DENVER — In case you missed it, an op-ed in the Denver Post, “The Colorado Option Is Not Working,” written by Colorado State Representative Anthony Hartsook, outlines the failure so far of the Colorado Option to deliver the lower prices that were promised to Colorado consumers.

“The Colorado Option is the state government-backed health insurance plan created by the state legislature, HB21-1232, in 2021 at the behest of the Division of Insurance,” Hartsook writes. “The stated goal was to reduce health insurance costs and increase competition in the small group and individual markets. However, insurance rates did not materialize in lower costs but instead resulted in less competition, fewer providers, and higher rates, especially in rural Colorado.” 

“An actuarial study completed by NovaRest found that in nearly every case, in almost every county in the state, the Colorado Option plans were NOT the least expensive. Furthermore, a whopping 85% of Colorado Option plans were unable to meet the government’s arbitrary 5% reduction in the first year. As a result, few people and businesses bought the Colorado Option. Instead, they chose a private plan that was more affordable and better suited to their individual needs,” Hartsook continues.

“Competition was another failure. The artificial market manipulations and unsustainable rates forced upon insurance carriers resulted in some carriers leaving the state. DOI recently announced the departure of Friday Health Plans. The Colorado Option may not have been the sole reason for that, but it was likely a contributing factor.”

Read the op-ed at The Denver Post or below:

The Colorado Option Is Not Working

Denver Post (Op-ed)

Rep. Anthony Hartsook

August 7, 2023

The charade that the Colorado Option would supply healthcare savings and benefits for consumers is tumbling down like a house of cards. This always happens with flawed ideas from government bureaucrats when they fail to listen to business and consumer stakeholders, along with ignoring sound fiscal policy. It just never works out as proposed. The “brilliant” idea looks drastically different when it meets consumer reality. This is where we are today with the Colorado Option. 

The Colorado Option plan was designed by bureaucrats to offer consumers lots of benefits at reduced rates. Insurance carriers were forced by legal mandate to offer the Colorado Option at lower rates than private plans. The ruse of this force was thought to be that it would lower the rates of the private plans. The public option premiums were legislated to decrease by 5% in the first year, 10% in the second, and 15% by year three.

The Colorado Option is the state government-backed health insurance plan created by the state legislature, HB21-1232, in 2021 at the behest of the Division of Insurance (DOI). The stated goal was to reduce health insurance costs and increase competition in the small group and individual markets. However, insurance rates did not materialize in lower costs but instead resulted in less competition, fewer providers, and higher rates, especially in rural Colorado. The Common Sense Institute released a detailed report on this (Do Final Colorado Option Rates Deliver on the Promise of Consumer Savings?) on Nov 16, 2022. 

An actuarial study completed by NovaRest found that in nearly every case, in almost every county in the state, the Colorado Option plans were NOT the least expensive. Furthermore, a whopping 85% of Colorado Option plans were unable to meet the government’s arbitrary 5% reduction in the first year. As a result, few people and businesses bought the Colorado Option. Instead, they chose a private plan that was more affordable and better suited to their individual needs. 

Insurance premiums are derived from the cost of supplying insurance coverage. The Colorado Option was overflowing with benefits but simultaneously mandated rates below the cost of doing business. That was a recipe for failure.

Competition was another failure. The artificial market manipulations and unsustainable rates forced upon insurance carriers resulted in some carriers leaving the state. DOI recently announced the departure of Friday Health Plans. The Colorado Option may not have been the sole reason for that, but it was likely a contributing factor.

Even with so many failures for the Colorado Option plan, DOI keeps trying to force a round peg into a square hole. At a public hearing, proponents of the Colorado Option tried pointing fingers of blame at the insurance brokers, claiming no one was buying the public plans because brokers were not offering them.

This is absurd. The Colorado Option plans are not selling because they do not meet the needs of individual consumers or small businesses.

Hospitals were also unfairly blamed. The DOI and their legislative allies have hinted they will use rate setting on hospitals to force the plans into financial soundness. Rate and price setting are bad ideas. They will simply push the brunt of the costs onto providers and consumers and worsen the provider shortage we are already facing. If doctors, nurses, technicians, and facilities cannot receive adequate compensation for their time, service, and skills, they will continue to leave the state or close their doors. 

We must have transparency in healthcare costs, prices, and results. It is complete foolishness for the government to micromanage the market through public plans and price controls. Transparency and free market competition will allow consumers and small business the opportunity to compare prices and services that best satisfy their healthcare needs and budgets.

Anthony Hartsook (R-Douglas County) Represents District 44 in the Colorado State House and serves on the House Health and Insurance Committee.

Read more about Colorado’s Health Care Future here.