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Insurance consolidation bill advances in House

29 02 08 - 12:14

Denver Business Journal - by Bob Mook Denver Business Journal
The House Business Affairs and Labor Committee passed a bill Thursday that subjects consolidating insurers to a more rigorous review process in Colorado. The vote was 6-3.

House Bill 1131, sponsored by Rep. Anne McGihon, D-Denver, and Sen. Bob Hagedorn, D-Aurora, requires the Colorado Division of Insurance to conduct independent investigations on how proposed mergers of insurance companies would affect the competitive market.

Doctors support the bill, citing concerns that the state's top four health insurance companies cover more than 75 percent of those who have insurance in Colorado.

In an earlier hearing, Alfred Gilchrist, executive director of the Colorado Medical Society, said a recent consolidation wave in the health insurance industry has created highly concentrated markets in the state, giving insurers the upper hand in contract negotiations with medical providers since there are fewer competitors.

Insurers originally opposed the legislation, saying mergers are subjected to enough regulation already.

Mike Huotari, executive director of the Colorado Association of Health Plans, also said that consolidation helps hold prices lower than they would be otherwise because of insurers' improved economies of scale.

But McGihon crafted a compromise between the Colorado Medical Society and insurers that places timeframes for the reporting of independent investigations by the Division of Insurance, and requires the investigation to be completed by the time the transactions are closed.

McGihon's amendment allows for public participation in all insurance merger investigations.

Huotari, who opposed an earlier version of the bill, said he supported the compromise.

Rep. Victor Mitchell, R-Castle Rock, said while he thought the bill was an improvement over the original, "I trust the best experts for mergers is not the Division of Insurance, but rather the Federal Trade Commission."

In an earlier hearing, Mitchell said the bill won't thwart mergers, since most occur outside of the state. Instead, insurers simply would pull out of the market.

The bill now goes to the House of Representatives for consideration.




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