AIA: Colo. Legislators Should Consider Viable Non-Auto Insurer Options for Added Trauma Care Funding

The American Insurance Association (AIA) is urging Colorado legislators to consider several viable non-auto insurance options for providing additional funding for trauma care, as needed, to address the shortfalls that arise for reasons having nothing to do with auto insurance.

“Funding of trauma care, including first responders, has been a long-standing issue, certainly pre-dating Colorado’s change from a no-fault auto insurance system to a tort system,” said David Snyder, AIA vice president and assistant general counsel. “Auto insurance will continue to pay for significant amounts of trauma care, including first responders, even without personal injury protection (PIP), as it does in other tort liability-based states.”

While testifying before the Colorado Interim Study Committee on Auto Insurance, Snyder stated, “Colorado is now in the mainstream, along with the vast majority of other tort liability-based states, because it has recently determined that its automobile insurance compensation system is to be fault-based, where the party causing the accident pays the economic costs (including trauma care) and he also pays the non-economic losses of the victim he injures up to the policy limits. It would be premature to reconsider that determination, especially when there are many effective alternatives for addressing the root causes of any trauma care funding issues.”

The issue of trauma care funding is not new because as early as 1991, 61 regional trauma centers had closed and the financial condition for trauma centers was deteriorating in 2001 and 2002. According to a report entitled “U.S. Trauma Center Crisis, Lost in the Scramble for Terror Resources,” prepared by the National Foundation for Trauma Care (May 2004), the major economic problems for trauma centers include both unfunded care and management issues such as physician call pay and physician support.

The causes for the underfunding are the following:

* The uninsured represent 18 percent of total costs but pay only 8 percent of those costs;
* Medicaid patients account for 18 percent of total costs yet pay only 64 percent of their costs; and
* Medicare patients account for 11 percent of total costs yet pay only 81% of their costs.
* In contrast, insurance pays far more into the trauma system than the costs its policyholders incur.

To effectively address trauma care and first responder financing issues, AIA urged the committee to consider how other states have filled the gaps. Among the alternatives are:

* Surcharges on traffic law violations to load the costs on to wrongdoers, or motor vehicle transactions to load the costs on to motorists generally, some of whom are probably uninsured;
* Dedicated taxes that “sweep in” everyone, not just insureds but also government-reimbursed patients and the uninsured for health insurance purposes, and recognize that trauma care is a core governmental function and should be supported by everyone;
* Special allocations to assist in supporting emergency medical services;
* Mandatory trauma care coverage under health insurance so legislation should not greatly add to the net economic burden for health insurance; and
* Direct charges for emergency medical services rendered.

Federal legislation directly relevant to the issue of first responder funding is under consideration as well. This legislation would reportedly go a long way toward eliminating the gap in government funding caused by inadequate Medicare reimbursement. The bills would raise the base rates for ambulance reimbursements to a level of average costs and provide additional reimbursements for rural ambulance trips, ranging from 5.5 percent to 22 percent.

Snyder concluded, “Any solution to the financing problem should, we believe, address those actual sources of funding deficits, not add additional burdens on health and auto/workers’ compensation insurers and their policyholders, who are already paying far more into the trauma system than they are costing it.”