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The Colorado Option, the new health insurance program that seeks to give people better coverage at lower prices, is the result of years of work by Democratic lawmakers, state officials and advocacy groups to prove that a more consumer-friendly insurance plan can be a winner in the free market.

But now, health insurance brokers say the state is unfairly trying to tilt that playing field in the Colorado Option’s favor.

The controversy has to do with plans that are being suggested to people who buy health insurance on their own and whose current insurance carriers are leaving the state.

Two carriers — Bright Health and Oscar Health — are pulling out of Colorado for 2023. Combined, around 50,000 people purchased a Bright or Oscar plan this year on Connect for Health Colorado, the state’s online insurance exchange. Those folks will need to pick a new plan with a new insurance company for 2023.

When they log into their account on Connect for Health to make that selection, the platform will give them a “suggested plan” that they can sign up for with only a couple of clicks. Those suggested plans this year are all Colorado Option plans, a request the state Division of Insurance made to Connect for Health officials.

The Colorado Option, created by the legislature last year, is a government-designed health insurance plan that offers a standardized set of benefits. It is then priced and sold by private insurance companies on the open market at premium rates that are mandated by law to eventually drop to 15% below 2021 levels, taking into account inflation. If prices don’t drop enough, the state insurance commissioner will be able to step in and dictate hospital prices to achieve the premium reductions.

Gov. Jared Polis delivers his big idea pitch — about a state-level “public option” health insurance plan — to the audience at The Colorado Sun’s Big Ideas 2020 Forum at the Cable Center on the University of Denver campus on Jan. 14, 2020. (Eric Lubbers, The Colorado Sun)

The Division of Insurance was heavily involved in advocating for and creating the Colorado Option, which is a signature policy achievement of Gov. Jared Polis and Democrats in the state legislature. State Insurance Commissioner Michael Conway, who heads the Division of Insurance, is a Polis appointee. Thus, giving a boost to Colorado Option plans could be seen as interfering in the free market to make a political initiative more successful.

“All of this, to me, is an obvious attempt to steer people into the Colorado Option, whether that is a better fit for them or not,” Brad Niederman, a health insurance broker, said at a meeting last month of the Connect for Health board.

“A much more cumbersome process”

In most counties, Colorado Option plans this year aren’t the least expensive. That means consumers just looking to find the lowest-cost plan could sign up for something more expensive than they intended if they go with the suggested plan, health insurance brokers say.

“Colorado Option plans are more expensive than (other) plans when most people are shopping on price,” said Meagan Fearing, a broker and the president of the Colorado State Association of Health Underwriters, a brokers group.

Fearing said she ran one quote for a client in El Paso County and found 10 to 15 plans that were cheaper before she got to a Colorado Option plan.

If consumers want to shop for a plan that’s not the suggested plan, they have to go all the way back through Connect for Health’s system, re-entering their financial information.

“It’s a much more cumbersome process,” Fearing said.

Choosing the suggested plan could also mean having to change doctors. Connect for Health used an algorithm to match each Bright and Oscar consumer with a new plan. In Connect for Health parlance, this was called “mapping” or creating a “crosswalk.”

The algorithm took a carrier’s service area into account, leading to a broad geographic parsing of the state. Bright customers in the Denver metro area, for instance, were mapped to Colorado Option plans offered by Kaiser Permanente.

But Kaiser has its own network of doctors and clinics, while Bright used Centura’s network. If a Bright customer chooses the suggested Kaiser Permanente plan in the Denver metro area, they will almost certainly not be able to keep their doctor, Fearing said.

The suggested plan algorithm also doesn’t take into account the specific prescription drugs a person might need or the specific hospitals they would like to use.

“With this mapping, in my strong opinion, we are doing Connect for Health Colorado customers a great disservice,” Niederman, the broker, said at the Connect for Health board meeting.

Representatives for insurance companies said they were also bewildered by the process.

“We’ve just found this really confusing and didn’t understand how the crosswalk was determined,” Amanda Massey, the executive director of the Colorado Association of Health Plans, an insurer trade group, said during the board meeting.

Massey declined to comment further.

State says better communication was needed

Fearing isn’t on the Connect for Health board but she sits on an advisory group to the board.  She said the issue of favoring Colorado Option plans was never brought to that group’s attention, calling the lack of communication a travesty.

“We should have been talking about this much sooner,” she said.

Conway, the insurance commissioner, agreed and apologized during the Connect for Health board meeting.

“That’s on me. That’s my fault for not sharing that we did talk some of these things through,” he said.

The issue was partly one of timing, state officials said. While the state had more notice that Oscar would be pulling out, Bright’s announcement of its departure came only a couple weeks before open enrollment began.

“We were just trying literally to figure out who was going to stay on the exchange and who was going to go off,” Kevin Patterson, the CEO of Connect for Health, said in an interview.

Connect for Health has previously offered suggested plans, but that typically occurs when an insurer discontinues a specific plan — think of a car company deciding to discontinue a specific model. In those cases, the suggested plan offers another choice within the same insurer, leading to little disruption.

But the departures of Oscar and Bright are the first time in seven years that a carrier has left the individual market entirely in Colorado. That meant Connect for Health’s methods for suggesting a new plan from a different carrier were rusty.

Patterson called the mapping system “by far one of the most imperfect processes that we have” and said officials and other stakeholders need to talk more about how it should work.

“We have to think about this from an exchange perspective — do we want to be in a position where we pick winners and losers?” he said.

A previous attempt to boost the Colorado Option

This is not the only instance of the Division of Insurance and Connect for Health seeking to elevate Colorado Option plans this year. There was also a previous attempt, involving how plans were sorted on the exchange.

There are 166 health insurance plans being sold on the exchange this year, split across multiple insurance carriers, counties and bronze, silver and gold levels. That makes for a sometimes bewildering forest of options on the exchange.

To better organize the chaos, Connect for Health creates a sorting system called “preferential display.” In most years, the preferential display favors lower premium prices, so the cheapest plans are what people searching for coverage will see first — though the exchange has other options for sorting plans. Think of it like the results that appear on the first page of a Google search.

But, when open enrollment kicked off this year, Connect for Health, at the request of the Division of Insurance, gave Colorado Option plans top billing in the preferential display.

Conway, the insurance commissioner, said the goal in prioritizing Colorado Option plans was to help people better compare coverage. Because the Colorado Option is built on a standardized benefit design — meaning what people get from their coverage should be the same across all Colorado Option plans — Conway said that made it simpler for people to shop because all they needed to consider was price and the plan’s provider network of doctors and hospitals.

“We want consumers to know when they are looking at Colorado Option plans that it’s an apples-to-apples comparison,” Conway said in an interview.

The decision to highlight Colorado Option plans in the preferential display provided the rationale for also making Colorado Option plans the suggested plans for Bright and Oscar customers, Conway said.

But, after criticism, the state backed off the preferred billing for Colorado Option plans, instead going back to sorting plans by premium price. By then, it was too late to change the suggested plans.

“We’re out of runway to actually change anything from a technology standpoint,” Patterson said.

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

Conway, though, said he hopes to push for preferential display favoritism for Colorado Option plans again next year, reiterating that he believes the plans provide the clearest opportunity to compare coverage. Sorting plans just by premium price gives carriers an incentive to under-price their plans in the hope of signing up more people, Conway said. That could lead to unsustainability that sees more carriers falter.

Highlighting Colorado Option plans would give consumers a broader view across all insurers, he said.

“I think that’s good for the market and good for the sustainability of the market, too,” he said during last month’s Connect for Health board meeting.

Urging consumers to shop

The dispute has left lingering questions and frustrations. But people on all sides of the issue agree that the complexity of the situation shows why consumers looking for insurance in the individual market need to be proactive shoppers this year.

Fearing, the president of the state’s brokers group, said people should think about using a broker to help navigate the system and make sure they end up with a plan that meets their needs.

“Don’t just click through the path of least resistance,” she said.

Patterson also highlighted the importance of shopping.

“This year is more important than last year to make sure you shop,” Patterson said. “There are just so many big things moving around.”

But, at last month’s Connect for Health board meeting, some members questioned how this encouragement of shopping squares with the idea of offering suggested plans.

“If you’re a member and you see something show up in your inbox that says (Connect for Health) has a plan that is a suggested match for your other plan, that carries weight,” said board vice chair Marc Reece, who also works as the senior director for state government affairs for Aetna’s western region. “If we’re making a suggestion, knowing that that carries weight, how do we balance that against the message to be sure to shop?”

John Ingold

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 the Rocky Ford Daily Gazette, the Colorado Springs...