House Bill 1225
Concerning Colorado Motor Vehicle Insurance
(Posted February 20, 2003)

The following information, produced by Consumers United Association, is meant to inform our members about legislation that is currently under consideration. We urge our members to contact us as soon as possible (renee@cuacolorado.org) and let us know your views on this important change in auto insurance law. We want to ensure that the voices of our members are heard.

What is HB 1225?
HB 1225 is legislation currently being considered that will change the Colorado No Fault Insurance law. You can view it at http://www.leg.state.co.us/2003a/pubhome.nsf (type in HB03 1225). The current law, which is part of the Colorado Revised Statutes, is available for your review at http://198.187.128.12/colorado/lpext.dll?f=templates&fn=fs-main.htm&2.0. The part of the law being changed begins at 10-4-702.

Why are changes being considered?
Some of our State Representatives and Senators have told us that they have received a high number of complaints from their constituents about the high cost of motor vehicle insurance.

The bill itself states the following reasons:
"The general assembly declares that its purpose in enacting this part 7 is to require reasonable and affordable motor vehicle insurance in this state, while balancing premium costs against the benefits provided."

Although the above statement says to require reasonable and affordable insurance, the bill itself does not require it.

What are some of the reasons that insurance rates have increased?
There is a great deal of dispute about this issue and many factors involved, including:

• Abuse of our current system
• Litigation
• Rising costs of medical care (which is also associated, in part, to litigation)
• Insurance industry losses in the stock market

Are Colorado's Insurance Rates higher than other states?
This is a complex question that requires you to look at several things, including:

• Colorado ranks 11th highest in overall insurance premiums in the country.
• Colorado insurance rates are increasing at virtually the same rate as other states, whether or not they have no fault insurance.
• Colorado's insurance rates are less than $6 per month more than the national average.
• Forty-seven other states rank higher in premiums for medical coverage on auto insurance than Colorado.
• Colorado ranks 2nd in the country for the total benefits provided under law.
• No fault insurance states have the highest average auto insurance premiums in the nation.

What is No Fault Insurance?
No Fault insurance was enacted in Colorado in 1974. What it means is that if you are hurt in an auto accident, your own insurance pays your medical bills no matter who is at fault. Colorado is one of 11 states with no fault insurance. Other state systems include Tort systems (most other states) and Choice systems (only 3 states). Connecticut and Georgia repealed their no fault laws. When those states repealed their no fault laws, insurance rates dropped 6-7%.

How does this bill change current law?
The short answer to this question is that the law will lessen some of your current benefits. This law has many provisions in it. More specifically, the new law offers three benefit plans of your choosing, beginning with a minimum required plan and allows for low-income people to have a reduced plan at a lower cost with less than the minimum coverage offered in the three plans.

Some of the other important changes you should be aware of:

What are the limitations of benefits?
Time period after an accident when you are covered will go from 5 years for medical claims to 3 years. The time period for rehabilitation benefits will go from 10 years to 5 years. The maximum amount of coverage which is $50,000 each for medical and rehabilitation stays the same. However, you will not be able to transfer unused medical benefits to rehabilitation.

What is covered?
The current law allows for services that are "reasonable and necessary" as prescribed by your doctor and has a very broad description of what is acceptable which includes, but is not limited to, alternative procedures such as healing art procedures, faith healing, chiropractors, acupuncture, etc.

The new law would limit referrals to:
"Medically necessary care and treatment for bodily injury arising from a motor vehicle accident shall only be made to a physician, nurse practitioner, physical therapist, occupational therapist, neuropsychologist, psychologist, child health association, physician's assistant, speech therapist, certified biofeedback therapist or practitioner as determined by the insurer pursuant to the treatment guidelines adopted pursuant to section 10-4-709.9."

In other words:

• Your insurance company determines which treatment provider is acceptable.
• A program manager will outline the treatment guidelines after the law is enacted.
• Some previous treatment options will no longer be available.

Who provides the treatment?
The current law says you can use any provider, including non-licensed or non-certified providers.The new law has three different plans with different requirements for the treatment provider. Each plan is designed to have different premiums:

Plan 1 - Managed care organization
Plan 2 - Choice of a participating provider
Plan 3 - Direct Access

This means that in Plans 1 and 2 the participating doctors making the decisions for your treatment are doing so under an arrangement as a "participating provider."

When can benefits stop?
Under current law, benefits stop when you have reached your maximum dollar limit for treatment that is "reasonable and necessary."

Under the new law, benefits can stop when you have reached what is considered to be "maximum medical improvement," as determined by the primary physician.

What happens if my insurance provider denies my claim?
Under current law, you dispute it directly with your insurance company and can sue. Under the new law, you would be required to go through first an internal then an external review process. If you escalate to an external review process, you have to pay for it. You can't sue unless you've been through the process.

What happens if I reach my maximum and still need treatment?
You would have to pay for it out of your own pocket unless you are covered by some other insurance, such as medical insurance.

How did lawmakers come to the conclusion that this will help us?
An actuarial study was conducted that analyzed insurance rates and the effects that have been shown on premiums by making these changes.

Will insurance rates go down?
There is no provision in this law that guarantees insurance rates will go down. The study mentioned above provided evidence that these changes can change rates. However, the most likely scenario is not a reduction in rates but more a leveling off of increases. Insurance companies are not required to lower rates and it is possible that if we tried to enact a law that would require insurance companies to lower rates, some insurance companies may consider not doing business in Colorado.

What is Consumers United Association's position on this law?
We want to support what our members feel is in their best interest. That means we want to hear from you! After reading all of this information, is this worthwhile to you? Write to us now and let us know! (renee@cuacolorado.org).

At minimum, in the interests of all consumers, we are asking that some changes be made in this legislation, including:

1. Guaranteed lower insurance rates if consumers are giving up benefits.
2. The ability to transfer unused medical benefits to rehabilitation.
3. Increasing the time limit from 3 to 5 years.
4. Reconsideration on the term "maximum medical improvement."
5. Adding referrals to, at minimum, chiropractors and acupuncturists.
6. Changing the referral method to providers to be determined by the primary care physician, not the insurer.
7. External reviews be paid by the insurer, not the insured.
8. Internal reviews include an unbiased patient advocate.

What else should we know about this?

• We will reiterate - there is no guarantee that insurance rates will decrease.
• It is possible that the transference of medical care and treatment to your own medical insurance when you have run out of benefits could potentially affect the cost of medical insurance.
• Litigation for auto-accidents in Colorado is decreasing and is currently half the national average.
• There have, indeed, been abuses to the current system.
• There are currently a large number of uninsured motorists in Colorado. This bill does afford a plan for low-income people to obtain insurance.
• Small businesses that rely on insurance payments are impacted.

Who is sponsoring this bill?
House of Representatives Sponsors:
Rep. Tambor Williams (R), District 50 (Weld)
Rep. Lola Spradley (R), District 60 (Chaffee, Custer, Fremont, Park, Pueblo, Saguache)
Rep. Keith King (R), District 21 (El Paso)
Rep. Bill Cadman (R), District 15 (El Paso)
Rep. Suzanne Williams (D), District 41 (Arapahoe, Denver)

Senate Sponsors:
Sen. Andy McElhany (R), District 12 (El Paso)
Sen. John Andrews (R), District 27 (Arapahoe)
Sen. Norma Anderson (R), District 22 (Jefferson)
Sen. David Owen (R), District 13 (Weld)

Who are my representatives?:
Find your elected officials by entering your zip code:
http://www.vote-smart.org/index.phtml.

What does Consumers United Association want from me?
We want to hear from you. This is a very important issue that affects all of our members. What we want to hear:

1. Your personal comments/experience with:
   – The current Colorado no fault law.
   – Your accident stories: the costs, time for rehabilitation, etc.
   – Your dealings with insurance companies.
   – Insurance rates here and in other states.
2. Professional opinions from insurance agents, attorneys, and practioners affected by this law.
3. Whether or not you want this law to pass and why.
4. Your opinions!
5. Please tell us who your representatives are.

Contact:
Renee Beauregard, Executive Director
renee@cuacolorado.org

Consumers United Association (CUA) is a nonprofit consumer advocacy association serving consumers in Colorado. CUA is an association made up of people and corporations who are dedicated to educating consumers on financial issues, which impact their personal lives. CUA offers services and resources to aid consumers in the resolution of consumer problems and provide a united voice for consumers in the legislative arena. For more information visit www.cuacolorado..org.