By Katie Kerwin McCrimmon
(Editor’s note: This story also appears in the Feb. 28-March 6 Denver Business Journal, with additional charts and tables.)

John Diemoz’ great-grandfather came to Colorado’s Roaring Fork Valley in 1903 seeking opportunity and mountains like the ones he’d left behind in Italy.

Now, high health costs may drive Diemoz away.

“I want to stay here. I love it here, but you have to make the decision economically,” said Diemoz, 52, of Glenwood Springs. “It’s going to cost us thousands to stay put. How are we supposed to survive?”

Known for its natural beauty, Glenwood is also part of the most expensive region in the country to buy health insurance. Diemoz says his family’s premiums will double from about $8,000 to $16,000 per year — and that’s why he and his wife are considering moving to Fort Collins.

“In 13 years, I’ll be 65. In that time, we’d spend an extra $140,000,” said Diemoz, the third-generation owner of a construction business with his dad. “Both of our families live here. We want to stay…but health costs have to be in the equation.”

People living in Colorado’s ski resort towns and adjacent places like Garfield County — home to small business owners like Diemoz, oil and gas workers, and service workers for Aspen — have long known that their costs for everything from rent to gas and food are higher.

Now, transparency required under the Affordable Care Act has lifted the veil on much higher health costs.

A recent Kaiser Family Foundation analysis found that Colorado’s resort region is the priciest place in the U.S. to buy health insurance. One of 11 rating zones in Colorado, the region stretches from Summit County through Eagle, Pitkin and Garfield counties and includes the state’s most famous ski areas.

While the pain of high health costs has been sharpest in resort areas, no health consumer has escaped double-digit premium hikes in recent years, even before enactment of the Affordable Care Act.

Health spending gobbles up 18 percent of GDP, according to some estimates.

While the ACA has arguably extended coverage to many who lacked health insurance before, it still is struggling to resolve issues related to the costs of care. And nowhere is that more stark than in parts of Colorado’s high country.

Jim Markuson, a retiree from Glenwood Springs who spent 40 years working in health care, was appalled to learn his hometown is the nation’s epicenter for high insurance prices.

“I was astounded, absolutely astounded,” said Markuson, who is fighting for better rates for Garfield County and is serving on a health cost study group that Colorado Commissioner of Insurance Marguerite Salazar has created.

Salazar’s group is probing causes for high health costs. State Sen. Irene Aguilar, D-Denver, also is introducing legislation to establish a statewide cost containment commission.

In some ways the reasons for pricey health care are simple: Either care is too expensive or people are using too much of it.

Dig deeper, however, and the complexities and finger-pointing between providers and insurers about who’s to blame leave behind mystified consumers and business owners footing bills for ever-escalating costs.

In some remote towns like Creede, anyone who is severely ill or injured gets a $50,000 helicopter ride out of town. That area had some of the highest per-person health costs in 2012, according to Colorado’s All Payer Claims Database (APCD).

In Aspen, a group of employers trying to cut health costs has found that people there are fit and healthy, except for frequent orthopedic injuries.

And costs for common procedures vary wildly across Colorado, according to the APCD. Giving birth can cost about $2,700 in Pueblo and nearly $4,700 in Eagle County. A knee replacement is a relative bargain in Morgan County or Denver at around $15,000 to $20,000. That same surgery costs at least $35,000 in Eagle County and a whopping $45,000 in Summit County.

Along with providers, health insurance companies get blamed for high costs. But only three carriers are even willing to sell insurance in Colorado’s resort region. Two nonprofits, Rocky Mountain Health Plans and the state’s new cooperative, the Colorado HealthOP, are selling in the resort region along with Anthem Blue Cross and Blue Shield.

Neil Waldron, chief marketing officer for Rocky Mountain Health Plans, says plenty of insurance carriers have lost money in the area. Before Cigna pulled out of the resort region, it claimed in state rate filings to have lost significant cash. And Aetna used to compete in the mountains before exiting Colorado’s individual health insurance market altogether.

It’s actually tough to charge enough to cover costs in resort areas, Waldron said. Last year, Rocky Mountain lost money in the resort region with claims exceeding premiums by 38 percent in Pitkin County and 13 percent in Eagle. In Summit County, he said Rocky Mountain barely covered costs with a loss ratio of 93 percent. The ratio was 79 percent in Garfield, almost exactly at the 80 percent now allowed under the Affordable Care Act.

“I’m not aware of anyone padding their profits there,” Waldron said.

Health costs should be lower in resort areas because people are generally healthier and use fewer prescription drugs. But one of the big obstacles to affordable care is single-hospital towns.

“You get that pretty much across the Western Slope. For example in Routt County, there’s one hospital and it’s a very nice hospital,” he said.

While emergency care is highly valued in communities, “a single-hospital environment makes it a lot more difficult to negotiate,” Waldron said. In other words, providers in areas that lack competition can pretty much set their own prices. That’s not true in urban areas with multiple providers.

Rocky Mountain is committed to offering broad networks of coverage in the resort region, but it’s tough to offer a competitive price, he said.

‘Narrow networks’

For other carriers, the hot trend is so-called “narrow networks,” limiting coverage to a smaller menu of more affordable doctors and hospitals. If doctors don’t want to play ball with lower prices, insurance carriers drop them.

At a recent health insurance forum sponsored by the Denver Business Journal, Dr. Jandel Allen-Davis, vice president of government and external relations for Kaiser Permanente Colorado, said in many ways Kaiser was the original narrow network, limiting care to providers it employs. The company now operates along the Front Range, but hasn’t expanded west to Colorado’s costly resorts or east to struggling communities on the Plains.

Dan Tuteur, chief strategy officer for the state’s newest carrier, the Colorado HealthOP, has been traveling extensively because the member-owned co-op offers coverage statewide. Most people in rural and resort areas drive to places like Denver or Grand Junction to get major care, especially expensive hospitalizations, Tuteur said.
In Glenwood Springs and Carbondale, Tuteur has met with providers and hospital representatives who are willing to own up to their role in the problem, but are weary of insurance companies that come and go.
“They need leadership. Everybody has a day job,” he said. “They need a health plan that will partner with them, be in it for the long haul and not take advantage of the situation.”

The HealthOP is the only carrier to make public its share of sign-ups on the state’s new health-coverage exchange, Connect for Health Colorado. It has captured more than 10 percent of the market, with about 8,400 sign-ups as of mid-February, many of them in Summit and Boulder counties.

Tuteur says the HealthOP has a solid network in Summit County, but doesn’t yet offer similar coverage in the Glenwood Springs area.

“Our mission it to try to lower the cost of care and work with communities that need to make this happen,” he said.

As with sign-ups, the HealthOP is vowing to be transparent on costs.

“The commercial insurance companies exist to make a profit. If they see a profit can be made in an area (like the resorts), they’ll make it,” Tuteur said. “They definitely don’t want anybody to see how they’re making their money. We’re going to be an open book and not have this whole shell game about pricing.”
While Colorado’s resort residents face the steepest insurance costs in the nation, the rest of western Colorado also ranks poorly: 23rd most expensive in the country.

Western Colorado is also home to the highest rates of uninsured people in the state with as many as one in four people living without health insurance. That means the regions that need coverage the most — because so many residents are without coverage — face the steepest prices.

And because the cost of living is so high in resort areas, requiring relatively high earnings just to survive, very few people qualify for federal subsidies that are supposed to make health insurance more affordable. Statewide, about half of those who have bought insurance on Colorado’s exchange qualified for a tax break.

“It’s middle-class people who are suffering from high premiums,” said Markuson, the retiree from Glenwood Springs. “If these people don’t take out insurance and roll the dice — and that is what is happening — we will only have the sicker people signing up for insurance and our costs will skyrocket even more.”

Suing over high costs

Garfield County’s commissioners recently authorized a discrimination lawsuit against the state of Colorado after Insurance Commissioner Salazar decided she would not change the state’s rating zones for this year or next.

People in Garfield County believe they were improperly placed in the resort region, noting that their health costs for 2012, the most recent year available, are lower than Pitkin, Eagle and Summit counties.

Salazar said she considered removing Garfield, but that would have bumped the resort region’s costs even higher.

“It’s great that Pitkin is next to us in regards to construction. They have provided a lot of jobs to Garfield County. But they have the highest per-capita incomes in Colorado by far and it feels like we’re helping subsidize health costs for the wealthiest county in Colorado,” Diemoz said.

Because his business is so small, he buys insurance through the individual market. Diemoz’ wife, Vreni, 48, had a pre-existing condition and used to have a $300 per month plan through Cover Colorado, the state’s program for people who couldn’t get insurance. Her new coverage this year climbed to $487 a month. John and their 14-year-old daughter have a $350-per month-plan that expires in September.

He said the cheapest family plan he can get will be a bronze plan costing $1,330 a month, double what the family used to pay, and with higher out-of-pocket costs. The cheapest bronze plan for their family in Fort Collins is Kaiser insurance for $562 per month.

In Glenwood, the Diemozes are afraid to go without coverage. If they faced a big health bill, they could lose the home and business they’ve worked so long to establish. Vreni Diemoz sent a letter seeking help to U.S. Sen. Michael Bennet, D-Colo., and got a response that never addressed their worries.

U.S. Rep. Jared Polis, D-Boulder, has jumped into the health cost fracas. Polis represents Summit County. While he supports reform, Polis has called for waivers from tax penalties for people who can’t afford to buy sky-high health insurance. So far, the feds have turned Polis down.

Massive hardship waiver

But a massive hardship waiver may be the best way to call attention to Colorado’s problems, according to Len Nichols, a health economist and director of the Center for Health Policy Research and Ethics at George Mason University in Fairfax, Va.

Since health reform was supposed to make care more affordable, Nichols said people in resorts could easily make the case that they’re getting hammered.

“They can petition the state and HHS (the federal government) and plead en masse for hardship. Then that gets everybody’s attention. If one person pleads hardship, no one cares. But if 10, 000 people in the same area do…then you get somebody to look at it.

“I’m not confident they’ll win, but as it’s currently structured, the Affordable Care Act is not helping them,” Nichols said.

Another option is to apply cost of living adjustments to the federal tax subsidies so people who live in expensive areas across the country can get more help affording insurance. That, however, would take action from Congress, and Nichols isn’t holding his breath.

“Fixing it requires Congress to act like adults as opposed to being locked in partisan warfare,” he said.

“Basically, we’ve waited too long to try to reform our health care system. All these entities from doctors to hospitals to insurance carriers — with all their Byzantine business models — are all trying to make a relatively small profit on an expensive product. I would not expect these guys to go bankrupt voluntarily.
“We’re going to have to change the business models,” Nichols said. “It will take time. Progress is hard. But doing nothing and going off a cliff is worse.”