HB 1407 strengthens the Insurance Commissioner's power to punish unreasonable claim denials by firms providing all kinds of insurance - health, car and home - except workers compensation and property title coverage.
A firm that exhibits a pattern of denying valid consumer claims could be fined up to $30,000 under the bill.Currently, consumers can legally battle a company for years and only win the benefit payment they should have been paid under their contract. The bill would allow consumers who prove they were wronged in court to receive two-times the amount of the benefit they're owed, plus their attorney's fees.
Estimates are that the health insurance industry adds in the neighborhood of 25% (or more) to the costs of health care in America. How? Well for one they refuse to pay for bills that they are contractually obligated to pay. They drag their feet and doctors offices are forced to hire staff who do nothing but chase down the unpaid claims. Then there are attorneys fees and court costs needed to extricate payment. Let me say it again, these are claims that the insurance company is contractually obligated to pay.
It's maddening that a bill like this is even necessary but in so much as it is this is a good bill. What do the defenders of the insurance industry say?
Critics say the bill will hurt Coloradans by driving up the cost of health care coverage and pushing more people into the ranks of the uninsured.
"It's going to raise rates - it's simply inescapable," warned Rep. Spencer Swalm, a Centennial Republican who is also an insurance broker.
Chicken little must have been an insurance industry lobbyist. Every single time anyone even mentions reigning in some anti-consumer, legally dubious activity from the insurance industry they say rates will go up. Every single time.
Think about what the insurance industry is threatening - if you hold us to the terms of our legally binding contracts we will be forced to raise your rates! Apparently the insurance industry is incapable of staying afloat unless they are allowed to flagrantly disregard their legal obligations. That's an amazing argument isn't it?
And guess what? Rates go up at astronomical rates every year anyway. Here's Business Week from this past Tuesday,
According to an analysis of government statistics being released Tuesday by the Robert Wood Johnson Foundation (RWJF), the average dollar amount employees must pay per year for family health coverage went up by 30 percent from 2001 to 2005. During that time, incomes increased by just 3 percent."Nationally, insurance premium costs are going up ten times faster than people's incomes," said RWJF spokesman Michael Berman. "And in some regions, the gap is even greater.
Given the fact that our rates are going to go up significantly every year anyway I see no harm in making sure that we can actually access the coverage that we paid for in the first place.