What They’re Saying: The Colorado Option is Increasing Costs and Hurting Competition

Aug 1, 2023

DENVER — Over the past several weeks, numerous individuals and groups across Colorado — including lawmakers, stakeholders, policy experts and newspaper editorial boards — have voiced strong concerns with the failure of the Colorado Option law which took effect this year. These Coloradans have cited the mounting evidence that the law is falling drastically short of its promise to lower health care costs and is instead hurting competition in Colorado’s health insurance market which threatens access to coverage and care for Coloradans. The Colorado Division of Insurance (DOI) held two public comment hearings regarding the Colorado Option law earlier this month. 

The Colorado Springs Gazette Editorial Board wrote:

“The first half of 2023 saw the exodus of Bright Health, Humana, Oscar Health, and Friday Health Plans. That’s a loss of more than 40% of the companies that offered insurance throughout Colorado last year. Less competition means less pressure to offer competitive prices, and therefore more health care inflation.” (Colorado Springs Gazette Editorial, 7/24/23)

Republican State Senator Jim Smallwood said in a recent radio interview:

“We were promised more and better plans, more insurance companies, so that our citizens could have a wider array of carriers to choose from, and rates that were supposed to not only not go up, they were supposed to go down by five percent. So, what we’ve seen now after a year is that rates did not go down by five percent, they did not stay flat at zero percent, they went up by seven to ten percent.” (710 KNUS, 7/11/23)

Former Democratic State Representative Don Valdez wrote in the Pueblo Chieftain:

“In 2021, as a former Democratic state representative, I voted in favor of the Colorado Option… The law took effect this year, and so far, despite having voted for the law at the time, I am concerned about what I have seen. Even though the law mandates that prices must come down, we have not seen that come to fruition yet. In all but exceedingly rare instances, pre-existing plans in the Silver and Bronze level (which make up 90% of the individual market in Colorado) are cheaper than the Colorado Option. And more concerningly, multiple insurance companies have had to leave Colorado’s health insurance market after being unable to meet the law’s price reduction mandates.” (Pueblo Chieftain, 7/6/23)

Akilah Graham, community leader and founder of the Colorado Black Arts Festival, wrote in the Glendale Cherry Creek Chronicle:

“The Colorado Option was sold by politicians in Denver and other advocates on promises of increased savings. I, along with so many other Coloradans, waited anxiously as the new system was passed and implemented. Today, we’re still waiting and wondering: where are the Colorado Option savings? I am troubled by what I’ve seen as the Colorado Option has been implemented. The State-backed health plan is failing to deliver the savings that were promised. But even more concerning, the Colorado Option is actually leading to increased costs and is decreasing access to the high-quality coverage and care that Coloradans depend on. The Black community has long struggled to see or benefit from savings promised in our health care system. I never considered whether I’d have to ask if the Colorado Option is making things worse.” (Glendale Cherry Creek Chronicle, 7/28/23)

Regarding DOI’s Colorado Option hearings, Saskia Young, Executive Director of the Colorado Association of Health Plans, told the Colorado Sun:

“Carriers had already negotiated hospital reimbursement rates that were in many cases lower than those set forth in the law, meaning the crux of the public option’s promise to lower premiums by forcing down hospital reimbursement rates failed.” (Colorado Sun, 7/5/23)

Tom Rennell, Senior Vice President of the Colorado Hospital Association, added: 

“I don’t think it brought anyone to the table… I just think it caused a lot of extra administrative work.” (Colorado Sun, 7/5/23)

The National Federation of Independent Business’ Colorado chapter submitted written hearing testimony to the Colorado Division of Insurance:

“State reforms should not be one-size-fit all directives. Reforms should be tailored to meet the needs of small businesses while maintaining accountability of carriers.” (Written testimony to DOI, 7/7/23)

The Colorado Ethiopian Community also submitted written testimony to DOI:

“When the Colorado Option law was passed in 2021, we were optimistic and hopeful that our members would find more affordable health insurance options for themselves, their families, and their employees. Unfortunately, those hopes have not been realized. Our members have not seen lower costs and in fact carriers have left the State – this means fewer options and likely higher costs. Remember, in recent years Colorado had the fourth lowest health care premiums in the U.S. At the hearing, it seemed that some who tried to defend the Colorado Option were pointing fingers and casting blame. That is not helpful – we need solutions. I urge you Commissioner Conway and your team to work with business and labor, republicans and democrats, rural and urban residents to find a solution that will in fact work.” (Written testimony to DOI, 7/7/23)

The National Association of Benefits and Insurance Professionals’ Colorado chapter (NABIP-CO) corrected false claims made by Colorado Option supporters during the public hearings:

“Public comments during the small group hearing suggested that insurance agents and brokers are to blame for lack of sales outcomes of the Colorado Option by not pushing the plan on consumers and even hiding the plans. NABIP-CO firmly disagrees with this assertion. NABIP-CO insurance agent and broker members have an ethical duty not to steer or push a client into a health insurance plan. We are bound by our ethics to meet each client’s specific benefit and financial needs and match them with a plan that is most suited to them… They are also informed on all the variables in finding coverage that’s an appropriate fit for their needs. It is an informed purchaser’s decision to enroll in the plan that best suits their needs. It is not the agent making decisions for them.” (Written testimony to DOI, 7/7/23)

Regarding marketing efforts surrounding the Colorado Option, NABIP-CO added:

“We do not support the preferential displaying of the Public Option through the marketplace. The marketplace is relied upon as an impartial resource. Colorado Option plans should be displayed along with all other similarly suited health plans. A plan that is affordable and well-designed will be seen by the consumer without having to single it out. Connect for Health Colorado should not have to push or prioritize any plan on the Marketplace.” (Written testimony to DOI, 7/7/23)

Additionally, during the DOI public comment hearings, Colorado’s Health Care Future hosted a media briefing featuring representatives from NovaRest Actuarial Consulting and the Common Sense Institute to walk through NovaRest’s actuarial report on the Colorado Option law. The NovaRest 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, threatening access to care for patients. You can watch the July 6 briefing here and read the actuarial report here

Learn more about Colorado’s Health Care Future here.