DOI Continues Misleading the Public About the Colorado Option
Sep 21, 2023
Paid for by Colorado’s Health Care Future, a project of Partnership for America’s Health Care Future Action.
MEMO
To: Interested Parties
From: Colorado’s Health Care Future
Re: DOI Continues Misleading the Public About the Colorado Option
Date: September 2023
Background:
- The Colorado Division of Insurance (DOI) and its allies continue to mislead the public about the Colorado Option.
- Recently, DOI’s rate announcement for 2024 boasted, “Colorado Option premiums are 30% lower than non-Option plans.” This is false. Filed Colorado Option premiums are not 30% lower than non-option premiums.
- Additionally, a recent op-ed from Colorado’s Health Insurance Brokers corrected false claims from DOI-aligned activists suggesting that the Colorado Option’s inability to deliver low premiums and strong enrollment is somehow the fault of insurance brokers. The facts are straightforward. If individuals and small businesses aren’t choosing the Colorado Option, it’s because other plans are more affordable and appealing.
Most recently, DOI claimed in a press release and in a Denver Post op-ed that the Colorado Option is lowering costs for Coloradans and helping to deliver federal pass-through funding to Colorado for saving the federal government money on Affordable Care Act subsidies.
- In plan year 2023, the Colorado Option is not the lowest premium plan for consumers in most counties.
- DOI’s claim that the Colorado Option “reduce[d] the second-lowest cost silver plans throughout the state by an average of 4.7%,” is missing crucial context.
- A recent analysis by NovaRest, an independent actuarial consulting firm with extensive experience supporting state and federal insurance regulators, adds missing context to the State’s math:
- In 2023, the Colorado Option had no impact on the second-lowest cost silver plan in 35 of 64 Colorado counties, and only 2% or less impact in an additional 24 counties.
- The Colorado Option had an 8% impact on the second-lowest cost silver plan in four counties. Presumably, these four counties are the source of DOI’s 4.7% premium savings claim.
- These specific four counties served by Denver Health Medical Plan, a small regional health insurance carrier, which was the only carrier able to meet Colorado Option premium reduction requirements for all its plans in 2023.
- Denver Health’s impact in these counties was only achieved by pricing their Colorado Option plans at a loss according to their own actuaries.
- According to Denver Health, the company priced their Colorado Option silver plans at a -6.5% risk margin, operating at a loss. Had Denver Health priced these same plans at a 2% risk margin—the same as their non-Option plans—that would effectively eliminate all Colorado Option premium savings.
- Colorado has recently felt the ramifications of carriers leaving the market after setting premiums too low and still being approved by DOI to operate with inadequate rates, incurring unsustainable losses.
- By approving rates with a negative risk margin, DOI effectively reduced Affordable Care Act premium subsidies for consumers in these counties—the vast majority of whom prefer non-Option plans from different carriers. By reducing their federal premium tax credits, DOI has effectively made the plans that consumers prefer more expensive.
- Families in Adams, Arapahoe, Denver, or Jefferson counties making an income of 300% of the federal poverty level ($90,000 for a family of four) and wanting to purchase a health insurance plan with another carrier would pay $1,128 more in premiums per year for a family of four.
- While Colorado may have received federal pass-through funding, it accomplished this through increasing the premiums consumers pay for the plans they want.
Bottom Line:
- The Colorado Option is failing to deliver the lower prices that were promised to Coloradans and is causing upheaval in Colorado’s health insurance markets. No insurance carrier will meet the 10% premium reduction target for 2024.
- The Colorado Option is not innovative. The State’s federal pass-through “savings” for the Colorado Option come from increasing the premium costs for the vast majority of consumers in the subject counties who prefer a non-Colorado Option plan.
- Ongoing claims from the Division of Insurance that the program is working as intended, despite the simple facts demonstrating otherwise, are continuing to mislead Colorado consumers.
- It’s time for the DOI to finally acknowledge that affordable premiums are not delivered via price controls, but by encouraging a healthy, competitive health insurance marketplace.