DENVER -- Colorado's switch to a fault-based auto insurance system has led to lower premiums but has placed a financial strain on hospitals, ambulance services and some drivers, according to a study.
Two years after the insurance change in 2003, the average annual premium for a car dropped 10 percent to $827 in Colorado, while the national average stayed steady, according to the report prepared for Gov. Bill Ritter by Denver-based BBC Research & Consulting.
At the same time, state drivers had less insurance protection and reimbursements to hospitals that treated auto accident victims dropped by nearly half, leaving $85 million more in unpaid bills in 2006.
"More and more Coloradans don't have health insurance, and their medical bills aren't covered by their auto insurance anymore," said Dave Bressler, director of Weld County Paramedic Services.
"In more and more cases, we're not paid for our services, and we're left with no means to recoup those costs," Bressler said.
In 2003, Colorado switched from no-fault insurance, in which companies paid for medical care of accident victims regardless of fault, to a tort system, where at-fault drivers or their insurers are responsible for payment.
Thirty-eight states have tort-based systems, according to the Insurance Information Institute in New York.
In Colorado, the switch left many drivers without coverage for their medical needs when they were at fault, according to the report.
The analysis for the governor's office was monitored by six appointees, three representing trauma care providers and three from the insurance industry. Those two groups drew different conclusions.
"We were seeing car insurance costs in crisis," said Carole Walker, executive director of the Rocky Mountain Insurance Information Association.
On average, insurance premiums in Colorado rose 14 percent between 2001 and 2002 to $921, according to the report, compared with a national rate of 7.5 percent.
Walker said that most people in Colorado have health insurance to cover them in a car accident they cause.
No-fault insurance once meant those consumers paid double for medical protection, she said.
Consumer health advocates and trauma care providers say consumers lost a great deal in the switch, as did paramedics and hospitals.
"A lot of consumers are showing up in the emergency room after a car accident and only later realizing they don't have coverage," said Sarah Blum-Barnett, spokeswoman for the Trauma Care Preservation Coalition.
In 2002, 75 percent of car accident patients who needed inpatient medical care were covered by private insurance, according to the report. In 2006, that figure was 49 percent.
In 2002, hospitals were paid for 60 percent of the care they gave motor-vehicle accident patients, according to the new data, and 36 percent in 2006 -- creating a $85 million loss.
Peg Burnette, chief financial officer at Denver Health, the city's safety-net hospital and a trauma center, estimated her hospital has lost $8 million annually since the switch.
The report also says that some of those unreimbused hospital bills have been shifted to people with private health insurance and as a result, auto tort changes have raised health care premiums about 1.5 percent per year.
Lawsuits are also up. A state database also shows a 21 percent increase in the number of motor-vehicle personal injury cases filed in Denver District Court since 2002, with 3,117 cases filed last year.Ritter's office declined to comment on the report.