Ladies and Gentlemen:

I am filing with the Secretary of State House Bill 05-1101, "Concerning Health Coverage for a Dependent Child Not Enrolled in an Educational Institution." I will neither sign nor veto House Bill 05-1101. Therefore, this bill becomes law at 12:01 A.M. on June 9, 2005. This letter sets forth my reasons for letting this bill become law without my signature.

House Bill 1101 creates changes in the definition of an eligible dependent and the benefit design a carrier makes available to employees. The definition of an eligible dependent is expanded to unmarried children under twenty-five years of age who have the same legal residence as their parents or are financially dependent upon their parents. In the past, employers have made the determination of what benefits will be available to their employees. H.B. 1101 places the decision to select the enhanced definition of a dependent with each individual parent in the employer's group rather than with the policyholder, the employer. I believe H.B. 1101 has merit in terms of expanding coverage to uninsured individuals; however, I am concerned that this bill could have the unintended effect of increasing health care costs, especially for small businesses.

Over the past few years, an increasing number of health insurance mandates have been added to Colorado's health plans. Taken in isolation, mandates such as the one in H.B. 1101 are well intentioned; however, collectively they have the unintended effect of making health care less affordable.

Under H.B. 1101, an important decision is taken away from the employer and given to the employee. While this may initially seem conceptually appropriate since the employee must pay the additional premium for the dependent, I am concerned that this legislation could result in additional mandates of employee-selected options in the future. These mandates could potentially lessen an employer's control over offered benefits and increase premiums.

Additionally, H.B. 1101 could pose potential problems to out-of-state employers who elect health plans from carriers licensed in our state. Many of these large employers clearly know the benefit packages they would like to offer, including the current definition of dependents, and are not considerate to state mandates that are not in line with their desires. Accordingly, they refuse to honor them. This would put Colorado health plans in the conflicting position of trying to comply with the state mandate and risking losing contracts with employers who could readily conduct business with carriers located outside of Colorado.

H.B. 1101 addresses the serious issue of expanding coverage to the uninsured citizens of our state. I believe H.B. 1101 takes a step in reducing this problem. In addition, we must keep in mind that with a parent choosing the additional coverage, the employer has every right to pass on this cost to the insured.

Taking the above-mentioned issues into account, if the potential negative consequences outweigh the positive aspect of extending health insurance in this manner, I will recommend that the General Assembly readdress this issue and create legislation to correct any problems.

Accordingly, I am allowing this bill to become law without my signature.