The health insurance representatives described in detail the condition and the consequences of Colorado option as he enters his second year of employment with the state.
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The Colorado option was approved by the Legislature in 2021. It is available to all Coloradans who buy their health insurance in the individual market and small employers with fewer than 100 employees. Colorado Division of Insurance (DOI) Chief Deputy Commissioner Kate Harris said it is designed to improve access and affordability at the 2023 Colorado Health Policy Reform Conference earlier this month.
“This is a standard plan that all carriers must offer,” Harris said. “It keeps premiums down. We took the 2021 base premium for plans and required carriers to reduce that (by) five percent in 2023, 10 percent in 2024 and 15 percent in 2025.”
DOI will enforce premium reductions through a price review and a new public hearing process.
“The other thing the option does is lower costs for many services. We hear from people that even if they are insured, they are unable to use their insurance because they are afraid of their copays, their coinsurance, and their deductibles. So we said we’re going to take some of these services that we know are so critical and put them before the deductions. So people can start using their cover without fear that they might not be able to afford the service.”
— Harris
One in five Coloradans skipped health care due to cost concerns in 2021, and three percent of Coloradans said their health worsened because they couldn’t afford their medications, according to Colorado Institute of Health Study.
As part of the Colorado Option, DOI created a standardized plan that allows consumers and businesses to easily compare plans and choose the one that’s right for them. The plans cover all essential health benefits required by the Affordable Care Act, provide free primary care and mental health visits, and are designed to reduce racial health disparities and improve health care equity.
“This is to make it easier for people to compare,” Harris said. “We do a lot of focus group work with consumers. And what we hear is that insurance is so confusing.
Colorado option saw more than 35,000 people (13 percent of total market enrollment) enroll in your first year. Harris compared this to the one percent enrollment that Washington’s public option plan garnered in its first year of operation (which was partially due until the majority of returning enrollees are automatically re-enrolled in their plan from the previous year).
In August DOI received $245 million in federal funding for the Colorado Option and the Colorado Reinsurance Program, Harris noted.
“This is a direct reflection of the savings from these premium reductions. The federal government agreed that we were saving money through these cuts and gave them back. It goes directly into our programs. It lowers co-pays and deductibles for people enrolled in the exchange. Thanks to this funding, there will be an additional 1,000 people who are insured this year because of the federal savings we are receiving.
— Harris
Health Management Associates director Stephanie Denning noted that the average annual single premium and the average annual family premium each increased by seven percent during the last year.
“They are expected to double and triple in some cases over the next year,” Denning said. “At what point does this benefit package need to change to keep the plans sustainable?”
Colorado Association of Health Plans Executive Director Saskia Young said cost-cutting restrictions and other features included in Colorado’s option legislation have already made the initiative unsustainable. Inflation is another inhibitor, she said.
“This year’s rates have not been finalized, but I would like to highlight the fact that the Colorado option has failed to deliver on its promise to save people money on health care. As of Jan. 1, 85 percent of plans in the individual market had not met the five percent reduction targets. For many Coloradans, the mandated benefits in the Colorado Option may not represent the greatest value for where they are in their life stage and their specific needs. The best value for them is to turn to other high-quality, potentially less expensive non-Colorado option plans that are available on the exchange.”
– Young
The Colorado option requires carriers to offer the standardized public option plan with premiums that are 10 percent and 15 percent lower than their 2021 average premium rate for 2024 and 2025 plans, respectively. But of 13 carriers offering Colorado option plansonly Denver Health Medical Plan has met all of the state’s 2024 rate reduction goals.
Harris said the idea that Colorado Option plans are more expensive is not accurate.
“Carriers in 2023 broke plans outside of the Colorado option to compete with the Colorado option,” Harris said. “That’s why we saw some of these premiums being close to each other. Which we are glad to see; this stimulates competition in the market. This leads to lower costs for the consumer.”
Tim Hebert—health insurance broker and legislative chair/president-elect at Sage Benefit Advisorshe was asked discuss Colorado Option feedback he has heard from customers.
“We’ll probably hear that in November or December as we start to enroll,” Hebert said. “Right now we’ve heard a little, but not much. Users have very short memories. They are very excited to enroll in a plan with great coverage at a low cost. And the carrier leaves and they say, “I can’t believe you put me on a plan that wasn’t stable.” So they have a short memory about the plan. It’s everywhere. We hear this all the time. Everyone’s needs are different.”