The Colorado Division of Insurance (DOI) today announced it will ask the federal government for approval to change Colorado’s geographic rating areas for health insurance for 2015.

Geographic rating areas are geographical units made up of metropolitan statistical areas (MSAs), counties or three-digit zip codes, which are used by insurance carriers to price premiums.

The DOI seeks to reduce the number of rating areas from 11 to nine, combining four rural areas into two larger rating areas, while retaining the seven urban (or metropolitan statistical areas, or MSAs). Such a change will require approval from the U.S. Department of Health and Human Services.

“Consolidating the higher health cost regions into larger rating areas will spread the risks and the costs of providing health care more equitably over a larger population,” said Marguerite Salazar, Commissioner of Insurance. “We understand that people across the state are concerned about high health care costs and the impact on health insurance premiums. This is the fairest way of addressing the issue and working toward stable premiums in all regions of the state.”

The announcement comes after a meeting last week of the Health Care Cost Study Group. At that meeting, the DOI put forth three options for rating areas following presentation of an actuarial analysis commissioned by the DOI for the study group. The DOI invited comments through Wednesday, May 7.

The DOI received 306 comments of which 138 addressed the rating area options. Of those, 117 were supportive of the nine rating areas structure.

As part of this change, on Friday, May 9, DOI will formally request approval from the Department of Health and Human Services to change Colorado’s rating area structure. Due to this change, the DOI also will extend its deadline for insurance carriers to provide plans and rates for 2015 from May 15 to June 6, providing time for insurance carriers to adjust to the new areas.

###

The Colorado Division of Insurance regulates the insurance industry and assists consumers and other stakeholders with insurance issues. DORA is dedicated to preserving the integrity of the marketplace and is committed to promoting a fair and competitive business environment in Colorado.