In the annual General Assembly spend fest, this year’s Colorado legislature has sunk to new depths by diverting money from the state highway budget to fund regulations that will increase health care costs.

While the roads and bridges crumble, Colorado politicians have already  begun the campaign for future tax hikes. They are expected to claim that the state’s infrastructure needs more funding.

This year’s legislative majority was clearly not satisfied with the fact that Colorado’s relatively lightly regulated individual health insurance market functions quite well compared to certain other states, with the fourth highest percentage of people enrolled in HSA eligible high deductible health plans among the 50 states. Hostile to insurance companies in general, and to health insurance companies in particular, it decided to divert taxpayer funding to HB 1389, a statute that lets the state set health insurance prices.

Thanks to these hardworking Colorado legislators, the state Department of Insurance can disapprove rates if profits are “unreasonably high.” It can disapprove rates if profits are unreasonably low (“clearly insufficient to sustain projected losses and expenses”).

The state can reject any rate increase judged “excessive, inadequate, unfairly discriminatory,” based on “The Commissioner’s” opinions about “profits, dividends, annual rate reports, annual financial statements, subrogation funds credited, investment income or losses, unearned premium reserve and reserve for losses, surpluses, executive salaries, expected benefits ratios…and any other appropriate actuarial factors.”

Regulating by Commissar whim costs money. According to the fiscal impact statement accompanying the bill, Department of Insurance employees currently spend about half an hour reviewing rate filings. Department actuaries then spend about 3.5 hours in further review. Under the new rules, the initial review time will increase an estimated 1,000 percent, to an estimated 5.5 hours. The actuarial review time will increase by 186 percent, from 3.5 hours to 10 hours per filing.

Overall, the bill will increase state government costs by an estimated $620,652. An estimated $419,583 of that will be funded by reducing “the annual diversion to the Highway Users Tax Fund” in FY 2008-2009.

As no government expansion is free, policy holders will no doubt also have to pay higher premiums to defray the costs imposed on insurers stuck with having to interface with the 8 new state employees hired to carry out this monument to regulatory uncertainty.

In the midst of spending one of its biggest tax increases ever, the Colorado legislature can think of nothing better to do than give Colorado residents higher health insurance costs by reducing road maintenance.

In the immortal words of P.J. O’Rourke, giving money and power to government is like giving whiskey and car keys to teenage boys.