The Division of Insurance (DOI) announced it had reached agreements with all 12 Colorado Option plans on meeting the insurance commissioner’s rate reduction target for individual and small group markets in plan year 2024.
DOI vacated all public hearings concerning 2024 rate reductions that were scheduled last month, citing it had reached terms with the carriers and hospitals involved in reducing provider reimbursement rates to the “maximum allowed under statute.”
The Colorado Option required carriers to offer the standardized public option plan with premiums that are 10% and 15% lower than their average 2021 premium rate for 2024 and 2025 plans, respectively.
Of the 13 carriers offering Option plans (seven individual market and six small group market plans), only Denver Health Medical Plan had met all of the state’s rate reduction targets for 2024.
Saskia Young, executive director of the Colorado Association of Health Plans (CAHP), says the cancellation of the scheduled hearings reiterates her organization’s conviction that the Colorado Option has failed to lower healthcare costs for Coloradans.
“Instead, the Colorado Option applies unachievable mandates and cost-increasing regulatory requirements that do not add value. Carriers had negotiated hospital reimbursement rates that were in many cases lower than those set forth in the law, meaning the crux of the Public Option’s promise to lower premiums by forcing down hospital reimbursement rates failed.
It is important to note the difference between meeting the statute’s allowed hospital reimbursement rates and meeting the premium reduction targets, which is not the case in the majority of the plans filed.
Had the hearings moved forward, they would have highlighted the fact that DOI has no additional authority to take further action given that insurers and providers have already achieved the statutory minimum hospital reimbursement rates. Health plans other than the Colorado Option remain the most affordable and high-value plan choice for most of Colorado with eighty-seven percent of Colorado residents rejecting the Colorado Option in favor of a different plan choice.”
— Young
The Colorado Option was passed in 2021 and approved by CMS last summer, creating a standardized private insurance plan on the individual marketplace that requires companies to offer services like mental health visits without out-of-pocket costs.
When rates were set and plans were introduced last year, DOI estimated they would provide up to $14.7 million in consumer savings for the state.
In a joint letter to DOI last summer, the Colorado Hospital Association (CHA) and CAHP outlined concerns over the impacts of medical inflation and managing the Option’s costs.
Sen. Jim Smallwood (R – Castle Rock) discussed those concerns on a panel during last year’s Colorado State of Reform Health Policy Conference.
“[The] Colorado Option was built with the goal of failure so that once it fails, we can move forward towards the single-payer system that this administration promised. So of course, it was set up to fail. Of course, it had unrealistic metrics in it. And of course, it will set the administration up to rate-set hospitals, which was, in my opinion, the overall goal.”
— Smallwood
Rep. Iman Jodeh (D – Aurora), a sponsor of the original Colorado Option legislation, told the Denver Post last month that the failure to meet rate reduction targets by insurers was expected.
“We’re going to face the argument of profit. The amount of profit that insurance companies make has become an epidemic in the United States, and it’s creating barriers to care.”
— Jodeh
In February, DOI announced that enrollment in Option plans for 2023 had reached over 40,000 members. DOI’s administrative template, which will determine the amount of pass-through federal dollars the program will receive, remains under federal review.