases of 20 percent are now standard, and many small businesses have faced cost increases of 100 percent or more. Small employers are especially vulnerable to price hikes because they don't have the bargaining power of businesses with hundreds of employees.

"Health-care costs are the top problem for small businesses in Colorado and nationwide," says Tim Jackson, state director of the National Federation of Independent Business (NFIB). "Medical costs are going up four to five times the rate of inflation."

Jackson agrees that getting rid of the mandates will help small businesses offer health coverage to their employees.

"Our health-care policies have been pricing small business out of the market," he asserts. "These are top-down, government-dictated, choice-limiting, unfunded health-care-benefit mandates that add on to the cost of health care."

While no one knows exactly how much the mandated benefits add to the cost of health insurance, most estimates are that costs are boosted from 5 to 10 percent. Many other states have passed laws allowing insurance companies to offer mandate-free, "catastrophic" health coverage, but they've found the policies to be unpopular with both businesses and consumers. Employers are often disappointed with the savings such policies allow, and their employees are unhappy with the loss of coverage for things they regard as health-care essentials.

The push to get rid of mandates is just the beginning of a coming crisis in American health care. As in other states, employers in Colorado -- already hammered by the recession -- are desperately looking for ways to control health-care expenses. New policies are being introduced by all of the state's major insurers that shift more of the cost of health care to consumers. Higher co-payments, bigger deductibles, and policies that don't kick in until expenses reach several thousand dollars are all part of policies now being drafted. People who have counted on their health insurance to protect them from huge medical bills will soon be surprised to discover that they are expected to carry much of the burden themselves.

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Stuart Steers
Contact: Stuart Steers