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Getting Mad with the APCD

When people have to pay more than others for the same services, and the reasons are unclear, it’s not surprising when anger ensues. We’ve seen this play out recently with the health insurance rates in Colorado’s resort communities, and Colorado’s Division of Insurance has responded by evaluating data to search for potential solutions. It was a perfect illustration of how data from the All Payer Claims Database can inform those debates and help shape responses.

Last week, Colorado Insurance Commissioner Marguerite Salazar proposed new ratings regions for health insurance plans offered in Colorado. The hope is that, by more closely linking “like with like” counties (e.g., putting almost all the western slope counties into one region), rates will stabilize for higher-cost resort counties. While the Commissioner’s proposal does not go as far as the resort counties had hoped (they wanted one statewide rating region), it does seem to have tamped down some of the furor that has ensued since premium differences became evident last fall with the debut of Colorado’s health insurance exchange. However, the ultimate effect of the proposed new regions on premiums remains to be seen.

But maybe one of the most valuable outcomes of the Commissioner’s work has been the light it has shed on what is driving health care—and thus health insurance—costs. The Division of Insurance commissioned a firm of actuaries, Miller Newberg, to review and make recommendations on various geographic ratings regions. In order to determine which configurations made sense, the actuaries had to look at the relative cost of care in each county. They used Colorado APCD data to illustrate which counties are more or less expensive, and for what services.

It’s not that there are any surprises in the actuarial analysis. Rather, it is that, using actual claims data from the APCD across all payers and parts of the state, the analysis is able to show objective differences by geography. For example, using the data in the table below as well as additional claims lines, the Miller Newberg actuaries concluded: “Unit costs drive the high resort cost.”

Unit Cost for some detail categories: Compare State Total with Resort Region





Detail Category

All Counties


All Counties


Inpatient Cost per Admit

Inpatient Surgery





Inpatient Cost per Admit

Inpatient Medical





Outpatient Cost per Visit

Outpatient Surgery





Outpatient Cost per Visit

Advanced Imaging





Professional Cost per Visit

Facility Surgical Visit






So why is this worth remarking on? In part, because the report rebuts the remarkable outbreak of “ostrich-ness” that’s been taking place. I’ve spoken with elected officials and providers from resort counties who steadfastly assert that things really aren’t more expensive in their part of the state, and their premiums shouldn’t be as high as they are. Rather, they assert, it’s because they’re lumped with dissimilar counties that their premiums are higher—and if only they were grouped with counties that look more like them, the problem would be solved. Well, maybe it will and maybe it won’t. But the data don’t lie: empirically, health care costs more in resort counties.

In addition, the report merits remark because it demonstrates that the APCD is fulfilling one of the most important purposes it was designed to achieve: to objectively shine a light on what we’re really spending on health care, in order to inform discussions about how to control that spending.

Of course, this analysis doesn’t tell you why unit costs are higher in resort counties. Economics does, though, at least in part: basic supply and demand theory tells us, and experience bears out, that when a provider is the only game in town it will charge what the market will bear. There’s nothing wrong with that; it’s just a reality that people who live in non-metropolitan areas have dealt with. And there are other, perfectly appropriate, reasons for price differentials, such as costs associated with training medical students and treating the uninsured. (Interestingly, data show that quality and price of health care services aren’t very well correlated.)

The point is, though, that Coloradans are starting to see these differences more starkly than ever before. And soon they’ll have more evidence. Later this year, you’ll be able to see detailed price and quality information about inpatient and outpatient procedures at different facilities around the state on the APCD public website.

Residents of Colorado’s resort counties are some of the first to really see and feel significant disparities in higher health care and insurance costs. And as a result, they’re “mad as hell, and they’re not going to take it anymore.” (You knew that was coming, didn’t you?) They won’t be the last, though. And with the APCD to provide factual information, Coloradans can make their anger constructive and spur change.

About the Author: Edie Sonn is CIVHC's Interim CEO and Vice President of Strategic Initiatives. Contact her at


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