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The emergency room entrance to Saint Joseph Hospital in Denver, photographed on Oct. 22, 2019. (John Ingold, The Colorado Sun)

In 2014, a thunderbolt struck the normally un-sizzling world of Colorado health policy: A report from the nationally respected Kaiser Family Foundation discovered that Western Slope resort communities had the highest prices for health insurance in the country.

What followed was more than five years of work by lawmakers to lower costs, culminating this year in a proposal that could make coverage prices in some Colorado counties the lowest in the nation, according to a Colorado Sun analysis. 

The proposal, House Bill 1232, passed the state House Monday on largely partisan lines and now heads to the Senate, where the vote margins for Democratic proponents are tighter.

The bill started out with the possibility that Colorado would offer a public option — an insurance plan run by the government that competes with private plans. But sponsors dropped that idea during a major rewrite last month in large part to assuage industry opposition.

The proposal now calls for insurance companies to negotiate with hospitals and doctors to reduce premium prices for one specific, heavily-regulated insurance plan by 18% over three years. If they don’t, the state can step in and dictate how much hospitals and doctors can charge.

But a lot has already changed in Colorado health policy in the past six years. And many of the details and impacts of the new proposal remain unclear. 

We’ve rounded up some of the knowns and unknowns as the bill hurtles toward the end of the legislative session.

KNOWN: The bill doesn’t cover everybody

As with previous ideas to lower the cost of health care in Colorado, there’s only so much state lawmakers can do.

A little  more than half the state gets insurance through a job, but most of those plans are what are known as “self-insured” plans that the state has little regulatory authority over. About a third of Coloradans are covered by Medicare, Medicaid or another federal government program. 

So House Bill 1232 applies only to people who either buy insurance on their own or are covered by a small employer with fewer than 100 employees. Out of Colorado’s roughly 5.8 million people, that’s about 470,000 folks, according to the state Division of Insurance. Those are the people who have, historically, been hit hardest by the high cost of coverage.

“We are trying to solve a narrow problem, but an intense one for those who fall into that window,” state Rep. Dylan Roberts, an Avon Democrat who is one of the bill’s prime sponsors, said during a hearing last month. “It’s never been our intent to completely disrupt the health care industry or the health insurance market in Colorado.”

UNKNOWN: How many people will actually sign up

The bill gives the state commissioner of insurance the power to create a standardized health plan and then requires insurers to offer that plan at a lower cost than the plans they currently offer.

So, the standardized plan would dictate what benefits get covered and what services people can receive without having to pay a deductible or co-pay. Health insurers would then have to negotiate with hospitals and doctors on prices for all those services in order to achieve the required 18% premium price reductions by 2025. The standardized plan is the only one for which insurers are required to reduce prices.

But, because this plan has yet to be created, it’s unclear how appealing it will be to consumers. Will insurers have an attractive network of hospitals and doctors? Will it have enough benefits to outweigh paying more for a possibly more robust plan?

One data point comes from Washington state, where sign-ups have been lackluster after the state implemented a somewhat similar policy last year.

“The only way that health plans and providers are going to be able to reduce costs significantly is by narrowing their networks,” said Amanda Massey, the executive director of the Colorado Association of Health Plans, the insurance trade group in the state.

The organization is currently seeking to amend the bill. “There’s only so many levers to pull,” Massey said.

The website for Connect for Health Colorado, the state’s health insurance exchange, shown in October 2018. (Eric Lubbers, The Colorado Sun)

KNOWN: Colorado currently has lower-than-average insurance prices

In making the case for House Bill 1232, supporters have sometimes pointed to that 2014 report on Colorado’s highest-in-the-nation insurance prices.

“Coloradans, and especially our mountain and rural communities, have some of the highest-cost health insurance in the country,” state Sen. Kerry Donovan, a Vail Democrat who is another prime sponsor of the bill, said during a kick-off news conference when the measure was introduced in March.

But this no longer appears to be true.

The Colorado Sun analyzed data provided by the Kaiser Family Foundation for 2021 premium prices in every county in the nation. Every one of Colorado’s 64 counties fell below the national median — often 20% to 30% below it. This was the case for all tiers of coverage — bronze, silver and gold plans.

The Kaiser Family Foundation data looks at the lowest-cost plans in each county for a 40-year-old non-smoker who does not receive a subsidy to help purchase coverage. But Cynthia Cox, a vice president at the foundation, said Colorado’s relative national ranking would be unlikely to change when looking at prices for older or younger people.

This map from the Kaiser Family Foundation shows the change in insurance premium prices per county from 2020 to 2021. Click the map to go to an interactive version. (Kaiser Family Foundation)

This doesn’t mean health insurance in Colorado is necessarily affordable. 

Donovan and other lawmakers talk often about their encounters with constituents who cannot pay for coverage. Of those who are uninsured in Colorado, 90% say it is because they can’t afford insurance. People who are in their early 60s and who buy insurance on their own can pay $700 or more per month to cover just themselves.

“I, for one, cannot go back to my constituents and say I didn’t fight for your right to health care that gives you quality access and affordability and not just a junk health care plan that checks a box,” Rep. Iman Jodeh, an Aurora Democrat who is another of the bill’s prime sponsors, said during a hearing last month.

But years of work by lawmakers and regulators — from tinkering with geographic rating areas to implementing a reinsurance program — have succeeded in driving down premium prices. The average “benchmark premium” in Colorado, which is the monthly price of the second-lowest-cost silver plan available in a county, has fallen by 25% since 2018, to $351 from $470, according to the Kaiser Family Foundation. That places Colorado sixth in the nation this year for the lowest-cost benchmark premium.

Meanwhile, the most expensive places in Colorado have shifted. The state’s highest insurance prices are no longer found in ski-resort communities, but on the Eastern Plains, in Mesa County and in parts of southern and northern Colorado.

UNKNOWN: How much lower prices will go

Take the current premium rates in Colorado, shrink them by 18% and you get the lowest prices in the nation — at least for some counties.

For instance, if you reduce the lowest-cost bronze plan in every Colorado county by 18%, there would be 34 counties in the state with prices that are lower than the current lowest-price bronze plan in the country. Using the same methodology, multiple Colorado counties would also end up with the lowest-price silver or gold plans.

But it’s unclear how low the prices will actually go.

For one, the starting point for the 18% reduction isn’t the lowest-price plan in a county. It’s the average of all the plans offered within the county this year. And it’s also adjusted for medical inflation and to exclude the savings from the reinsurance program. In other words, it’s a complicated number that hasn’t yet been released.

In addition to that, House Bill 1232 lays out a lengthy process of hearings and appeals when insurance companies can’t hit the 18% reduction target for the standardized plan in a specific county. These hearings would allow the commissioner of insurance to set the prices that hospitals and doctors can charge for people covered by the plan in that county. But the end result could be a price that still doesn’t achieve the 18% reduction.

KNOWN: More people are receiving help to pay premiums

Up to this point, we’ve been talking about the unsubsidized premiums — the raw price to buy insurance. Some people pay that. Most do not.

Instead, most people who buy insurance on their own get some kind of help from the federal government in the form of a tax credit. And a lot more people are now getting help after the passage of the American Rescue Plan.

That bill expands subsidies for people who already get them and it extends subsidies to many higher-earning people — eliminating the so-called “subsidy cliff” that a lot of people in Colorado fell off when their income was just above the cutoff for subsidies but the coverage available was too expensive to buy without help.

A chart prepared by Connect for Health Colorado, the state’s insurance exchange, and presented to the state’s Health Insurance Affordability Board in February 2021 shows the estimated impact of the health insurance subsidies contained in the American Rescue Plan. FPL is (Screenshot by John Ingold, The Colorado Sun)

The state’s insurance exchange has estimated that the American Rescue Plan will cut the net premium that people pay by dozens, if not hundreds, of dollars per month in Colorado. People who were previously ineligible for subsidies will, on average, end up paying more than $150 less per month. Many who already got subsidies will see their net premium shrink by half.

These expanded subsidies are in place through 2022. But there is already support for making them permanent.

UNKNOWN: Whether the bill will cause subsidy amounts to decrease

Flash back really quickly to when Colorado implemented its reinsurance program, which is another method of lowering health insurance premiums.

Prices fell in 2020 for people who purchase their insurance on the public exchange, as expected. So did subsidies, meaning some people ended up paying a higher net premium. The issue is that subsidy amounts are tied to how expensive coverage is, so subsidies decrease when premium prices do.

Will this happen again as a result of House Bill 1232?

It’s unclear — in part because there is so much that goes into setting insurance rates that things are not always as they appear.

Earlier this year, the state Division of Insurance released two reports that it had commissioned on reinsurance. The reports, by the actuarial firm Lewis & Ellis and by the Colorado Health Institute, a nonpartisan think tank, concluded that reinsurance was not the biggest culprit in the subsidy decline. Instead, the reports identified complicated pricing decisions made by insurance companies as the bigger issue.

The reports have caused the state Division of Insurance to clamp down pricing decisions related to “induced utilization,” which is when people use something more when it becomes cheaper.

Colorado Insurance Commissioner Michael Conway speaks at a public forum in Frisco on Feb. 21, 2020. (John Ingold, The Colorado Sun)

“We constantly evaluate what is happening in the market to identify issues that we need to address to help consumers,” Michael Conway, the state’s insurance commissioner, said in a statement. “Based on the findings of the subsidized population study the division released earlier this year, we determined that induced utilization factors could be used to distort the market and hurt consumers.”

Massey, the executive director of the health plans association, disagreed that those pricing decisions were to blame for the decrease in subsidies.

Even if subsidies decline as a result of House Bill 1232, supporters have a plan for dealing with it.

A drop in subsidies would save the federal government money. The bill requires the state to ask the federal government to send some of that money back to Colorado, where it could be put back to use helping people afford their premiums.

“That,” said Roberts, the bill’s House sponsor, “is a big positive in my view.”

John Ingold is a co-founder of The Colorado Sun and a reporter currently specializing in health care coverage. Born and raised in Colorado Springs, John spent 18 years working at The Denver Post. Prior to that, he held internships at...