Mandated Medical Coverage Bill in Colorado Goes Down

Legislation that reportedly could have significantly increased automobile insurance premiums by forcing consumers to buy $35,000 in medical payments coverage was defeated in the Colorado House.

“This legislation (HB 1287) could have cost consumers, on average, an extra $200 a year for auto insurance,” said Michael Harrold, assistant vice president and regional manager for the Property Casualty Insurers Association of America (PCI). “This had the potential of eliminating the savings that were achieved last session by the transition from a no-fault to a tort-based automobile insurance system. In order to preserve the savings for consumers, PCI has urged lawmakers to just say no to changes that mandate coverages and strip away the savings that are benefiting Colorado families today.”

As introduced, HB 1287 would have required consumers to purchase $35,000 of medical payments coverage for “reasonable and necessary” trauma and emergency care and then opt out of the purchase if they did not want the coverage.

It also required payment within 20 days after receipt of reasonable proof that the expenses were incurred. However facing strong opposition and a veto threat from the governor, the bill’s sponsor, Rep. Tom Wiens (R- Castle Rock), was forced to support amendments that would have softened the bill to a mandatory offer of at least $10,000 of medical payment coverage with the option to offer up to $50,000. Consumer then would have had to sign an acceptance or rejection form. Although the amounts and conditions of the offer were modified, the bill was defeated on the House floor 22 – 39.

“The mandate to purchase coverage and then opt out would have been confusing and added administrative cost. HB 1287 was an inappropriate way to fund trauma centers and would have set Colorado on a dangerous course that is out of step with the rest of the country. The vast majority of states with tort systems do not require consumers to buy medical payment coverage and none have coverage specifically for trauma care,” said Harrold.

As the session began this year, it was expected that there would be several bills designed to undue changes that have taken place in Colorado regarding medical payments.

In addition to HB 1287, lawmakers have so far rejected two “pay at the pump” proposals that would have established a new gas tax to pay for medical payments coverage. “With the session drawing to a close in May, so far the Legislature has preserved many of the positive elements of the new tort system,” commented Harrold.

Gov. Bill Owens and Insurance Commissioner Doug Dean both opposed HB 1287 because it added a mandate that threatened to drive up insurance costs and return the state to the problems that plagued the no-fault system.

On Monday, April 12, Gov. Owens signed House Bill 1026, which requires automobile insurers that provide medical payments coverage to offer at least $5,000 of coverage. The bill sets a minimum offer, but does not limit any other coverage amounts being made available by an insurer.

Currently about 40 percent of consumers who purchase optional medical payments coverage choose to buy $5,000 in coverage. Based on a PCI study of the transition from no-fault to a tort-based system, an estimated one-fourth of all policyholders bought medical payments coverage after the conversion to tort in July 2003. This number is reportedly dynamic and is expected to go up over time.

“It is important to note that consumer now have a variety of coverage choices available to them and the purchase of $5,000 of medical payments coverage is fairly typical around the country. With HB 1026, consumers may purchase additional coverage, if they so choose. This provides consumers with options regarding how they spend their insurance dollars and the ability to purchase the insurance coverage that best suits their individual circumstances, rather than instituting a confusing mandate,” added Harrold.