As the Peak has pointed out time and time again, the Democrat-controlled Colorado state legislature have paid ample lip service to small business and economic issues, but their actions during the session tell a different story altogether. Far left social issues such as civil unions, gun control, and sex ed have taken most the air out of the room, and when the democrats actually expended the effort to address business issues, they are have been throwing up more regulations, impediments, and interference in the marketplace. Denver Rep. Beth McCann has offered the latest example.
Legislators on the left have targeted health plans popular with small businesses to force small businesses into the more expensive small-group market. Eliminating the popular stop-loss insurance option is important to the left because the small business health exchange that the state plans to launch needs the small businesses with young, healthy employees in order to spread out costs and to prevent the state’s program from becoming almost impossibly expensive.
Stop-loss insurance is a simple type of policy that many small businesses use as an alternative to expensive group policies. In a stop-loss insurance arrangement, the company self-insures to a certain extent, and then purchases stop-loss insurance to protect against catastrophic claims. In Colorado, it’s common for the stop-loss coverage to kick in at $15,000 per person, and a higher aggregate amount for the entire company. This is a great option for small companies with young, healthy employees. In fact, testimony at the legislature this year included a vignette about a local company with five employees who took advantage of stop-loss insurance, and had a scant $300 in claims above what they spent on the annual premium last year.
Unfortunately for growing businesses that view this type of insurance as a way to provide benefits for employees and control costs, these types of plans pose a threat to the future small-group state insurance exchange by attracting companies with low-risk employees. But Beth McCann had a plan: if she could pass a law that would radically increase the minimum stop-loss coverage amount, a quick vote in the legislature and a stroke of Governor Hickenlooper’s pen could essentially wipe out this insurance option by rendering it economically useless.
At first she introduced a bill, HB13-1290, that stated that stop-loss insurance providers could not pay a penny in claims until an individual’s claims hit $30,000. After an amendment lowering that amount to $20,000, she was able to convince enough of her fellow Democrats to get this one through the Health, Insurance and Environment Committee. By the state changing the economics of these policies, it will invariably push companies into the more expensive small-group market, and grease the skids for the expensive, government-run exchange.