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Colorado health insurance marketplace: history and news of the state’s exchange

Premiums are dropping by 20% in 2020, thanks to a new reinsurance program. And Colorado regulators have proposed a new State Option health plan.

Colorado health marketplace highlights and updates

Colorado exchange overview

State legislative efforts to preserve or strengthen provisions of the Affordable Care Act

Colorado is one of the states fighting hardest to preserve the Affordable Care Act’s provisions. See what the state is doing.

Colorado has a state-run exchange, Connect for Health Colorado. The state passed legislation in 2011 to create the exchange, and is among just 13 states (including DC) that are running their own exchanges and enrollment platforms for 2020 coverage.

Colorado has permanently extended open enrollment, so it runs from November 1 to January 15 every year. And with a Democratic governor and Democratic majorities in both chambers of the state legislature in 2019, Colorado enacted legislation to create a reinsurance program, further address surprise balance billing, and draft a proposal for a public option health program.

Colorado is also one of only a few states where exchange enrollment has increased every year since 2014 (there are some discrepancies between state and federal data, but according to federal data, enrollment has trended upwards each year in Colorado). Although there have been some significant rate increases in recent years, Colorado regulators have approved an average rate decrease of more than 20 percent for 2020 individual market plans.

Although some carriers exited the Colorado exchange at the end of 2016 — as was the case in most states — Connect for Health Colorado is still among the most robust exchanges in the country, with seven carriers offering plans for 2019, and one more joining for 2020. There are 124 individual market on-exchange plans available in Colorado for 2019, which is unchanged from 2018, although it’s increasing to 130 in 2020. And for 2020, Oscar plans to join the market in Colorado, partially due to the state’s new reinsurance program.

In 2020, there will be 22 counties in Colorado (out of 64) where Anthem BCBS is the only insurer offering plans in the exchange. This is up from 14 counties in 2019, and the single-insurer counties will include some in the eastern part of the state, whereas previously they were all in the western region. Friday Health Plans is exiting several counties in the eastern part of the state (they had no enrollees in any of those six counties), and Kaiser is exiting the western/mountain area of the state (Kaiser had no enrollees in three of the counties where they’re exiting; curiously, Kaiser’s plans have not appeared on the exchange’s plan comparison tool in counties like Routt, even in 2019 when they supposedly offered on-exchange plans in that area). But Bright Health is entering Summit County as part of the Peak Health Alliance, preventing that county from dropping to a single insurer.

In 2018, with the same 14 single-insurer counties, almost 95 percent of Connect for Health Colorado’s enrollees lived in areas where there are at least two insurers offering plans, and more than 83 percent of enrollees had three or more insurers from which to choose. Although the number of counties with just one insurer is increasing in 2020, the heavily populated areas of the state all continue to have more than one insurer offering plans in the exchange.

Bucking the national trend, bronze plans became the most popular option in Colorado as of 2016, with 45 percent of enrollees picking bronze during open enrollment. Nationally, silver plans are twice as popular as bronze plans across all of the state-run exchanges, and more than three times as popular as bronze plans in states that use Healthcare.gov. Bronze plans were also more popular in Colorado than in other states in 2014 and 2015, but 2016 was the first year that bronze plan selections outnumbered silver in Colorado. That continued to be the case in 2017, 2018, and 2019. Colorado has a lower-than-average percentage of enrollees who qualify for premium subsidies (although the number of people who qualify for subsidies has been growing steadily as premiums have increased), so there are a significant number of enrollees who pay full-price for their coverage. Bronze plans are the lowest-cost option, so they tend to appeal to people who have to pay full price. In 2019, two-thirds of unsubsidized buyers in Colorado selected bronze plans.

Colorado implemented new regulations for short-term health plans in 2019, effectively eliminating them in the state. As of April 2019, there are no longer any short-term plans for sale in Colorado.

Colorado lawmakers implemented numerous bills in 2019 related to health care. The Colorado Health Institute has an excellent overview of some of the key pieces of legislation.

Average rate decrease of 20.2 percent for 2020, thanks to new reinsurance program

Colorado enacted HB1168 in 2019, paving the way for the state to create a reinsurance program for plan years 2020 and 2021. Similar legislation had passed the Colorado House in 2018, but had failed in the Republican-controlled Senate. However, the Senate gained a Democratic majority in the 2018 election, allowing the reinsurance measure to pass during the 2019 session. Governor Jared Polis signed the bill into law in May 2019, and the state immediately began working to obtain federal approval for the reinsurance program. The state’s waiver proposal was submitted to CMS on May 20, 2019, and received federal approval on July 31.

Colorado’s reinsurance program will be effective in 2020 and 2021. Some states have implemented five-year reinsurance programs, but Colorado would have to seek a waiver extension if the state wishes to continue the reinsurance program after the end of 2021.

The reinsurance program will reimburse insurers an average of 60 percent of the cost of claims that are between $30,000 and $400,000, although the actual reimbursement percentage will vary by location. The program is designed to incentivize insurers to offer plans in areas of the state where few insurers currently offer plans, and to offset a larger portion of claims in high-cost areas of the state — ie, the mountains and rural areas — as opposed to the heavily populated I-25 corridor where health care costs are lower.

To that end, Colorado’s reinsurance proposal is innovative: It will pay 45 percent of eligible claims in rating areas 1, 2, and 3 (Boulder, Colorado Springs, and Denver), where premiums are currently the lowest. This is expected to lower rates by 15-20 percent in those areas. But it will pay 50 percent of eligible claims in rating areas 4, 6, 7, and 8 (Fort Collins, Greeley, Pueblo, and the eastern plains/south-central Colorado), which is projected to reduce premiums by 20-25 percent. And in the areas of the state where premiums are highest (the mountains and western part of the state, including Grand Junction), the reinsurance program will pay 85 percent of eligible claims, bringing down premiums by 30-35 percent.

Overall, the state’s waiver proposal projected that reinsurance would result in a 16 percent average decrease in average premiums for 2020. And in July, the Colorado Division of Insurance announced that insurers in the state’s individual market had proposed an average rate decrease of 18.2 percent for 2020, based on the assumption that the reinsurance proposal would be approved (the proposed average rate change would have been a 0.5 percent increase if the reinsurance program had not been approved). And once rates were finalized, the average rate decrease was even bigger, at 20.2 percent.

When 1332 waivers are used to implement reinsurance, the general idea is that the reinsurance program results in lower premiums, which in turn, results in smaller premium subsidies being paid by the federal government. By using a 1332 waiver, the state gets to keep those savings (referred to as pass-through funding) instead of the federal government keeping the money that they save on premium subsidies. The state then utilizes that money, along with state funding as necessary, to cover the cost of the reinsurance program. Colorado’s waiver proposal projects federal pass-through funding will be $170 million in 2020 and $183 million in 2021.

Colorado’s individual market insurers — all of which offer plans in the exchange — are implementing the following average rate decreases for 2020:

  • Anthem: A 24.2 percent decrease for HMO Colorado, and a 12.5 percent decrease for Rocky Mountain Hospital & Medical Service, Inc.
  • Bright Health: 19.5 percent decrease (Bright will begin offering plans in Summit County in 2020 via the Peak Health Alliance)
  • Cigna: 23.3 percent decrease 
  • Denver Health Medical Plan: 29 percent decrease (Denver Health’s membership is fairly low, at 1,616 enrollees; but that’s up from just 615 members in 2017)
  • Friday Health: 26.9 percent decrease (Friday is leaving six counties in eastern Colorado at the end of 2019, but they had no enrollees in those counties)
  • Kaiser: 15.4 percent decrease (Kaiser will no longer offer individual plans in the west/mountain rating regions after the end of 2019)
  • Rocky Mountain HMO: 33.5 percent decrease 
  • Oscar: New to Colorado for 2020. According to Oscar’s filing (SERFF filing number OHIN-131973376), the plans will only be available in the Denver metro area (specifically, in six of the 10 counties in rating area 3).

The final premiums for Cigna, Friday Health, and Kaiser are all a little lower (ie, a more significant rate decrease) than the insurers initially proposed.

Colorado insurers began adding the cost of CSR to silver plans rates as of 2019 (a change from 2018, when they spread the cost across the premiums for all plans), and will continue to use that approach in 2020.

Rates are decreasing but people who get premium subsidies could see sharp increases in net premiums

It’s noteworthy that although overall average premiums are dropping by 20 percent in Colorado in 2020 — the largest percentage decrease in the country — that rate decrease will really only apply to people who don’t get premium subsidies (that’s 20 percent of on-exchange enrollees, plus everyone who has ACA-compliant coverage outside the exchange, where subsidies aren’t available).

For people who do get subsidies, the subsidies will decrease in line with reductions in the benchmark premium in each area. And some plans (including the benchmarks in some areas) will have sharper premium decreases than others. As an example,  consider a family of four (parents in their early 40s and two young children) living in Denver and earning $95,000 a year. We’ll keep them the same age in 2019 and 2020 and keep their income unchanged in order to compare apples to apples.

In 2019, they qualified for a premium subsidy of $747/month. And after that subsidy was applied, the least-expensive plan they could get was $355/month (a $6,000 deductible plan from Bright Health). If they wanted an HDHP in order to be able to contribute to an HSA, their least expensive option was $445/month after their subsidy. In total, there were 45 plans from which this family could choose.

For 2020, however, there are 58 plans, and unsubsidized premiums have dropped across the board — all of which is good news for people who don’t get premium subsidies. But this family’s subsidy is shrinking significantly: It will only be $379/month in 2020. That’s because the full-cost price of the benchmark plan is a lot lower: $1,159/month in 2020, versus $1,527/month in 2019 (those are two different plans; the benchmark in that area is offered by Kaiser in 2019, and will be offered by Cigna in 2020).

Because the benchmark plan is so much cheaper, premium subsidies for everyone in the area are shrinking. For this family, the lowest-cost option for 2020, after their subsidy is applied, will be $523/month. The same Bright Health plan that had a net premium of $355/month in 2019 will be $529/month in 2020 — despite the fact that its full-price premium (ie, without any subsidies) is dropping from $1,102/month to $909/month. If this family wants an HDHP in 2020, the cheapest one will be $569/month.

So if we assume this family enrolled in the $355/month plan in 2019 and they want to keep it for 2020, their net premiums are going to increase by 49 percent (from $355/month to $529/month). And shopping around isn’t going to do them much good, because the cheapest option for 2020 (a similar plan from Bright Health) is still going to be a 47 percent increase in their net premium.

This is not a new phenomenon — it’s happened in other areas in previous years and it will continue to happen in various areas as insurer participation, plan options, and premiums fluctuate from one year to the next. But it’s important for enrollees to understand, especially given that Colorado has garnered so many headlines about decreasing premiums for 2020.

It can be shocking to get a renewal notice indicating a substantial after-subsidy rate increase after seeing news reports about widespread rate decreases, but hopefully this summary helps to illustrate how rate changes for people who get subsidies don’t necessarily mirror rate changes for people who don’t get subsidies. If our Denver family had an income of $110,000 (and was thus not eligible for subsidies), they would see a reduction in their premiums from 2019 to 2020: If they had enrolled in the cheapest plan in 2019 it would have cost them $1,102/month, and it would be dropping to $909/month in 2020.


Colorado’s open enrollment period permanently set at 2.5 months

For 2019 coverage, open enrollment in Colorado continued until January 15, as will be the case in future years. In August 2018, the Colorado Division of Insurance published draft regulations proposing a permanent open enrollment schedule of November 1 to January 15. The regulation was finalized in November. Under the terms of the new regulation, Colorado will add a special enrollment period each year, from December 16 to January 15, during which anyone can purchase individual market coverage. That effectively makes open enrollment run from November 1 to January 15 every year. The new enrollment dates apply both on- and off-exchange. In states that use the federal enrollment platform, enrollment will continue to run from November 1 to December 15.

Colorado regulators have finalized a proposal for a “state option” health plan that could be available by 2022

H.B.1004, signed into law in May 2019, directed the Division of Insurance (DOI) and the Department of Health Care Policy and Financing (HCPF, which oversees Colorado Medicaid) to come up with recommendations for a public option health plan that would compete with private insurers in the state.

H.B.1004 included some basic parameters and guidance, but largely avoided the specifics of how the public option would operate. There have been a variety of stakeholder meetings since May, aimed at gathering public input on how a public option in Colorado should be crafted. HCPF and DOI presented their draft proposal in October 2019, and their final proposal, with modifications based on public comments and stakeholder feedback, was unveiled in mid-November. Regulators hope that the plan can be available for purchase by 2022.

The details of the current proposal are summarized here. The plan would be available statewide, and would be offered by the state’s existing health insurers. Reimbursement rates for hospitals would be determined via on a hospital-by-hospital basis via a transparent process, although the final recommendation stopped short of recommending a specific percentage of Medicare rates (the draft proposal had recommended 175-225 percent of Medicare rates). The individual market state option plans would have to spend at least 85 percent of premiums on medical costs, as opposed to the ACA’s 80 percent requirement.

The proposal also recommends that the state use a 1332 waiver in order to recapture the estimated $89 million reduction in annual premium subsidies flowing into Colorado, and use those funds to improve benefits for Colorado consumers via additional cost-sharing reductions, additional benefits (eg, dental coverage), and/or additional premium subsidies. This is an important recommendation, as the introduction of lower-cost plans is beneficial for people who pay full price for their coverage, but can have the opposite effect on people who get subsidies, due to the reduction in subsidies (see above, in the description of how Colorado’s reinsurance program is affecting net premiums for some people who get subsidies).

Colorado lawmakers had considered similar legislation in the past. H.B.1384, considered in the 2018 legislative session, would have directed the state to conduct a study on the costs, feasibility, and pros/cons of a Medicaid buy-in program, a public-private partnership option, or a community based or regionally based option for health coverage in the state. The study would also have considered the feasibility of implementing a pilot program for one or more of those coverage options in areas of the state where current plan options are limited (ie, the 14 counties — increasing to 15 in 2020 — in Western Colorado where Anthem is the only insurer offering plans in the exchange) and/or coverage is unaffordable (ie, primarily the areas outside of the front range). The House passed H.B.1384, but it was indefinitely postponed by the Senate in 2018. At that point, the Senate had a Republican majority, but it has since switched to a Democratic majority, allowing bills like H.B.1004 to pass.

Nearly 170,000 people enrolled for 2019 (plus a look at past enrollment)

The day after enrollment ended for 2019, Connect for Health Colorado announced that 169,672 people had enrolled in medical plans for 2019. Colorado is one of only a few states where enrollment in the exchange has increased every year since 2014 (according to the numbers reported by the federal government; these are a little different from state numbers, since the state also reports enrollments that happen during extensions after the end of open enrollment). In most states that use HealthCare.gov, enrollment peaked in 2016. But Colorado’s state-run exchange has continued to see enrollment gains since then.

Here’s a look at Connect for Health Colorado enrollment over the years:

2014: Connect for Health Colorado announced more than 129,000 people had signed up for QHPs as of April 23. Through special enrollment periods, QHP enrollment grew to 137,000 as of mid-2014. In addition, nearly 182,000 people qualified for the state’s expanded Medicaid program.

But Colorado was one of only two states — Massachusetts is the other — where total individual market enrollment declined in 2014. Nationwide, individual market enrollment, including on and off-exchange policies as well as grandfathered and grandmothered plans, increased by 46 percent in 2014. But in Colorado, enrollment dropped by 4 percent. This was despite the fact that Colorado’s population grew by nearly 84 thousand people from mid-2013 to mid-2014 — only three states had a higher percentage growth in population.

2015: Connect for Health Colorado saw private plan enrollment grow to 141,639 people during the 2015 open enrollment period — an increase of about 10 percent over the total at the end of the 2014 open enrollment period. By April 2015, total enrollment in medical plans had grown to 145,506, and 88 percent of those enrollments had been effectuated by the beginning of May.

Ninety percent of Colorado’s exchange enrollees picked nonprofit health plans in 2015: 40 percent chose Colorado HealthOP, the ACA-created CO-OP, 35 percent selected Kaiser Permanente, and 15 percent went with Rocky Mountain Health Plans. Kaiser got 46 percent of exchange enrollees in 2014, and auto-enrollment likely helped their retention, despite the fact that Colorado HealthOP offered the lowest rates in all but one of the rating areas in Colorado for 2015.

2016: 157,317 people had enrolled in private health plans (QHPs) through Connect for Health Colorado by February 2, 2016. Open enrollment ended on January 31, but there was a special enrollment period (SEP) – through the end of February – for people who lost coverage in Colorado at the end of December 2015 (more details below).

By the end of February, enrollment in QHPs through Connect for Health Colorado had grown to 169,156. Total enrollment for 2016 (including SEP enrollment in February) was about 19 percent higher than the 141,639 people who enrolled in QHPs through the exchange during the 2015 open enrollment period.

2017: Enrollment ended up well above prior year totals. Connect for Health Colorado reported that 172,361 people enrolled in medical plans for 2017 by February 5, 2017 (including stand-alone dental plans, there are a total of 175,964 enrollees). 62 percent of the enrollees qualified for premium subsidies.

The federal government put out an official report in March 2017, showing how many people enrolled in each state’s exchange by January 31. In Colorado, the total was 161,568. That’s lower than the total reported by Colorado, but that’s because they were referencing different days (January 31 versus February 5). And the Colorado enrollment report as of March 2 includes all of the people who enrolled in February due to loss of coverage at the end of 2016. Even with the lower total on January 31, enrollment in Connect for Health Colorado was more than 7 percent higher than it had been during the 2016 open enrollment period. Nationwide, there was an average decline in enrollment among states that use HealthCare.gov, and an average increase in enrollment among states that run their own exchange platforms. The decline in states that use HealthCare.gov was likely linked to uncertainty about the future of the ACA, and the Trump Administration’s decision to cut outreach and advertising during the final week of open enrollment. This didn’t impact states like Colorado, that run their own exchanges and conduct their own marketing and outreach.

2018: By the time open enrollment ended, the exchange reported that 165,777 people had enrolled in medical plans through the exchange for 2018. According to the exchange’s metrics, that was a little lower than the number of people who enrolled the year before — for 2017 coverage, Connect for Health Colorado had reported that 174,678 people enrolled in medical plans by March 2, 2017. But according to the official CMS report, 161,764 people enrolled through the Colorado exchange for 2018, which was higher than the official CMS count for 2017.

But the CMS report was lower than Colorado’s official 2017 enrollment number because it was based on enrollment as of January 31, 2017, and Colorado extended enrollment by a few days that year, giving people until February 3 to sign up. And the 174,678 people who had signed up by March 2, 2017 included people who enrolled in February 2017 due to a special enrollment period triggered by loss of other coverage (Humana and UnitedHealthcare terminated plans for about 20,000 people in Colorado at the end of 2016; they all had a special enrollment period in early 2017).

The slightly lower overall enrollment (compared with enrollment by early March, 2017) that the exchange reported could have been partly due to the shorter enrollment period, but also partly due to the fact that Colorado had insurers apply the cost of CSR to all plans, on and off-exchange for 2018, rather than just silver plans (most states took the approach of applying the cost of CSR only to silver plans, which protects most enrollees and provides additional benefits to some, due to the larger premium subsidies that result). Colorado switched to the silver loading approach as of 2019.

Connect for Health Colorado published their official enrollment report for 2018 in March, available here.

Average rate changes in Colorado’s exchange: 2014 through 2019

As described above, insurers in Colorado have proposed a significant rate decrease for 2020, assuming the state’s reinsurance waiver proposal is approved. This will be a welcome relief for people in Colorado who don’t get premium subsidies (about three-quarters of Connect for Health Colorado enrollees are receiving subsidies in 2019; the rest pay full price). For those who do receive subsidies, the effect of the rate decrease will be mostly muted by changes in subsidy amounts, and for some, after-subsidy rates could actually increase slightly.

Although average premiums in Colorado increased modestly in 2019, the majority of Connect for Health Colorado enrollees saw their net premiums (after subsidies are applied) decrease in 2019, due to the way the cost of cost-sharing reductions is being handled (more on that below). For the roughly three-quarters of Colorado exchange enrollees who receive premium subsidies, average net premiums were expected to decrease by 24 percent in 2019, with the most significant decreases in the western (except Grand Junction) and northern parts of the state. For enrollees who don’t receive premium subsidies, including people who buy individual market plans outside the exchange, the average rate increase was 5.6 percent in 2019, although it varied considerably from one plan to another and from one area to another.

Here’s a look at how average rates have changed in Colorado’s marketplace over the years:

2015:

Average rates for 2015 remained very similar to what they had been in 2014, with an average increase of only 0.71 percent in the ACA-compliant individual market.

2016:

The overall weighted average rate increase for the individual market in 2016 was 9.84 percent, although it’s 12.14 percent if we only count plans sold in the exchange. Average rate changes by carriers and full rate sheets for each region of the state are available on the Division of Insurance website (click on “more” under the “approved plans for 2016” section). The Division of Insurance also created an at-a-glance map of the state that shows average rate increases by area, for both the individual and small group markets.

Three carriers that offered coverage in 2015 pulled out of the market in 2016: Colorado HealthOP (more details below), New Health Ventures (Access Health Colorado), and Time Insurance Company (Time only sold off-exchange plans in 2015, and has exited the market nationwide). Golden Rule began offering individual market health plans in 2016, but only outside the exchange.

In the Denver area, benchmark premiums increased by an average of 32.2 percent for 2016. The benchmark plan is the second-lowest-cost Silver plan, and it’s not the same plan from one year to another. The increase in Denver (and across much of Colorado) was due to the fact that Colorado HealthOP had the lowest rates in most parts of the state in 2015, and their plans weren’t available in 2016. When compared with the average benchmark prices in other areas across the country, Denver’s rates were still very much in line with the national average.

2017:

The Colorado Division of Insurance released the approved rates for 2017 plans in September 2016. In the individual market, the Division of Insurance announced that premiums would increase by an average of 20.4 percent (on-exchange, the average was 20.9 percent, while off-exchange, it was 19.9 percent). In the small group market, the average increase was just 2.1 percent.

However, the Wakely Consulting Group worked together with the Department of Insurance to analyze available plans for 2017, and reported that premiums were increasing an average of 24 percent for people who weren’t eligible for subsidies and whose existing plans would still be available for 2017. People who aren’t eligible for subsidies are more likely to select Bronze plans, and the average rate increase on Bronze plans for 2017 (25 percent) was higher than the average rate hikes for the other metal levels.

2018:

In the individual market, insurers initially proposed an average rate increase of 26.96 percent, although that included two filings for plans that would only be available off-exchange (Freedom Life, at 27 percent, and Anthem’s catastrophic PPO, at 33.5 percent).

Shortly after the rates were filed, Commissioner Salazar explained that “these premium increases are not a surprise,” and that she “believe[s] that the dubious situation at the Federal level has contributed to the premium increase requests we’ve seen from the companies.”

Despite a robust review, regulators were only able to make a slight reduction in the proposed overall average rate increase, getting the average down to 26.7 percent from 26.96 percent. Most of the approved rates were very similar to what insurers had proposed, although the DOI made some significant changes to the rates that were filed by Bright Health and Cigna.

But those rate filings were based on the assumption that funding for cost-sharing reductions (CSR) would continue in 2018. The Division of Insurance noted in September that they had backup rates that would be used if CSR funding were to be eliminated. On October 12, the Trump Administration announced that they would cut off CSR funding immediately. As a result, the backup rates were implemented in Colorado.

The Division of Insurance noted that the overall average rates would increase by 6 percentage points over the already-approved rates. Ultimately, the average rate increase in Colorado was 34.3 percent for 2018. Colorado was one of only five states where the cost of CSR was added to plans at all metal levels, rather than being concentrated only on plans at the silver metal level.

The Colorado Division of Insurance clarified that their decision to have insurers spread the cost of CSR across all metal plan premiums (as opposed to just silver plan premiums) was made because the state wasn’t sure that the federal government would accept a silver load strategy. Insurers filed the backup rates in the early summer of 2017, and it wasn’t entirely clear what other states were going to do at that point. Although almost all states ultimately ended up having insurers add the cost of CSR only to silver plan premiums — and the federal government didn’t push back against that strategy — Colorado regulators were afraid that they would end up in a situation where they needed to deploy their backup rates, only to find out that the federal government wouldn’t allow those rates, leaving them with no fallback plan. Hence, the backup plan included adding the cost of CSR to premiums for 2018 plans at all metal levels.

The rate filings are available in SERFF and the SERFF filing numbers are on the Colorado Division of Insurance statement about the approved rates. Some of the filings clearly indicated that a factor in the overall increase was the expected lack of enforcement of the individual mandate (or at least a perception that it wouldn’t be enforced) which insurers expected would lead to fewer people enrolling, and a less healthy risk pool than there would be if the individual mandate were being strongly enforced.

2019:

The Colorado Division of Insurance published the approved rate changes for 2019 in October 2018. For the seven insurers in the state’s individual market, average premiums increased by 5.6 percent for 2019. But because Colorado began allowing insurers to add the cost of CSR to silver plan rates for 2019 (as opposed to spreading the cost across premiums for all plans, the way they did in 2018), premium subsidies grew substantially in 2019. The state noted that while there was an overall average increase of 5.6 percent for unsubsidized premiums, people with premium subsidies who kept the same plan from 2018 to 2019 saw an average decrease of 24 percent in their after-subsidy premiums.

Under Colorado’s new approach to handling the cost of CSR, if the exact same silver plans are also sold off-exchange, they have to include the cost of CSR in their premiums. But as long as the on- and off-exchange silver plans have a difference in benefits, the cost of CSR can be added only to the on-exchange silver plans.

To accomplish this, the Colorado Division of Insurance suggested the insurers could slightly adjust (by $5) the off-exchange ambulance/emergency transportation benefit in order to have a slight difference between the on- and off-exchange plans. The two plans would then have different identification numbers in the Health Insurance Oversight System (HIOS) and could then have differing premiums, with the cost of CSR added to the on-exchange version and not to the off-exchange version. Insurers have the option of using a different approach to creating a slight benefit difference between on- and off-exchange silver plans, but had to discuss the proposal with the Division of Insurance before proceeding.

Connect for Health Colorado projected that two-thirds of subsidy-eligible enrollees would be able to select bronze plans that would be free after 2019 premium subsidies are applied. Although this happened in many other states (here’s an example, from Wyoming) in 2018, it didn’t happen in Colorado in 2018 because the cost of CSR was added to all plan premiums, and not just silver plan premiums. But now that Colorado is silver loading the cost of CSR as of 2019, zero-premium bronze plans are available to many enrollees, due to the much larger premium subsidies and the relatively smaller bronze plan prices. And in some areas of the state, enrollees who select plans from Kaiser, Denver Health, or Rocky Mountain Health Plans may be able to find gold plans that are cheaper than silver plans.

Insurer participation in Colorado’s exchange 2014 – 2019

Colorado has always had a robust exchange, although most of the insurer participation in concentrated along the I-25 corridor (Colorado Springs, Denver, Fort Collins, etc.). In the mountains and eastern plains, insurer participation has been much more limited. In the first few years of exchange operation, there was some upheaval in terms of insurer participation, but it’s leveled out at seven insurers for the last few years. Oscar Health plans to join the Colorado exchange in the Denver metro area in 2020, bringing the total number of insurers to eight.

2014: Ten insurers offered individual market plans in Colorado’s exchange in 2014: All Savers, Cigna, Colorado Choice, Colorado Health OP (an ACA-created CO-OP), Denver Health, HMO Colorado (Anthem), Humana, Kaiser, New Health Ventures (Health Access Colorado), and Rocky Mountain Health Plans.

2015: The same ten insurers continued to offer individual market plans in the exchange in 2015.

2016: There were several changes for 2016. New Health Ventures (Health Access Colorado), which had 450 members, dropped out of the market at the end of 2015 after suffering “heavy financial losses.” But most significantly, there were also 82,000 people with CO-OP (Colorado HealthOP) plans who had to pick new plans for 2016, as the CO-OP shut down at the end of 2015.

Colorado HealthOP had by far the lowest premiums in most areas of Colorado in 2015, and particularly for enrollees who don’t receive premium subsidies, the switch to a different carrier meant a sharp increase in premiums for 2016 (in hindsight, the low premiums and generous benefits that the CO-OP offered were clearly unsustainable, but that’s little consolation to the people who had to pay significantly more to maintain health insurance coverage after the end of 2015).

Amid the carrier exits, there was one entrant: UnitedHealthcare of Colorado began offering individual market plans in the state, both on- and off-exchange. Their participation was short-lived, however, as they left the market at the end of 2016.

There were still 75,000 people with grandmothered plans in the individual market in Colorado in 2015, and all of them had to select new coverage for 2016, as grandmothered plans terminated at the end of 2015 in Colorado.

2017: Humana and UnitedHealthcare exited the individual health insurance market in Colorado, both on and off-exchange, at the end of 2016. According to the Colorado Division of Insurance, the carriers’ decisions to leave the individual market impacted about 20,000 people.

Rocky Mountain Health Plans (RMHP, otherwise known as Rocky Mountain HMO) and Anthem BCBS continued to offer plans in the individual market — including in the exchange — in 2017, but their offerings were reduced.

RMHP began offering individual market plans only in Mesa County as of 2017. This is the Grand Junction area, and it’s where RMHP is based. Roughly 10,000 people in other areas of Colorado needed to enroll in new coverage for 2017, as their RMHP coverage ended at the end of 2016. RMHP’s exit from the individual market in the mountains and western slope left many areas in that region with Anthem BCBS as their only on-exchange option starting in 2017.

Anthem continued to offer HMO plans throughout Colorado in 2017 (and continues to do so as of 2019), but they discontinued their PPOs at the end of 2016. There were 62,310 people with Anthem PPOs in the individual market in Colorado in 2016. All of them had to select a new plan for 2017. They still had access to Anthem plans, albeit HMOs.

All together, including Humana, United, RHMP, and Anthem enrollees, more than 92,000 people had to switch plans at the end of 2016.

But Bright Health Insurance was approved by the Colorado Department of Insurance to start offering individual plans on and off the exchange in 2017. Bright was the first new carrier to enter the exchange in Colorado since the exchange opened for business in the fall of 2013. They began offering plans in eight of Colorado’s 64 counties in 2017: Arapahoe, Boulder, Broomfield, Denver, Douglas, El Paso, Jefferson, and Summit counties (there are 16 zip codes in Boulder County, but Bright Health Insurance was only available in four of them. The other seven counties appeared to have coverage county-wide though). They are continuing to offer coverage in those eight counties in 2019.

2018: Colorado Choice, a Colorado non-profit that’s offered coverage for more than four decades, was purchased by Melody Health at the beginning of June 2017 (Melody had planned to offer coverage in Wyoming and Nevada for 2017, but did not get the necessary regulatory approval in time to sell 2017 plans). With the acquisition, Colorado Choice plans began to be marketed as Friday Health Plans for 2018, and are for-profit rather than non-profit. Colorado Choice plans were available in five of Colorado’s nine rating areas in 2017, and that grew to six rating areas for 2018. However, Colorado Choice/Friday Health offered fewer plans in each area in 2018.

2019: Friday Health expanded into the three remaining rating areas, and joined Anthem in offering coverage in all nine of Colorado’s rating areas (Anthem offers plans in every county, whereas Friday only has partial coverage in three of the nine rating areas; their coverage in the West rating area in 2019 is limited to just two of the 21 counties). Friday’s rate filing indicated that they expected their membership to grow to 10,000 people as a result of their coverage area expansion (by the time they filed their 2020 rate proposal, enrollment stood at 7,293). Pueblo has gone from having two insurers in the exchange to three, Boulder has gone from having four to five, and Grand Junction from two to three. Grand Junction is unique in that it’s the only rating area where Rocky Mountain Health Plans offers individual market coverage, and it’s the only rating area where Kaiser does not offer coverage.

The Division of Insurance published a chart showing the projected change in average after-subsidy premiums (for enrollees who receive premium subsidies) from 2018 to 2019, in each of the state’s nine rating areas, for enrollees who keep the same plan in 2019 than they had in 2018. Overall, there was an average decrease of 24 percent. But in Grand Junction, subsidized enrollees who kept the same plan from 2018 to 2019 ended up with an average premium increase of 38 percent. However, if they were willing to switch to the lowest-cost plan at the same metal level, they saw an average after-subsidy premium decrease of 56 percent.

This is a perfect illustration of how a new insurer entrant can disrupt a market, and how the effect can be both good or bad, depending on your perspective. Friday Health has taken over the benchmark plan spot in Grand Junction, with rates that are lower than the benchmark would otherwise have been. That means everyone in that area who receives premium subsidies is getting smaller subsidies in 2019 than they would otherwise have received. If they opted to keep the same plan they had in 2018, they may have seen significant average net premium increases, due to the smaller premium subsidies. But if they opted to switch to a lower-cost plan in the same metal level (offered by Friday Health), they saw a sharp reduction in their premiums for 2019. But for people with pre-existing conditions, provider networks and drug formularies play a role in determining the feasibility of switching to a new plan.

State is seeking CMS input on whether federal permission could be granted to allow anyone to buy a catastrophic plan

S.B.132 was signed into law in 2018, and directed the state to conduct an actuarial study on the impact of allowing people over the age of 30 who don’t have hardship exemptions to purchase catastrophic plans. The bill was amended in February 2018 to ensure that the catastrophic plans would only be available through the exchange. The provision requiring that the state conduct an actuarial study and only submit the 1332 waiver if the proposal would not reduce total premium subsidies or increase average premiums was also an amendment (the initial bill would have just directed the state to seek federal approval to expand access to catastrophic plans).

The ACA’s premium subsidies cannot be used for catastrophic plans, so the expansion of catastrophic plans would likely only appeal to healthy people who aren’t eligible for subsidies and are currently paying full price for the cheapest bronze plans they can get (catastrophic plans are generally less expensive than bronze plans because they’re in a separate risk adjustment pool). The legislation stated that if the study found that doing so would not reduce the total amount of premium subsidies provided to Colorado residents, and would not result in higher average individual market premiums, the state would then submit a 1332 waiver to the federal government, seeking permission to allow anyone in Colorado to purchase a catastrophic plan (the ACA limits the sale of these plans to people under age 30, and people who have a hardship exemption from the ACA’s individual mandate).

The state contracted with Wakely for the actuarial analysis, and the results were published in November 2018. Wakely concluded that total premium subsidies would likely increase (by no more than 6.6 percent) during the first year of universally available catastrophic plans. This is because healthier people would be expected to migrate to lower-cost catastrophic plans, leaving a less healthy population in the metal-level plans. That would lead to higher premiums for the metal-level plans, and since premium subsidies are based on the cost of the benchmark silver plan, subsidy amounts are expected to be higher. And since the people switching to catastrophic plans are expected to be those who aren’t eligible for subsidies anyway, they wouldn’t be giving up subsidies (and thus saving the federal government money) with their switch to catastrophic coverage.

The ACA only allows 1332 waivers to be approved if doing so would not increase federal deficits. Since premium subsidies are funded by the federal government, Wakely’s analysis notes that “allowing greater enrollment in Catastrophic plans would not meet the Federal deficit requirement as part of a 1332 waiver.” But in October 2018, CMS issued new guidance for 1332 waivers, noting that although waivers still cannot be approved if they would increase the federal deficit in the long run, it’s now possible for a waiver to be approved if it would result in increased federal spending in a given year, but not overall. In light of this and the result of Colorado’s actuarial study, Colorado Insurance Commissioner Mike Conway sent a letter to CMS in November 2018, asking whether a 1332 waiver to expand access to catastrophic plans would be likely to be gain approval.

Information about S.B.132, the actuarial study, and correspondence with CMS can be found here.

Allowing brokers to charge fees

S.B.136 was signed into law in 2018. It allows insurance brokers to charge clients a fee if the insurer doesn’t pay a commission. Brokers were not previously allowed to charge any sort of fee, and have historically only been compensated via commissions from insurance carriers (with enrollees paying the same price for their coverage, regardless of whether they use a broker or not).

But some insurers have eliminated broker commissions, resulting in fewer brokers who are willing to work with individual market clients (in the group market, insurers still pay commissions). S.B.136 was designed to ensure that there will continue to be brokers available to serve people who buy coverage in the individual market, although the consumers may have to pay for that assistance themselves.

The Colorado Division of Insurance proposed regulations for broker fees (here and here), which became effective August 8, 2018.

Lawmakers have twice rejected a state-based premium subsidy for people impacted by the subsidy cliff

H.B.1205, considered during the 2018 legislative session, would have implemented a state-based premium subsidy through the end of 2019, for people living in the three most expensive rating areas of the state (the mountains —including Grand Junction, which is its own rating area — and the eastern plains) who earn between 400 and 500 percent of the poverty level (ie, their income is above the eligibility cap for federal premium subsidies) and for whom health insurance premiums would otherwise be more than 20 percent of their household income.

The premium subsidy would have been available for bronze, silver, and gold plans sold through the exchange, and there would have been a special enrollment period from June 1, 2018 to August 1, 2018, to allow people to newly enroll in a plan through the exchange with the state-based subsidies. The legislation called for an appropriation of $6 million from the general fund, to be used by Connect for Health Colorado to fund the state-based subsidy. The House passed the measure, but a Senate committee indefinitely postponed it in early May.

H.B.1205 was very similar to 2017’s H.B.1235, which passed the House in 2017, but not the Senate (the same Senate committee indefinitely postponed it, killing it for the 2017 session). The only real difference for consumers is that the 2017 bill would have provided assistance for people whose insurance premiums exceeded 15 percent of their income, while the 2018 bill would only have provided assistance to people whose premiums exceed 20 percent of their income. For reference, 400 to 500 percent of the poverty level is equal to $100,400 to $125,500 for a family of four purchasing health coverage effective in 2019

DOI banned differing commission structures for brokers

In late 2015, many of the nation’s health insurance carriers began reducing or eliminating broker commissions, mostly for plans sold outside of open enrollment (during special enrollment periods triggered by qualifying events) or for benefit-rich plans at the gold and/or platinum level.

The general consensus was that the commission cuts were an effort by health insurance carriers to limit sales in general, or to limit sales of benefit-rich plans, which tend to be more popular among enrollees who have health conditions, and are more expensive to insure. In 2014 and 2015, eligibility for special enrollment periods was very loosely enforced by Healthcare.gov and some of the state-run exchanges, and carriers noted that healthcare utilization tended to be higher for people who enrolled outside of open enrollment.

In December 2015, Colorado’s Department of Insurance issued a regulatory bulletin (B-4.87) stating that carriers cannot offer “differing commission structures,” which they defined as different commission levels for different metal levels, different commission structures for plans sold during open enrollment versus outside of open enrollment, or “not paying commissions on certain plans offered in the State of Colorado.” The Department of Insurance warned carriers that none of those actions are allowed, and that carriers that utilize differing commission structures would risk “enforcement actions to remedy those violations.”

The purpose of the state’s regulatory bulletin was to protect consumers’ access to the full range of plans available, regardless of whether the consumer is enrolling during open enrollment or as a result of a qualifying event, and regardless of what metal level plan the consumer needs.

Bulletin B-4.87 is still in effect, but some insurers in Colorado have simply switched to a model under which they pay no commissions at all for new enrollments. There’s no “differing commission structure” so the lack of commissions doesn’t run afoul of the regulation. But it does result in fewer brokers being willing to assist people with individual market coverage (commissions are still paid by all insurers for group health insurance plans). After declining in 2017 and 2018, broker commissions have increased again for 2019, as insurers have started to once again be profitable in the individiual market

Regulators considered, but rejected, a switch to a single rating area

Colorado has significant disparity in terms of healthcare costs — and thus health insurance premiums — from one area of the state to another. Rates in the mountain areas of the state are far higher than rates along the I-25 corridor, and although subsidies make coverage affordable for people who are eligible, there’s no assistance for someone earning more than 400 percent of the poverty level.

As an example, a 59-year old in Pagosa Springs who earns $50,000/year would have to pay $1,063/month (25 percent of her income) for the least expensive bronze plan available in the exchange in 2019, and is ineligible for any premium subsidies to make the coverage more affordable (note that if she earned $48,000, she would be eligible for $1,006/month in premium subsidies and could get the least expensive plan for just $56/month; the subsidy cliff is most significant for older applicants in areas where health insurance is expensive).

In an effort to address the disparity, then-Governor Hickenlooper signed HB 1336 into law in May 2016. The bill directed the Colorado Department of Insurance to study the impact of making Colorado one unified rating area, meaning that premiums would rise in the areas where they’re currently lower, and would fall in the mountain areas of the state where they’re currently higher.

The DOI’s report on the impact and viability of a single rating area was presented to the legislative committees in August 2016. The DOI did not recommend that the state become a single rating area, but recommended instead that the state work to find ways to lower the underlying cost of health care, since that’s what drives health insurance premiums. Insurance Commissioner Marguerite Salazar noted that a single rating area strategy could backfire, leading carriers to adjust their plan offerings or even leave the state altogether.

As of 2019, Colorado has nine rating areas (there were 11 prior to 2015, but some areas were combined as of 2015). The District of Columbia uses a single rating area, as do six states: Hawaii, Delaware, New Hampshire, New Jersey, Rhode Island, and Vermont.

Increased legislative oversight

In March 2016, Governor Hickenlooper signed HB1148 into law. HB1148 gives the legislative oversight committee increased authority to monitor and oversee various aspects of Connect for Health Colorado’s rule-making processes.

The law gives the legislative committee “oversight over rules and policies proposed by the health benefit exchange that affect bidding and awarding contracts, carrier and regulating carrier participation, regulating broker participation and compensation, interacting with other state agencies, managing and compensating the assistance network, or the handling of any type of appeal.

Colorado CO-OP shut down by regulators

On October 9, 2015, Colorado HealthOP — the state’s ACA-created CO-OP — joined six other CO-OPs that had already failed (and by the end of 2015, 12 of the original 23 CO-OPs had shut down; as of 2019, there were only four CO-OPs still in operation around the country). The Department of Insurance announced that they had made the difficult decision to decertify Colorado Health OP from the state-run exchange, effectively shutting down the CO-OP.

Although Colorado HealthOP was the seventh CO-OP to fail, they were the first one to publicly disagree with regulators over the shut-down. In their message to members, the CO-OP called the Colorado Division of Insurance’s decision “both irresponsible and premature” and noted that they were “astonished and disappointed by the DOI’s decision”. The CO-OP had said just the day before that they had three viable solutions for funding, and they noted that they had presented them to the DOI earlier in the week.

Colorado Health OP had said that they were on track to pay back their federal start-up loans in full and ahead of schedule, but that was derailed by the announcement on October 1 that risk corridor payments would be just 12.6 percent of the amount owed to each carrier.

Colorado’s then-Insurance Commissioner, Marguerite Salazar, noted that

“Our decision is a direct result of this [risk corridor] shortfall by CMS, and I sympathize with the HealthOP, but the Division has requirements and it has to protect consumers. It is a key function of Colorado Divison of Insurance to make sure that insurance carriers are financially stable enough to pay the claims of their policyholders. While Colorado HealthOP can continue to pay claims for the rest of 2015, we cannot allow it to sell or renew policies on the exchange for 2016.”

The DOI explained that although the CO-OP had been under DOI supervision for most of 2015, the carrier had been meeting their reserve requirements until October. But the risk corridor shortfall meant that “the Colorado HealthOP’s rainy day fund will be completely wiped out, and is in fact expected to be in the negative by $34 million by the end of the year [2015].” Because of this, the DOI felt they had no option other than to decertify Colorado Health OP from the exchange.

In a last-ditch effort to be allowed to participate in the 2016 open enrollment, Colorado HealthOP filed a lawsuit in Denver District Court on October 19, requesting an injunction and temporary restraining order against Insurance Commissioner Marguerite Salazar. But by the end of the day, following a closed-door court hearing, the case had been withdrawn (and suppressed by the court) and the CO-OP had agreed to begin the process of winding down their operations by the end of the year.

Colorado HealthOP had about 80,000 people enrolled in individual plans in 2015. All of those members had to sign up for new coverage for 2016. There were also almost 3,000 members enrolled in small group plans, and initially, the plan was that they would have to switch to new plans as of their next renewal date. But on November 17, Colorado Insurance Commissioner Marguerite Salazar announced that Colorado HealthOP’s small business plans would also terminate as of December 31, and small businesses with Colorado HealthOP plans had to secure coverage with a different carrier for 2016. Colorado HealthOP published a list of FAQs about the small group announcement.

Universal healthcare defeated in Colorado in 2016 election

Supporters of universal healthcare in Colorado worked for months to gather signatures in support of ColoradoCare, a universal coverage system that would have gone into effect in 2019 if voters had approved it in the 2016 election. But voters resoundingly rejected the measure, with just 21 percent in favor, and 79 percent opposed.

ColoradoCare would have been enacted using a 1332 waiver under the ACA, which allows states to chart their own course for healthcare reform, as long as they do so in a way that covers at least as many people as the ACA would have, keeps coverage affordable and at least as comprehensive as it would be under the ACA, and doesn’t increase the federal deficit.

If those general guidelines are satisfied, the state can receive funding from the federal government equal to what would have been provided to the state’s residents in premium tax credits, cost-sharing subsidies, and small business tax credits. In Colorado, those funds, together with Medicaid waiver funds, were projected to total $11.6 billion in 2019. Total costs to run a zero-deductible, universal coverage program in Colorado were estimated at $35.6 billion for 2019. The $25 billion difference would have been generated through a 10% income tax. Employees would have paid only a third of the total tax, with their employers kicking in the remaining two-thirds (ie, employees would have paid 3.33 percent of their gross pay).

Grandmothered plans discontinued at the end of 2015

The Colorado Division of Insurance announced that transitional or “grandmothered” health plans had to be discontinued at the end of 2015. As of 2016, all individual and small-group plans in the state are either fully ACA-compliant, or grandfathered (effective dates prior to March 23, 2010).

Despite the fact that many other states are still allowing grandmothered plans to remain in force until the fall of 2017, there was controversy in Colorado over the fact that grandmothered plans were allowed to renew at all after January 1, 2014. Lawmakers in Colorado passed a bill in 2013 (House Bill 13-1266) that aligned Colorado healthcare law with the ACA. It required Colorado plans to be compliant with the ACA as of their issue or renewal date starting on January 1, 2014. Ultimately, the Division of Insurance used their regulatory power (also provided for in HB 1266) to allow the renewal of grandmothered plans in 2014, but there were questions as to whether or not they overstepped their bounds in doing so.

Background on Colorado’s exchange

Then-Governor John Hickenlooper informed the federal government in October 2012 that Colorado intended to run its own health insurance marketplace, and the state received federal approval of its plan in December 2012.

Unlike politicians in most other states, Colorado legislators voted on a bipartisan basis to move ahead with a state-run exchange. Legislation to establish the state marketplace passed in May 2011 and was signed by Hickenlooper in June 2011. In early 2013, the marketplace was given the brand name “Connect for Health Colorado.”

Colorado’s marketplace is governed by a 12-member board (nine voting and three ex-officio) and led by CEO Kevin Patterson.

Colorado health insurance exchange links

Connect for Health Colorado
855-PLANS-4-YOU (855-752-6749)

State Exchange Profile: Colorado
The Henry J. Kaiser Family Foundation overview of Colorado’s progress toward creating a state health insurance exchange.


Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.