Legislation requiring Colorado health insurers to get state approval before raising premium rates cleared a Senate committee Tuesday after major insurers dropped their opposition to the bill.
The measure, sponsored by Rep. Morgan Carroll, D-Aurora, would require insurers to submit proposed rate increases to the state Division of Insurance for approval. Insurance regulators could deny rate increases deemed unreasonable or unjustified by a company’s financial situation.
Regulators could consider an insurer’s incidence of claims, surplus reserves and other financial factors.
The bill, which already has passed the House, had required a greater level of disclosure from insurance companies about how they arrive at rate increases. But insurance companies negotiated a small compromise.
The measure allows the state’s insurance commissioner to determine whether some information about how rates are determined ought to remain confidential.
“We have an agreement that would take us to a neutral position on the bill,” said Mike Huotari, director of the Colorado Association of Health Plans, which represents 11 of the state’s largest insurers.
Huotari said an example of information that might remain confidential could be the complex algorithms insurers use to arrive at rates. Those are considered proprietary in the industry.
Some groups representing businesses supported the bill, saying it would be especially good for small companies overwhelmed by health care costs.
Twenty-three states require health insurers to get approval before raising rates, according to the Colorado Consumer Health Initiative.
The measure, House Bill 1389, now must go to the Senate Appropriations Committee before it can head to the full Senate.
