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The Polis administration just cut $51 million from its budget request for Colorado’s reinsurance program

The state will receive more money than expected from the federal government to fund the program that has reduced some people’s health insurance premiums dramatically

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The administration of Gov. Jared Polis has scaled back how much money it is requesting to continue the state’s new reinsurance program after pushback from lawmakers and a happy surprise from the federal government.

Polis had asked lawmakers to spend an additional $60 million on the program, which helps health insurers pay their highest-cost claims. The program has resulted in some people who buy insurance on their own seeing extraordinary price drops for their premiums — close to $1,000 less per month this year for some families. But, because of the way the Polis administration moved money around in the program to achieve those price drops, it needs extra dollars from the legislature to continue the savings next year.

The new request is for $9 million, Colorado Insurance Commissioner Michael Conway told members of the legislature’s Joint Budget Committee during a hearing on Friday. The lower amount will be enough to maintain the program’s savings, Conway said.

“We only need an extra $9 million to continue the premium relief that this vital program is providing to Coloradans right now,” Conway said at the hearing.

Michael Conway speaks to Colorado Gov. Jared Polis at Red Rocks Community College on Thursday, Dec. 12, 2019, for a stop on his listening tour. (Jesse Paul, The Colorado Sun)

Two factors account for the lower figure.

First, reinsurance is currently approved to be a two-year program. But the majority of the original $60 million request had been intended as a down payment on a potential third year — even though the legislature has not signed off on a third year for the program. Lawmakers on the Joint Budget Committee, particularly Sen. Dominick Moreno, D-Commerce City, balked at being asked to spend money on something before it’s approved, so Conway said the administration decided to yank $42 million out of its request.

Then, the federal government told the state that it will be chipping in $169 million to the program — $9 million more than the state had budgeted to receive. (Reinsurance is paid for through a combination of federal and state dollars, with a fee on hospitals contributing much of the state’s share. The program is expected to cost, in total, around $500 million for its two-year run.)

Those two factors left only $9 million remaining in the governor’s request — and left supporters of the program upbeat about its budgetary prospects.

“I know there’s some glitches financially; I think we worked through those,” said state Sen. Bob Rankin, a Republican from Carbondale who sponsored the reinsurance bill at the Capitol last year and also sits on the JBC. “I think we’ve found solutions.”

Colorado Gov. Jared Polis, in the blue running shoes, sits next to state Sen. Bob Rankin during a town hall meeting in Frisco on Feb. 1, 2019. (John Ingold, The Colorado Sun)

The reinsurance program had come under scrutiny not just for Polis’ $60 million request but also for the potential impact it will cause on the budget in a year where the state government is expected to exceed the Taxpayer’s Bill of Rights’ revenue caps. The smaller request from Polis will now shrink some of the program’s impact on the state’s general fund — the discretional dollars that are available for lawmakers to spend on a wide variety of programs.

Conway said the administration hopes to lower reinsurance’s TABOR impact even further by asking lawmakers at some point in the future to approve a third year for the program — which, for complicated reasons, would drop the program’s projected TABOR impact by tens of millions of dollars more.

It’s unclear when that might happen, though. Meanwhile, Conway is being sued by the state hospital association for his plan to make hospitals pay the first $40 million in fees to fund the program in the first half of this year — a move also designed to lessen the program’s TABOR impact.

And Conway faced questions at the JBC hearing over how many people actually ended up having to pay more for health insurance premiums as a result of reinsurance. He said he did not yet have final numbers.

Despite the criticisms, it’s clear reinsurance still has strong support in parts of the Capitol.

“I’m getting emails all the time,” Rankin said, “from people who are buying insurance for the first time in years.”


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