Senate Democrats passed a bill today that critics say will hike health-insurance rates on small business and eventually reduce the number of covered workers.

House Bill 1355, by Sen. Bob Hagedorn, D-Aurora, and Rep. Anne McGihon, D-Denver, would prohibit health insurers from providing discounts to healthy employees and increases insurance rates for nearly two-thirds of small businesses in Colorado.

Sen. Shawn Mitchell, right, and Sen. Bob Hagedorn debate House Bill 1355.

“When healthy groups drop out, the ones left on the policy are those that need to be, and the result is a cost increase at a much higher speed,” said Senate Minority Leader Andy McElhany, R-Colorado Springs. “This bill is a retread of the old ‘death spiral collapse’ we saw a few years ago. It’s insane to pass HB 1355.” 

If the Hagedorn proposal is signed into law, Colorado will be one of just 13 states that allow insurers to set rates for all older employees as if they were severely ill, rather than reward those who are healthy. Observers say the bill could increase rates by up to 30 percent upon taking effect, a propsect even the sponsor admitted to during his introduction of the measure.

Hagedorn acknowledged his bill will allow for rate hikes. He noted that the bill prevents insurers from considering risks such as claims history and health status among employees because those provisions are “discriminatory.” He offered a two-year phase-in amendment to the bill, which was passed by the Senate on a voice vote.

An amendment offered by Sen. Josh Penry, R-Fruita, to allow the “208” Health Care Reform Commission to look into HB 1355 was denied on a party-line vote despite pleas from Republicans not to rush into so sweeping a change in health-care policy.

The debate took a testy turn at one point. In an exchange with Penry, Hagedorn noted his file cabinet full of health-insurance information, which he was more than willing to share with the freshman senator for educational purposes.

Penry shot back that the Senate should name Hagedorn “health-care czar” for his unwillingness to consider viable, alternative options to HB 1355.

Democrats voted against another GOP amendment, by Sen. Shawn Mitchell, R-Broomfield, that would have retained the intent of the bill but still allow insurers to offer discounts to healthy employees. That notion was again shot down on a party-line tally.

Sen. Mike Kopp, R-Littleton, echoed the GOP position that hundreds of small-business owners would be impacted with increasing health-insurance rates via HB 1355.

“This bill is a penalty on small-business employees,” he said.