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A photo of a website homepage for Health Colorado
The website for Connect for Health Colorado, the state's health insurance exchange, photographed on July 26, 2023. (John Ingold, The Colorado Sun)

Health insurance premiums for people who buy coverage on their own are set to increase by nearly 10% next year.

But that is slightly lower than insurers had initially requested, and the Polis administration found other reasons to cheer in the numbers it released Monday.

Nearly one-third of Colorado Option plans sold in the individual market and 80% of Colorado Option plans offered in the small-group market — where small employers buy plans for their workers — are expected to hit the state-set price targets.

Those numbers are far better than what it appeared they would be when insurers earlier this year filed their rate requests and raised questions about the sustainability of the Colorado Option, which aims to offer better coverage at less-expensive prices. The program is one of Gov. Jared Polis’ signature health care policies.

“The division continues to hammer away at health care costs, working to limit rising costs and save people money on health care,” Colorado Insurance Commissioner Michael Conway said in a statement. “As it does every year, our team dug deep into what the companies filed to push down on what they wanted to charge.”

Others were not as enthusiastic. Saskia Young, the executive director of the Colorado Association of Health Plans, an insurer trade group that often spars with Conway, noted that fewer overall plans will be offered next year and said the increasing premium prices are due in part to new coverage requirements that the Division of Insurance has championed.

“The DOI is couching its legal obligation to ensure premium rates are not ‘excessive, inadequate, or discriminatory’ as a newfound win for Colorado consumers, when in fact it is the same premium filing process that occurs every year,” Young said in a statement.

The rates announced Monday apply only to a subset of consumers. About half of Coloradans get their health insurance through work — but most of those are covered by large-group or self-funded plans. Only about 7% of Coloradans, meanwhile, purchase insurance in the individual market, where consumers buy plans without help from an employer.

But, because the individual market is the most transparent health insurance market — and the most subject to regulatory oversight — it often receives the most attention and serves as a bellwether for the rest of the insurance market.  

New subsidies available

One unique feature of the individual market is that the federal and state governments provide subsidies to help some people purchase the plans, which are often more expensive than what employees pay for coverage through their jobs.

On Monday, the Polis administration announced that the state will be able to offer additional subsidies next year to people with lower incomes. The subsidies are available as one result of the decision by the federal government to provide the state with more than $200 million in “pass-through funding” for 2024 — money given in recognition of Colorado programs that have lowered how much the federal government spends on premium subsidies for the state.

The new subsidies will be available on silver-level plans to people and families making up to 250% of the federal poverty line — that’s $36,450 per year for an individual and $75,000 per year for a family of four. The state estimates that about 20,000 people will be eligible for the new subsidies.

The most powerful of the price-reducing programs continues to be reinsurance, in which the state helps insurers pay their most expensive claims, allowing those companies to reduce premiums for everyone. The Division of Insurance estimates that reinsurance will save consumers $411 million in 2024. Without the program, the state says premium prices for 2024 would be nearly 25% higher.

“I am thrilled to announce that Coloradans will save $411 million on health insurance premiums next year as a result of the bipartisan reinsurance program,” Polis said in a statement. “I am committed to looking at every solution to save people money on health care to ensure that Coloradans can access quality care when they need it most.”

The Colorado Option rebound

The 9.7% that individual market insurance plans will increase, on average, next year is only a shade below the average rate increase of 10% that insurers had initially requested. But most insurers saw state regulators reduce their requested premium increases by more than that. The state’s insistence that one insurer, Denver Health Medical Plan, significantly raise its rates offset much of the savings from the reduction in other insurers’ prices.

Rates increased last year by 10.4%.

The Division of Insurance said that if people not currently enrolled in a Colorado Option plan were to switch into the lowest-cost one available to them next year, they would be able to limit their price increases to 7%. (To be sure, though, a Colorado Option plan may not be the lowest-cost plan available to people, meaning even more savings might be available and which is why the Division of Insurance typically encourages people to actively shop each year and not let their existing plan auto-renew.)

To Conway, this represents a significant victory for the Colorado Option program, even if most plans in the individual market won’t meet the price targets of being 10% below 2021 rates after adjusted for inflation. He credits the public hearing process for Colorado Option plans — though the public hearings, themselves, fizzled out.

Conway said the threat of public hearings caused insurers and hospitals to lower 73 different contracts to the maximum extent allowed under the law, thus dropping rates for many Colorado Option plans lower than what was originally requested.

“The Colorado Option hearing process did something that is nearly unprecedented in health care in the U.S.,” Conway said in a statement. “The Colorado Option actually bent the cost curve and reduced health care costs, and in turn brought down premiums.”

Young, the Colorado Association of Health Plans leader, reiterated concerns that Colorado Option requirements are unsustainable.

“The Colorado Option program requires additional coverages at lower prices which is not how insurance nor any other industry works,” she said.

Open enrollment for the individual market starts on Nov. 1. People who want coverage that starts on Jan. 1, 2024, will need to select a plan by Dec. 15. The open enrollment window closes for everyone on Jan. 15, 2024.

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...