Insurance study to look at impact to health insurance premiums and competition

Division of Insurance to study one geographic rating area.

DENVER — Healthcare costs and health insurance premiums in Colorado are different depending on where you live. The cost of a broken arm, or delivering a baby, or a sprained ankle is different if you live in Grand Junction or Colorado Springs, Denver or Walsenburg, Lamar or Pueblo. And those costs are key factors in health insurance premiums.

The Colorado Division of Insurance (DOI), part of the Department of Regulatory Agencies (DORA), is going to dig into why those costs are different. House Bill 1336 was recently passed, and today was signed into law by Governor John Hickenlooper. This bill directs the DOI to “determine the impacts and viability of establishing a single geographic area” for setting health insurance premiums.

“We welcome this study because we want to know more,” said Colorado Insurance Commissioner, Marguerite Salazar. “The Division was involved in this bill since it began, working with the legislature and the mountain communities. We know differences in the costs of healthcare drive the differences in health insurance premiums, but we want to know what’s behind those healthcare costs.”

Currently, the state is divided into nine geographic areas. Health insurance companies can differentiate their premiums between the geographic areas. The Affordable Care Act (ACA) required states to create geographic areas, recognizing that different areas had different providers, healthcare costs and patterns. Each area had to have similar healthcare costs within its region.

For 2014, the DOI originally established 11 areas for the state. After a study in 2014 that looked at healthcare costs, these were reduced to nine areas. But why does this bill ask the DOI to study a move to a single geographic area? Some people believe that having one geographic area will make health insurance more affordable for Coloradans. Others think that a single geographic area could lead to fewer insurance companies wanting to do business in the state, which would push up premiums.

The DOI will look at the potential impacts, both positive and negative, such a change would bring. And to study it, the Division will need to look at the heart of the matter, healthcare costs. In fact, the bill directs the DOI to study the healthcare costs that lead to differences in premiums throughout the state, specifically calling out five areas to put under the microscope.

  • Prescription drugs
  • Provider rates (what doctors and hospitals charge)
  • Diagnostic tests (x-rays, scans, lab work, etc.)
  • Surgical procedures
  • Other hospital procedures and services

The study will analyze the healthcare cost information to determine how a single geographic rating area will impact insurance premiums, and the competition of insurance companies in this state.

DOI’s report is due to the legislature on August 1, 2016. However, if any changes to the state’s geographic rating areas are recommended, those changes would not be put into place until 2018. It is too late to make changes for 2017, as the deadline for health insurance companies to submit their 2017 plans and premiums to the DOI was May 13, 2016. However, the Division will review geographic rating support for the 2017 plans to ensure that the premiums are justified.


The Colorado Division of Insurance (DOI), part of the Department of Regulatory Agencies (DORA) regulates the insurance industry and assists consumers and other stakeholders with insurance issues.  Visit for more information or call 303-894-7499 / toll free 800-930-3745.

DORA is dedicated to preserving the integrity of the marketplace and is committed to promoting a fair and competitive business environment in Colorado. Consumer protection is our mission. Visit for more information or call 303-894-7855 / toll free 1-800-886-7675.