Despite a record allocation of federal pass-through funding from the Center for Medicare and Medicaid Services (CMS), the facts remain the same: the one-size-fits-all Colorado Option is failing, decreasing access to affordable health care for Colorado patients and their families. In fact, the Colorado Option has very little to do with this pass-through funding at all. Premium savings that the Colorado DOI attributes to the Colorado Option are in fact minimal. The reinsurance program, not the Colorado Option, is the driver of health insurance premium savings in the state.

The Colorado Option Has Little to Do With Federal Pass-Through Funding

• Data published by the Center for Medicare & Medicaid Services (CMS) shows that the state reinsurance program is the overwhelming source of these federal pass-through funds. Not the Colorado Option.

Colorado Option Premium Savings Are Minuscule

• The overwhelming majority of service areas have premium savings from the Colorado Option of less than one percent.

• Denver, which encompasses 40 percent of the market in its service area, shows less than a 0.2 percent in Colorado Option premium savings. In comparison, reinsurance reduces premiums by 15 percent.

• Twenty-three of the 34 service areas, which encompass the vast majority of the state’s market, show less than 0.5 percent in Colorado Option premium savings. In comparison, reinsurance in those same service areas lowers premiums by 15-32 percent.

The Colorado Option is Failing to Deliver for Colorado Patients

• A report by Lanhee J. Chen, Ph.D., Tom Church, and Daniel Heil found that in its first year (2023), over 85 percent of individual exchange enrollees selected a non–public option plan; the take-up was even lower in small-group market plans where only about 100 individuals enrolled.

• Despite a DOI press release in October 2023 claiming that 25 Colorado Option individual market plans across all metal levels would meet the second-year 10 percent premium reduction target, only three plans* hit the target in their market out of 468 (0.6 percent). (* SERFF: Carrier 2024 Rate Filings – BY24 Colorado Option Rate Reduction Notice Templates)

• CMS data also shows none of the second lowest-cost silver plans across service areas hit the Colorado Option’s second-year 10 percent premium reduction target.

The facts are clear: the state reinsurance program has delivered significant premium savings to Coloradans over the program’s many years. In contrast, the Colorado Option’s premium savings are miniscule and it is failing to deliver for patients in the Centennial State.