New Actuarial Analysis Of The State Government Option (HB21-1232) Identifies Key Potential Effects On Healthcare Providers And Consumers

May 25, 2021

DENVER – A new actuarial analysis from the actuarial firm Milliman, Inc. on House Bill 21-1232 commissioned by the Partnership for America’s Health Care Future, released today identifies important issues that should be considered when evaluating the potential effects of the bill on Colorado consumers and healthcare providers.

The stated goal of House Bill 21-1232 is to ensure that affordable health insurance options are available for Coloradans. The mechanism to achieve that goal is the establishment of standardized health insurance plans to be offered by insurers with an adequate network and at a premium that is reduced from premiums offered in the 2021 individual and small group markets. If an insurer is unable to meet network adequacy or premium rate requirements, the bill gives the commissioner the authority, following a public hearing, to require hospitals and physicians to accept lower reimbursement rates from that insurer, subject to limits established in the bill.

Key Findings from the Analysis: 

  • Premium reductions achieved through lower provider reimbursement: HB21-1232 gives the Commissioner of the Division of Insurance (DOI) the authority to reduce hospital and professional provider reimbursement rates to achieve target premium levels, but does not provide the authority to enforce reductions in pharmacy costs or insurer retention. It is possible that insurers may choose to reduce margin or increase care management protocols to achieve a portion of the reduction, but it is also possible that the entire premium reduction is achieved through lower reimbursement to hospitals and other healthcare providers.
  • Applies a uniform set of criteria across all regions: HB21-1232 uses a uniform set of criteria for establishing minimum reimbursement levels for facilities across the stateThe use of a uniform set of criteria will drive non-uniform results by region, since healthcare costs differ dramatically by region for a multitude of reasons.
    • Urban Hospitals: Hospitals in urban areas that are more densely populated are more likely to have narrow network arrangements at rate levels that are already below the minimums established in the bill. 
    • Rural Hospitals: Hospitals in rural areas, where there is little to no insurer or provider competition and lower patient volume, may be required to reduce rates by more than hospitals in urban areas without the benefit of the increased volume associated with narrow network arrangements. 
  • Consumer out-of-pocket premium impact mixed: Some consumers may experience a rate reduction under HB 21-1232 if they choose to enroll in a standardized plan, but many consumers in the individual market who are subsidized will not see any change in the lowest out-of-pocket premium option available to them. It is possible that some consumers could experience a rate increase if they choose to keep their current plan.
  • Consumer savings reduced if enhanced premium subsidies under the American Rescue Plan continued: Should enhanced subsidies under the American Rescue Plan (ARP) continue beyond 2022, the number of consumers eligible for subsidies will be higher, increasing available pass-through funding [with an approved Section 1332 Waiver], but decreasing the number of consumers directly benefiting from premium rate reductions under the bill.
  • Effects on market competition and consumer choice uncertain: While converging provider reimbursement levels may foster competition by narrowing the range of premiums among insurers, these dynamics may possibly result in some current low-cost insurers exiting the market due to the erosion of their prior competitive advantage, reducing competition and consumer choice.

The Partnership for America’s Health Care Future Action believes HB21-1232 would artificially lower costs through price-fixing measures shifting the burden on healthcare providers and hospitals, particularly rural hospitals – which will impact access and quality of care and have diminishing returns over time. Additionally, HB21-1232 could force insurers to exit the market – which would reduce competition and consumer choice – and consumers could experience a decrease in subsidies available to them or experience a higher rate for their current plan.

Rather than starting over with the state government option, The Partnership for America’s Health Care Future Action urges lawmakers to slow down, allow for full consideration of this proposal, including the sweeping impacts and guarantee Coloradans that this legislation does not come at the expense of disrupting our state’s integrated healthcare system and threaten Coloradans’ access to care. Lawmakers should consider the larger implications of this proposal and provide the public and stakeholders with the opportunity to participate in a full and meaningful debate based on facts, not politics.

For more information, please contact Tyler Mounsey, Colorado’s Health Care Future, [email protected].

About Colorado’s Health Care Future: Colorado’s Health Care Future is a project of The Partnership for America’s Health Care Future Action, Inc. To learn more, visit

  • To read the complete report from Milliman titled, “Analysis of Colorado HB 21-1232 Impact on Healthcare Provider Reimbursement and Consumer Premiums,” CLICK HERE.