Open Enrollment for 2023 health insurance plans, which now offers standardized state health plans for the first time in Colorado, began on Tuesday and officials from the healthcare industry are taking notice.
Colorado was the first state in the nation to have its state-specific health coverage plan approved by the federal government, which paved the way for the Colorado Division of Insurance (DOI) to move forward with rate setting for Colorado Option plans.
Insurers that sell on the state’s marketplace Connect for Health are now also required to offer the Colorado Option, affordable individual and small group health insurance plans that are tiered by premium costs, provide free primary care and mental health visits, and offer the standard benefits required under the ACA.
To an audience of healthcare professionals at the 2022 Colorado State of Reform Health Policy Conference in Denver on Wednesday, a panel featuring perspectives from the DOI, the Colorado Association of Health Plans (CAHP), and the Colorado Consumer Health Initiative (CCHI) discussed what the new plans mean for Coloradans.
DOI Deputy Commissioner Kyle Brown said the objectives of the standardized plan are to increase choice and competition in the market, improve affordability and access to high quality coverage, and reduce racial health disparities through health equity promotion.
“[The Colorado Option] as we have designed it over the last year provides first-dollar coverage for certain high value benefits, like primary care and behavioral health,” Brown said. “[It] is designed to reduce racial health disparities, improve perinatal care, and improve cultural responsiveness of the network.
It requires that standardized plans reduce premiums and, in the bill, [the law] says we have to reduce these premiums by 15% over 3 years, 5% a year beginning in [2023]. Basically after 2025, the premiums can only increase by a rate of inflation.”
Brown added that the Option allows Colorado to capture federal premium tax credit savings through money the federal government earns from those premium reductions. Those captured funds would then be applied to public option coverage to make it more available and affordable.
Representing carriers on the panel, Amanda Massey, Executive Director of CAHP, said the state’s policies on health insurance affordability are having the opposite effect.
DOI established 2% and 15% caps on profit margins and administrative spending, respectively, for carriers on the implementation of option plans. Massey said this doesn’t give plans adequate spending room to meet the requirements DOI mandates they meet.
“Given that there is significantly more administration for Colorado Option plans,” Massey said. “Kyle mentioned the culturally competent networks. That’s something carriers are having to build, systems to collect data on provider demographics, front office staff demographics, enrollment demographics. Those things cost money. They have to be part of the administration that the carrier loads when they file rates with the Division of Insurance.”
She said DOI failed to consider broader economic trends when determining premium rate reduction metrics, making it difficult for plans to meet them. Carriers are required to notify DOI by March 1st, 2023, on whether they plan to hit their 10% premium reduction target for 2024. If they cannot, the matter will go before a rate review and public hearing to determine if the carrier is responsible.
According to Massey, carriers are concerned about this process, particularly whether the hearings will be fair, and whether the timeline is adequate to prepare the necessary claims data to predict success. She said the rising costs of inflation and prescription drugs will continue to drive up health insurance premiums.
“From our perspective, the bills that have passed since 2019 have increased the costs for coverage in the fully insured marketplace somewhere between 5.5% to almost 8%,” Massey said. “So we’re actually being told to reduce the cost of premiums in an era of extremely high inflation while also having added benefits that are going to increase the cost of healthcare as a baseline.”
Brown responded by saying the DOI is continuing to work on collecting data to inform its regulations and has been looking to incorporate value-based purchasing and coverage design models into the Option as potential reforms.
CCHI, a consumer advocacy group whose years of fighting for a public option helped it pass in 2021, continues to work to ensure the policy delivers on its promise.
CCHI Policy Manager Isabel Cruz said she and her fellow community health advocates see the emergence of the option as a critical milestone for her organization’s mission of ensuring equitable health coverage and care for all Coloradans.
“[It] will provide an opportunity for undocumented folks, who have not been able to compare and purchase plans in the marketplace, to do so and to have subsidies for folks up to 150% of the federal poverty level to access Colorado Option Silver level plans for a $0 premium with low-cost sharing and improved benefits,” Cruz said.
Cruz said the efforts by organizations like the Center for Health Progress and the Colorado Rights Coalition on the ground over the years to improve health equity have been successful.
For example, House Bill 1289, which passed last session to support health coverage to economically insecure children and mothers in the state, is helping undocumented families get access to care.
Cruz said distrust among the undocumented population in a health system that has historically and deliberately excluded them remains one of the many barriers to community engagement in healthcare.
“There’s a lot of need for resources in building relationships, in getting our information in multiple languages, and ensuring people from all corners of our state, particularly those with the biggest barriers, are at the table making these decisions to make sure these policies work for people,” Cruz said.
“All of this takes time and money and there is limited infrastructure at the state level, but also at the community organizing level to do that. We need more investment in this work to improve our systems if we’re going to meet the goals that we all share.”