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Wed Jul 17, 2019, 01:53 AM

Thanks, Reinsurance: Colorado Premiums to Drop By 18%

According to a press release today from the office of Gov. Jared Polis, healthcare premiums for individual plans in Colorado are expected to decrease for the first time in state history:

Today, the Colorado Division of Insurance (DOI), part of the Department of Regulatory Agencies (DORA), announced that for the first time ever, Colorado health insurance companies that sell individual plans (for people who do not get their health insurance from an employer or government program) expect to reduce premiums by an average of 18.2 percent (-18.2%) over their 2019 premiums, [Pols emphasis] provided the reinsurance program is approved by the federal government. These are the health insurance plans available on the Connect for Health Insurance Exchange, the state’s health exchange made possible by the Affordable Care Act (ACA).

“For the first time in the history of our state’s health exchange, premiums are dropping. Premiums in the individual market are projected to go down by 18.2 percent on average next year, and as much as 41 percent in some areas of the state, so long as the Federal government approves our bipartisan reinsurance program. Reducing health care costs for Colorado families has been a primary focus of my administration, and today we are seeing the first signs that our hard work is paying off,” said Colorado Governor Jared Polis. “The thousands of dollars people save can go to buying a home, saving for college or retirement, or whatever Coloradans want to do with it. I’m just thrilled to save people thousands of dollars on health care so they have more left to enjoy life. By saving families money and helping more Coloradans gain affordable, quality health care for their families, we can reduce costs across our health care system and continue our state’s strong economic growth.”

Colorado’s proposed reinsurance program — a bipartisan policy that has produced double-digit premium reductions in other states — is primarily responsible for these lower premiums. These decreases range from 10.3 percent (-10.3%) to 33.5 percent (-33.5%), all tallying to an average reduction of 18.2 percent (-18.2%) over 2019 individual premiums, across all plans, from all companies, across the state. Without the proposed reinsurance program, the companies’ requested premium changes would add up to an average increase of 0.5 percent (+0.5%). [Pols emphasis]

This is a pretty big deal, for both political and policy reasons (click here for more information on the Reinsurance Program). From a political perspective, Polis and incumbent Democrats can now go back to voters in 2020 with very real evidence to support arguments for returning a Democratic majority to the State Capitol. Being able to tell voters that you delivered on one of your major promises in 2018 is a tough message to beat.

As for the already-frayed Recall Polis groups — have fun explaining this one.

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Reply Thanks, Reinsurance: Colorado Premiums to Drop By 18% (Original post)
TexasTowelie Jul 2019 OP
mr_lebowski Jul 2019 #1
TexasTowelie Jul 2019 #2
mr_lebowski Jul 2019 #3
TexasTowelie Jul 2019 #4
watoos Jul 2019 #5
TexasTowelie Jul 2019 #6

Response to TexasTowelie (Original post)

Wed Jul 17, 2019, 02:40 AM

1. Yeah ... unfortunately the Reinsurance Companies are among the most powerful companies

in the entire world ... a HUGE global industry that a scant few regular folks have any awareness of.

Without making your eyes glaze over with the details, this handful of companies (at least, there's not that many REALLY big ones) are the insurance companies ... of the insurance companies we all know of.

IOW, your Geico's and Progressives are more or less 'fronts' for the Global, BIG MONEY Reinsurance companies.

The only major one's you've likely heard of are Berkshire Hathway and Lloyds (of London). But the two biggest by far are Munich Reinsurance and Swiss Re, Ltd.

Given their money and power, I would not count on Federal Regulators under Trump giving the CO plan the okay. I hope I'm pleasantly surprised though, by all means.

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Response to mr_lebowski (Reply #1)

Wed Jul 17, 2019, 03:01 AM

2. Well, I know about them.

However, that's because I worked at the state insurance department and Transamerica Property & Casualty before it went under.

The holding company for Transamerica was also one of the counter-parties on the derivatives that AIG was involved with. Back in 2008 when AIG plummeted, I was making a tidy profit on my company stock. I took the gamble beginning in 2004 and purchased company stock after reading the annual report on their involvement in derivatives and because I knew real estate prices were over-inflated. It was probably the smartest financial decision I ever made.

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Response to TexasTowelie (Reply #2)

Wed Jul 17, 2019, 03:22 AM

3. Cool man! Yeah I'm not claiming to be some expert, I just know about them because of my dad's

Worker's Compensation case back in the 90's/early 2000's. He was a Teamster and fairly un-educated (though he's smart, to be sure) who got hurt bad on the job.

To help him out, I basically was his attorney before the Workers Comp court. Mostly it was just writing all his legal document submissions (he doesn't type or use computers), but I even represented him once at a hearing before the Appeals Board ... with no legal training ... he was pro per and I was like 'Dad ... you better let me do this, cause you're way too pissed off ... plus you're on pain pills!'

Anyways, due to a glitch on their side, we'd ended up finding out what the Workers Comp Ins. Carrier's limits were on their policy with their Reinsurance company (think it was American RE Group or some such), and argued that they were failing to 'do what they were obliged to do under the law' on account of they'd reached the ceiling on their reinsurance ... i.e. they were trying to abandon my dad because of that fact.

It's funny to think that insurers buy insurance ... but they DAMN SURE do, and the limits on their policies with RE's are HUGELY important to them.

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Response to mr_lebowski (Reply #3)

Wed Jul 17, 2019, 03:37 AM

4. IOW,

the WC company was underinsured, which doesn't absolve them of any responsibility to have paid your father's claim. It's ironic that situation occurred since the insurance industry spreads messages about not going bare and they also sale more coverage than is necessary.

The policy on by brother's truck had $50K to pay for comprehensive coverage on his vehicle. He had already paid out the note on the vehicle and the truck had depreciated to less than $10K blue book value. The insurer made a killing off of my brother because he doesn't bother reading legal documents.

I had to drop GEICO on my renter's policy because each year they made an adjustment for inflation and I was over-insured at the time. The alternative was that I would need to do a complete proper inventory every year which was ridiculous. I switched to another company where I didn't have to go through the headache because they wanted to make a few extra dollars in premium each year.

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Response to TexasTowelie (Original post)

Wed Jul 17, 2019, 07:12 AM

5. So I assume that these reinsurance people,


still conform to the regulations of the ACA? The state insurance commissioners aren't giving these people a license to sell junk insurance are they?

I'm asking?

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Response to watoos (Reply #5)

Wed Jul 17, 2019, 07:55 AM

6. The reinsurance market is not regulated at either a state or federal basis

other than general corporate law so they do not conform to the regulations of the ACA. They usually does not provide direct coverage for policyholders, although there might be an exception for self-insured companies which is not something found very frequently regarding health care coverage.

Reinsurance contracts can be based on various contract provisions such as insuring a set percentage of claim losses, reinsuring entire books of business for multiple policyholders, reinsuring by state jurisdiction, reinsuring amounts in various tier layers (e.g., >$10M and <$25M). The premiums vary depending on the contract established between the company writing the direct business and the reinsurer. It is possible that a book of business could have more than one reinsurer assuming a portion of the risk.

The benefit of having reinsurers is that it helps spread the risk so that companies remain solvent if there is a calamitous event. It also provides direct insurers with larger underwriting capacity so that they can insure more policyholders and provide policies with higher coverage limits.

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