When Colorado enacted its small group health insurance reform laws, most consumers correctly understood that insurers could no longer underwrite, decline, postpone or rate-up applicants for group insurance as long as they were employed by a business with fifty or fewer employees and chose a basic or standard plan. This includes self-employed individuals also referred to as a business group of one. Subsequently, federal laws were enacted making all plans, not just the basic and standard, guarantee issue for groups of 2-50 employees. However, in states outside Colorado the insurers are still allowed to underwrite and charge higher rates for businesses that have employees with medical problems. This is not allowed in Colorado, as all rates by an insurer must be the same regardless of whether its a new case or a renewal with high medical utilization. I believe this to be one of the greatest consumer protections against insurance company abuses in Colorado, and one that several insurers have been fighting to eliminate.

What most people don?t realize is that the Basic and Standard plans can also be used as a sure fire way to compare rates across the board among the different insurers. The Colorado Division of Insurance Bulletin 4-96 says "richer benefit plans must have higher rates, leaner plans must have lower rates". Regulation 4-6-7 states that "a carrier?s index rates for a plan with richer benefits than the standard plan should be higher than the index rates for its standard plans." Translated into English, all of the plans offered in an insurer?s portfolio must be indexed around the standard and basic plans. If a particular plan is a higher benefit plan than the standard plan it must be higher priced. If a plan is a lower benefit than the standard plan it must be lower priced. Don?t ever let a salesperson tell you that the plan they are showing you is a higher benefit than the standard plan but the price is lower. He/she would be lying to you.

Now comes the neat part. The standard plan is offered in both a PPO and HMO variety. If comparing the standard HMO (the same applies to the standard PPO), you can be assured that all insurer?s standard HMOs are exactly the same as their competitors.

There are no differences in the coverage?s?by law! It is an exact apples-to-apples comparison. Therefore, you can make valid rate comparison by comparing the rates for each insurer?s standard HMO. Next, you can make a valid assumption about the other plans offered in the insurer?s portfolio of products. Since the other products within an individual insurer?s portfolio must be indexed to the standard plan, we can assume that those with high standard plan rates are also high priced for their other products. Conversely, those insurer?s with low standard plan rates are also low priced for their other products. By looking at the rates for the standard plan you can immediately see the true market for your company?s plan, you can quickly determine who is out of the market and does not want your business and you can see who is priced aggressively.

Recently we heard arguments for retracting or modifying the small group insurance reform laws by those who would profit by such an act, mainly large insurance companies. One argument heard over and over is that there is no rate competition in Colorado. Yet a recent analysis of standard HMOs showed more than a 70-percent difference in rates from lowest to highest. The use of the standard plan is possibly the best tool a consumer can use to analyze his/her company?s group health insurance.