Colorado insurance rates will be more expensive than the Polis administration has promised

Colorado insurance premiums will rise by double digits in the small group pool and by a substantial amount in the individual market next year, according to rate changes released by the state on Tuesday, bringing the trade association of health insurers to claim that the Polis administration “chose politics over math.

Coloradans face a 10.4% rise in the small group market, which insures businesses with two to 100 employees, and 7.4% in the individual market, which serves people who must pay for their own insurance illness, in 2023.

Despite skyrocketing insurance premiums, the Polis administration insisted Coloradans would save money — to the tune of $326 million — and credited its actions with “substantial savings.” But these savings are primarily through reinsurance and are not included in the information consumers will see when they purchase health insurance when open enrollment begins next Tuesday, November 1.

“Thanks to the innovative programs that the Polis-Primavera administration — in partnership with the legislature — has championed over the past three years,” the Colorado Division of Insurance said in a press release, “Coloradons can save $326 million dollars statewide on individual health insurance plans for 2023.”

Amanda Massey, executive director of the Colorado Association of Health Plans, argued that almost all of the cheapest products on the individual market were not the result of the “Colorado option,” but were “built by health insurance providers. that continue to provide choice and affordability for Colorado consumers in an era of unprecedented inflation.”

“The decisions made by the Polis administration regarding the Colorado option were fundamentally at odds with the stated goal of saving money on health care,” Massey said in a statement. “The result of these decisions is fewer carriers offering individual and small group products to in-state consumers, less competition, and higher premiums. We fully support market-based policies that actually drive down costs. , but the result of the first in- nation politics shows that the administration chose politics over mathematics.

Enacted last year, the Colorado Option is a state-designed health plan that insurers must begin offering Jan. 1, 2023. The Polis administration touted it as a mechanism to lower insurance costs .

How much premiums will increase in each region of the state is not yet available.

However, Colorado’s Health Care Future, a Partnership for America’s Health Care Future Action project funded by the insurance industry, saw the rates and said in a press release Tuesday that

• Traditional health plans (non-Colorado Option) will offer significantly more affordable premiums, 5-10% lower than competing Colorado Option plans, especially for certain Bronze and Silver level plans that are most popular with consumers.
• in the few counties where the Colorado Option plan is the most affordable option, the difference between the Option plan and traditional plans is less than 1%.
• most counties and entire regions of Colorado – including West Slope Individual Market Region 9 – will not have access to a single compliant Colorado Option Plan.

“”When you peel back the layers, initial examination of the 2023 premium data suggests that this newly created unique system (of government mandates and regulations) is failing to deliver the savings promised by politicians as they were rushing to push the new agenda through the state legislature,” the press release read.

The 2023 plans include the “Colorado option” for the first time. Beginning January 1, health insurance companies must offer the Colorado option in all counties where they also offer health insurance in the individual or small group market.

The Colorado option will be available for the individual market in the Gold (most expensive) and Bronze (least expensive) plans in 63 of 64 counties, while the Silver tier will be available in all 64 counties, according to the Colorado Division of Insurance. .

The agency did not say how many counties will have Colorado Option plans in the small group market, which insures between two and 100 employees.

DOI said that, for individual plans for 2023, “virtually all counties will have access to a Colorado Option plan at or below the medium bounty for that county in each metal level.”

Consumers aren’t shopping based on “average” premium costs, said Massey of the Colorado Association of Health Plans.

“If people choose the cheapest plan available, it probably won’t be the Colorado Option plan,” she said.

Since this month, at least three carriers have announced that they are leaving the Colorado market:

• Bright Health pulled all of its health insurance plans — small group and individual, as well as Medicare — from Colorado, affecting at least 55,000 consumers in eight mountain counties;
• Humana, which has retired from self-insurance and small group plans
• Oscar Health, which announced in May that it was exiting the consumer market

The Colorado Option began as the most expansive “public option”, which would have been a state-designed and operated plan. The effort to pass it took more than two years and two legislative sessions, culminating in its passage through the General Assembly in June 2021. House Bill 1232 passed by a party vote in the House ; in the Senate, all but one Democrat voted in favor and all Republicans voted against.

Setting up a public options plan was a key part of Gov. Jared Polis’ first term program, in an effort to save money on health insurance premiums.

By law, health insurance providers are required to reduce premium rates by at least 5%, not including medical inflation, beginning January 1, 2023. In subsequent years, providers are required to reduce premiums by an additional 5% each year, for a total of 15% by January 1, 2025.

The law instructed the insurance commissioner to create a standardized health care plan for individual and small group markets that insurance companies are required to offer and doctors and hospitals must accept.

Tasking the commissioner with creating a health plan raised red flags about conflicts of interest.

The Insurance Division, under the Regulators Department, is responsible for regulating and supervising insurance companies, including the review and analysis of policy premiums and benefits as well as claims.

Prior to the Colorado Option, the Division had never created a health insurance plan from scratch, and the plan is now regulated by Division of Insurance employees, who work for the Commissioner.

If a health insurance provider fails to meet premium reduction targets, as outlined in HB1232, they would be permitted to present evidence and offer an explanation at a hearing with the Division of Insurance, which under of the law, has its own mandate to keep Colorado option premiums competitive with other plans offered by the health insurance industry.

The law also sets fines for hospitals that refuse to accept Colorado’s option plan — at $10,000 a day. After 30 days, fines can reach $40,000 a day, and state regulators could suspend or impose conditions on the hospital’s license.

In some counties in Colorado, there is little competition among insurers, and the Colorado option would force health insurers to compete, driving down prices across the board, Democrats said.

But Tuesday’s announcement paints a different picture.

The Division of Insurance has made a number of decisions affecting 2023 insurance rates, the CAHP said in its statement.

This included “departing from traditional cost trends in its rate target methodology, understating current inflation for Colorado option plans, understating administrative costs for Colorado-only options and capping profit and contingency rates for health insurance providers at 2%.

“These requirements are in addition to new insurance benefit mandate requirements approved by the Governor since 2019, which have increased the base cost of insurance premiums for Coloradans by approximately 5.5% to 7, 9%,” the band said.

The Colorado option, Massey told Colorado Politics, has an administrative cost cap of 85%, compared to 80% for all other health insurance plans.

“Management is trying to improve the look of the product, but it won’t be the cheapest on the market,” Massey said.

Mannat Singh, executive director of the Colorado Consumer Health Initiative, which was a leading proponent of Colorado’s Options Act, said in a statement Tuesday that “after several years of fairly stable health insurance prices, Colorado consumers will feel these increases, especially in rural areas.”

“Insurers and hospitals are not trying hard enough to meet the reductions required for some Colorado Option plans, but rather are setting a baseline for not meeting targets without reasonable justification,” Singh said.

The group also pointed out that health insurance rates have remained low in recent years due to the state reinsurance program. The Insurance Division has estimated that in 2023, consumers in the personal market will save an average of 32.1% compared to what premiums would have been without reinsurance, a way to balance risk in the home market. ‘insurance. Reinsurance refers to insuring insurance companies – it helps them pay the largest claims and, as it is a form of cost sharing between insurance companies, reduces overall risk for an insurance company. Of the $326 million in savings announced by the DOI for 2023, $294 million is related to reinsurance.

Consumers, however, will not see these savings in the new insurance rates.

“Health insurance continues to be unaffordable for too many Coloradans, despite reinsurance moderating premium prices and supplemental plans being offered in more counties,” Singh said. “Premium rates must be reasonable and justified – industry should not use the pandemic or ongoing inflation to boost corporate profits.”

Massey told Colorado Politics that carriers have done what they can to meet those targets and lower fares.

“Many decisions have been made by the administration to make it impossible to achieve these goals,” Massey said.

Savannah Mertens of the Denver Gazette also contributed to this report.