Will the Colorado Option Lower Health Insurance Prices?

Health insurers and hospitals have made deals to help drive down Colorado Option insurance prices. However, it remains to be seen if they’ve met their goal of reducing monthly expenses by 10%.

The Colorado option is a standardized health insurance plan sold by private companies and is not a true state public option. Its plans must cover more primary care and behavioral health services at no cost than most plans.

Next year, the plans’ monthly premium costs are expected to be 10% lower, adjusted for inflation, than they were in 2021.

Insurers had until June 26 to submit their proposed rates for next year, and normally the Colorado Division of Insurance will release its first results in mid-July, said Adam Fox, deputy director of the Colorado Consumer Health Initiative.

Normally, tariffs finalized in October differ by just a few percentage points from those proposed in July, Fox said. That may not be the case this year, as the tight deadline for submitting rates could mean insurers did not fully account for any savings from negotiating lower rates, he said.

“Based on the preliminary rates, I wouldn’t say too much about where they will ultimately be,” he said.

Approximately 35,000 people, or 13% of those who bought on the individual marketplace, chose Colorado Option plans in 2023.

Few insurers met the target of reducing premiums by 5% in 2023, although there were no penalties for non-compliance. Documents filed in March showed only Denver Health Medical Plan expected all of its plans to meet the 10 percent target for 2024, although some other insurers said a handful of their offerings would make the cut.

The insurance companies and hospitals they contract with were scheduled to hold individual public hearings in June, but these were canceled by the insurance department after it found insurers had made the biggest concessions the state could ask of hospitals. General hearings on the state of small group and individual markets are scheduled for Thursday and Friday respectively.

Under the law, the state could not force hospitals to reduce the rates paid by any given insurer by more than 20%, nor could it require rates below a “floor” that was at least 65% above what Medicare would pay for the same benefits.

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