Colorado’s Health Care Future Submits Comment to Division of Insurance as Part of Public Comment Period Regarding the Colorado Option

Jul 11, 2023

DENVER, July 11, 2023 — Colorado’s Health Care Future submitted a comment to the Colorado Division of Insurance as part of the Division’s public comment period regarding the Colorado Option law.

Thank you for the opportunity to offer a comment on the Colorado Option law. Colorado’s Health Care Future is committed to working together to ensure every Coloradan has access to the health coverage and care they need and deserve, and we appreciate the opportunity to make the following set of facts part of the official record.

Colorado’s Health Care Future recently engaged NovaRest, an independent actuarial consulting firm with extensive experience supporting state and federal insurance regulators, to perform an actuarial review of the Colorado Option. NovaRest’s report demonstrates clearly that the Colorado Option is objectively falling short of the promise to save Coloradans money on their health care.

The report’s findings are consistent with the Division of Insurance’s (DOI) fall 2022 release regarding final approved rates for 2023 health plans, indicating individual market plans increased in price by 10.4% over 2022 plans, and small group plans increased in price by 7.4% over 2022 plans. NovaRest’s key findings include:

• The Colorado Option is not the lowest premium plan for consumers in most counties.

• The target premium reductions in the law appear to be unrealistic, as 85% of Colorado Option plans offered in the individual market could not meet the 5% premium reduction target in 2023—the law’s first year in effect. Given this reality, it’s unlikely that the increasingly aggressive statutory price controls can be met in 2024 or 2025.

• In fact, only one small regional health insurance carrier was able to meet the Colorado Option premium reduction requirement for all its plans in 2023. However, it was only able to do so by pricing their Colorado Option plans at an unsustainable loss according to their own actuaries.

• Denver Health Medical Plan’s actuary indicated in their 2023 premium rate filings that, “by pricing certain plans at a loss, Denver Health Medical Plan is exposed to the risk that premiums will be inadequate if actual enrollment in the Colorado Option plans (which is beyond Denver Health Medical Plan’s control and difficult to project due to 2023 being the first year of the program) is significantly higher than anticipated.”

• By approving inadequate premium rates by Denver Health Medical Plan, DOI artificially lowered the ACA premium tax credits available to some Coloradans, therefore increasing the cost of health coverage for a family of four by up to $1,128 in 2023.

• The law requested health care providers accept lower reimbursement rates which will continue to drive provider shortages. As of 2022, all Colorado counties except Pitkin, Summit, and Broomfield have primary care shortages.

• Since the conclusion of the 2022 benefit year, four carriers have exited the individual market, small group market, or both markets, including Bright Health, Friday Health, Humana, and Oscar Health. This market consolidation is resulting in reduced health carrier competition and fewer health plan choices for Colorado consumers.

• The DOI-enforced Colorado Option restrictions on carrier allowance for administrative costs and restrictions on total risk margins will make it more difficult for the Colorado market to attract new issuers to participate in the individual or small group Affordable Care Act (ACA) markets. Numerous health insurance providers have cited concerns that DOI-enforced restrictions on health plan pricing do not provide for adequate rates or certainty regarding the viability of the market. This will continue the trend of reduced competition in the Colorado ACA markets.

Additionally, the DOI’s inaugural Colorado Option public hearing process forced Colorado’s health care community to divert valuable time, resources, and funds away from patient care. The state’s unpredictable and burdensome legal process required hundreds of formal legal filings and untold legal costs for all parties involved, including Colorado taxpayers. Not to mention that health insurers and care providers had already achieved the statutory minimum reimbursement rates independent of the public option, leaving many of the hearings without a purpose.

While cancelling the previously scheduled carrier hearings was an important outcome, an even better resolution for patients and Colorado’s health care system would be for the DOI to drop this rate setting system altogether, and spare Colorado’s health system from the unaffordable costs and unsustainable administrative burdens required to comply with the program’s unachievable premium reduction mandates.

Short of a wholesale rollback of the failed rate setting system, the DOI should eliminate the requirement for Colorado health insurers to invest significant resources towards offering Small Group Colorado Option plans, which attracted very limited membership in 2023 because they were not the lowest-cost plans available.

Colorado’s Health Care Future believes every Coloradan deserves access to affordable, high-quality health coverage and care. We encourage the State of Colorado to support our efforts to focus on proven solutions that build on what’s working in health care to deliver even greater affordability, access, and value for Colorado patients and families.

The analysis by NovaRest Actuarial Consulting shows how the Colorado Option has fallen short on the promise to save Coloradans money on their health care. The actuarial analysis demonstrates how this state government-controlled health insurance system is increasing costs for Coloradans and reducing competition in the state’s health insurance market. Read NovaRest’s actuarial analysis on the Colorado Public Option here.