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Colorado has a state-run health insurance exchange, Connect for Health Colorado.
Six insurers offer 2023 health plans through the exchange, down from eight in 2022 (Bright and Oscar both exited the market for 2023).
The Colorado Option debuted for 2023, bringing standardized plans and lower-cost coverage options to the state’s market. Colorado also offers additional cost-sharing assistance to some silver-plan enrollees who receive federal cost-sharing reductions.
As of 2023, Colorado is providing state-funded premium and cost-sharing assistance to undocumented immigrants who enroll through a new public benefit corporation that the state has created. This is separate from the state’s health insurance exchange, as undocumented immigrants are not eligible to use an ACA-created health insurance exchange.
Colorado has a state-run exchange, Connect for Health Colorado.
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.
Although some carriers exited the Colorado exchange at the end of 2016 — as was the case in most states — Connect for Health Colorado has continued to have robust insurer participation. Bright and Oscar both left the exchange after 2022, but there are still six insurers offering plans for 2023. In the individual/family market, there are 337 on-exchange plans available in Colorado for 2023 (plan availability varies considerably from one area to another).
Open enrollment for individual/family health plans in Colorado runs from November 1 to January 15. This is a permanent schedule that Colorado implemented a few years before the federal government started using the same schedule in states that use the HealthCare.gov exchange.
Colorado has published an updated draft of the state’s regulations pertaining to open enrollment, noting that the state’s enrollment window will now align with the federal window, rather than needing an extra month added at the end (as was the case in prior years, when open enrollment in most other states ended December 15).
Outside of open enrollment, a qualifying event is necessary to enroll or make changes to your coverage.
There are six insurers that offer exchange plans in Colorado for 2023, with coverage areas that vary from one insurer to another:
There were eight participating insurers as of 2022, but Bright Health and Oscar Health both exited Colorado’s individual market as of 2023.
But despite the carrier exits, there is still just one county — Jackson, which is sparsely populated — that has only a single insurer offering coverage in the exchange for 2023 (down from 22 counties in 2020 and ten counties in 2021).
Eight insurers offer coverage in Colorado’s exchange in 2021, and all will continue to do so for 2022: Anthem (HMO Colorado), Bright, Cigna, Denver Health, Friday Health Plan, Kaiser Permanente, Oscar, and Rocky Mountain Health Plan. Two insurers expanded their coverage areas for 2021, and four are doing so for 2022. So while there were 22 counties in Colorado (out of 64) where Anthem BCBS was the only insurer offering plans in the exchange in 2020, that dropped to ten counties in 2021, and will drop to just one county (Jackson) for 2022.
Colorado has always had a robust exchange, although most of the insurer participation is 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 had leveled out at seven insurers. Oscar Health joined the Colorado exchange in the Denver metro area in 2020, bringing the total number of insurers to eight.
Here’s a look at how carrier participation in Colorado’s exchange has changed over time:
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).
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).
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.
Although 14 of Colorado’s 64 counties had just one participating insurer in 2018, almost 95 percent of Connect for Health Colorado’s enrollees lived in areas where there were at least two insurers offering plans, and more than 83 percent of enrollees had three or more insurers from which to choose.
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 had partial coverage in three of the nine rating areas; their coverage in the West rating area in 2019 was 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 went from having two insurers in the exchange to three, Boulder went 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 the only rating area where Kaiser did not offer coverage in 2019.
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 took over the benchmark plan spot in Grand Junction in 2019, with rates that were lower than the benchmark would otherwise have been. That means everyone in that area who received premium subsidies was 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. 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.
2020: Oscar Health joined the exchange in the Denver area. All of the other insurers continued to offer plans — although there were some shifts in their coverage areas — so a total of eight insurers are offering plans in Colorado’s exchange in 2020. There are 22 counties in Colorado where Anthem is the only insurer offering plans in the exchange, up from 14 counties in prior years.
Friday Health Plans exited several counties in the eastern part of the state at the end of 2019, although they had no enrollees in any of those six counties. And Kaiser exited the western/mountain area of the state (Kaiser had no enrollees in three of the counties where they exited; curiously, Kaiser’s plans did not appear 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 entered Summit County as part of the Peak Health Alliance, preventing that county from dropping to a single insurer.
2021: Rocky Mountain Health Plans and Bright Health expanded their coverage areas for 2021. RMHP expanded into 12 additional counties: Archuletta, Dolores, Garfield, Gunnison, Hinsdale, La Plata, Montezuma, Montrose, Ouray, Pitkin, San Juan, and San Miguel. Bright Health expanded into Dolores, Grand, Lake, La Plata, Montezuma, and San Juan counties. There are only ten counties in Colorado with just a single insurer (Anthem) offering coverage in 2021: Eagle, Jackson, Logan, Moffat, Phillips, Rio Blanco, Routt, Sedgwick, Washington, and Yuma counties.
2022: Bright, Friday, Oscar, and Rocky Mountain HMO expanded their coverage areas for 2022 individual market coverage. This left Jackson county (a sparsely populated county in northern Colorado) as the only county with just a single participating exchange insurer (Anthem).
2023: Bright and Oscar left Colorado’s individual market at the end of 2022, leaving six insurers offering coverage through the exchange. Jackson County is still the only part of the state where just one insurer offers plans for 2023.
For the six insurers that are offering individual/family health coverage in Colorado for 2023, the average pre-subsidy rate increase is 10.4% (the rate changes range from a decrease of 2.6% for Denver Health, to an increase of 25.1% for Friday Health Plans).
But Colorado is also debuting standardized Colorado Option plans for 2023, which have lower premiums and some enhanced benefits, including $0 primary care and mental health care (Colorado Option is described in more detail below). It’s important for people with 2022 coverage in Colorado to actively compare their choices for 2023 to see if a Colorado Option plan might be a better value than renewing their 2022 plan.
In 2022, the average full-price (pre-subsidy) premium for plans purchased through Connect for Health Colorado was about $466/month. That was among the lowest in the nation; only three states had lower average full-price premiums (Maryland, New Hampshire, and Utah).
And most Colorado enrollees get premium subsidies to help pay for the cost of their coverage. The subsidies are larger and available to more people now that the ARP has been implemented and the “subsidy cliff” has been eliminated (this has been extended through 2025, under the Inflation Reduction Act).
During the open enrollment period for 2022 coverage, 74% of Colorado exchange enrollees qualified for premium subsidies. The average subsidy amount was $368/month, and the average after-subsidy premium (even when we include the quarter of enrollees who pay full price) was $191/month.
It’s noteworthy that although overall average premiums dropped by 20% in Colorado in 2020 — the largest percentage decrease in the country — that rate decrease really only applied to people who don’t get premium subsidies (that was about 20% 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 decreased in line with reductions in the benchmark premium in each area. And some plans (including the benchmarks in some areas) had 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 were 58 plans, and unsubsidized premiums had dropped across the board — all of which was good news for people who don’t get premium subsidies. But this family’s subsidy shrank significantly, to only $379/month in 2020. That’s because the full-cost price of the benchmark plan was a lot lower: $1,159/month in 2020, versus $1,527/month in 2019 (those are two different plans; the benchmark in that area was offered by Kaiser in 2019, and by Cigna in 2020).
Because the benchmark plan is so much cheaper, premium subsidies for everyone in the area are smaller in 2020. For this family, the lowest-cost option for 2020, after their subsidy was applied, was $523/month. The same Bright Health plan that had a net premium of $355/month in 2019 was $529/month in 2020 — despite the fact that its full-price premium (ie, without any subsidies) dropped from $1,102/month to $909/month. If this family wanted an HDHP in 2020, the cheapest one was $569/month.
So if we assume this family enrolled in the $355/month plan in 2019 and they wanted to keep it for 2020, their net premiums increased by 49% (from $355/month to $529/month). And shopping around wouldn’t have done them much good, because the cheapest option for 2020 (a similar plan from Bright Health) would have still resulted in a 47% 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 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 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 prior to the American Rescue Plan Act), they would have seen 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 have dropped to $909/month in 2020.
Here’s a look at how average rates have changed in Colorado’s marketplace over the years:
2015: Average increase of only 0.71% in the ACA-compliant individual market.
2016: Average increase of 9.84%, although it was 12.14% if we only count plans sold in the exchange. Average rate changes by carriers and 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, New Health Ventures (Access Health Colorado), and Time Insurance Company (Time only sold off-exchange plans in 2015, and exited the market nationwide at the end of the year). 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% 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: Average increase of 20.4% for individual market plans (on-exchange, the average was 20.9%, while off-exchange, it was 19.9%). In the small group market, the average increase was just 2.1%.
2018: Average rate increase of 34.3% for individual market plans. Insurers had initially proposed an average rate increase of 26.96%, although that included two filings for plans that would only be available off-exchange (Freedom Life, at 27%, and Anthem’s catastrophic PPO, at 33.5%).
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% from 26.96%. 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 CSR funding would end 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% for 2018. Colorado was one of only five states where the cost of CSR was added to plans at all metal levels in 2018, 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: Average increase of 5.6%. 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% for unsubsidized premiums, people with premium subsidies who kept the same plan from 2018 to 2019 saw an average decrease of 24% 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 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 when Colorado began silver loading the cost of CSR as of 2019, zero-premium bronze plans became available to many enrollees, due to the much larger premium subsidies and the relatively smaller bronze plan prices.
2021: Average premiums decreased by 1.4%. Colorado’s reinsurance program was credited with keeping proposed premiums for 2021 an average of nearly 21% lower than they would otherwise have been. Colorado’s individual market insurers initially proposed an overall average rate increase of 2.2% for 2021, with some insurers proposing increases and others proposing decreases. But after some filings were revised and the rate review process was complete, the Colorado Division of Insurance announced that overall average rates would decrease by 1.4% for 2021, with average premiums declining for every insurer except Cigna and Anthem (and the approved increases for those two insurers are much less significant than the insurers had initially proposed). In the small group market, insurers proposed an overall average rate increase of 5.7 percent, and the Division of Insurance approved an overall average increase of 3.8%.
2022: Colorado’s individual market insurers proposed an overall average rate increase of 1.4%, and state regulators ultimately approved an average rate increase of 1.1%. Again, that only applies to people who pay full price; most enrollees get subsidies, and net rate changes also depend on how much a person’s subsidy changes from one year to the next.
Colorado has been working on a public option program since 2019, when H.B.1004 was signed into law. That bill 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. Lawmakers introduced a public option bill in early 2020, but it was abandoned in the early days of the COVID pandemic.
Lawmakers vowed to revive it in 2021, and H.B.1232 was introduced in Colorado’s House of Representatives in March 2021. Both chambers of Colorado’s legislature made modifications to the bill, but it was ultimately signed into law by Governor Polis in June 2021.
After the amendments made in the House and Senate, the “public option” legislation was watered down to a standardized plan bill with targeted premium reductions, and no longer includes any sort of government-run public option health plan. Despite the substantial concessions that lawmakers made, the Colorado Association of Health Plans remained strongly opposed to the legislation.
The initial version of the legislation, described in detail here, called for the creation of standardized health insurance plans for the individual and small group market starting in 2023. Insurers offering these plans would have had to target premium reductions: 10% lower in 2023 and 20% lower by 2024 (compared with 2021 rates). The bill initially included a second phase that would have been deployed if insurers had not been able to meet those premium reduction targets. The legislation would have then created a true public option (the Colorado Health Insurance Option), which would have been overseen by a nonprofit entity called the Colorado Option Authority. This public option plan would have been made available to Coloradans who wanted to purchase it.
The modifications to the legislation took place in April 2021 in the House, including the removal of the provision that would have created a state-run public option plan if insurers were unable to meet the rate reduction targets in the original legislation. The revised fiscal note for the bill (as of mid-May, after it passed the House) included a summary of the provisions in the bill as it was sent to the Senate. The Senate made some additional modifications, including reducing the target premium reductions from 18% (over three years) to 15%, and eliminating the potential $5,000 annual fine for physicians who refuse to become participating providers with the new plan. Here’s how things stood once the legislation was finalized:
It’s important to note that the majority of Colorado’s individual market exchange enrollees receive premium subsidies, so their net (after-subsidy) premiums depend on the cost of the plan they pick as well as the amount of their subsidy.
If the benchmark plan premium ends up being lower as a result of the introduction of the standardized plan, premium subsidies will decline for everyone in the area, as we saw when Colorado’s reinsurance program drove down overall premiums in 2020. But for people who pay full price for their coverage, the standardized plan could be a more affordable new option. And the standardized plan could end up making coverage more affordable in the small group market, where subsidies are not available.
H.B.1232 was introduced almost a year after the 2020 legislation that would have created the “Colorado Option” plan was abandoned by lawmakers in May 2020, due to the COVID-19 crisis. If the bill had been successful, the Colorado Option plan would have been available to state residents during the open enrollment period in late 2021, with coverage effective in January 2022. But lawmakers felt that crucial stakeholders — including hospitals and medical staff — could not be expected to participate in the legislative process when their focus needed to be on the COVID-19 pandemic instead. And the budget shortfalls caused by the pandemic would also likely have made passage of the bill nearly impossible in 2020.
The 2020 legislation called for the public option to be run by private insurers, but under strict guidelines set by the state. The initial 2021 legislation would have given insurers an opportunity to bring down costs on their own, as opposed to diving straight into a public option program. But it did call for a publicly run program to debut if insurers were not able to meet the proposed premium reduction targets. If that had come to pass, private insurers would not be involved in the public option, and would instead have to compete with it.
But Democratic lawmakers in Colorado have had to compromise significantly on the public option legislation, in the face of opposition from various hospital and physician organizations (those groups’ stance changed from opposed to neutral after the government-run plan was eliminated from the legislation in April 2021). The transition to a government-run program is no longer part of the proposal, although the legislation that passed the House in 2021 does call for the state to step in with reimbursement rates and provider participation requirements if insurers are unable to meet the premium targets or ensure an adequate provider network.
Colorado enacted HB1168 in 2019, paving the way for the state to create a reinsurance program for plan years 2020 and 2021 (under the terms of SB215 and a 1332 waiver extension, the reinsurance program was extended through 2026; a subsequent waiver amendment pushed it out through 2027). The state’s reinsurance waiver proposal was submitted to CMS in May 2019, and received federal approval in July.
Colorado’s reinsurance program took effect in 2020, and resulted in overall average premiums (before subsidies are applied) decreasing by 20%. The reinsurance program is designed to reimburse insurers an average of 60% of the cost of claims that are between $30,000 and $400,000, although the actual reimbursement percentage varies by location. The program is structured to incentivize insurers to offer plans in areas of the state where few insurers previously offered 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 pays a larger percentage of claims in high-cost areas, with specifics that can vary from one year to the next. The goal of the program was to reduce premiums by 15-20% in the parts of the state where premiums were already lower, by 20-25% in areas where premiums were middle-of-the-road, and by 30-35% in areas where premiums were the highest.
The exact parameters have varied a bit over the years. For 2023, the reinsurance program will pay 42% of eligible claims in rating areas 1, 2, and 3 (Boulder, Colorado Springs, and Denver), It will pay 47% of eligible claims in rating areas 4, 6, 7, and 8 (Fort Collins, Greeley, Pueblo, and the eastern plains/south-central Colorado). And in the mountains and western part of the state, including Grand Junction, the reinsurance program will pay 72% of eligible claims.
Overall, the state’s waiver proposal projected that reinsurance would result in a 16% average decrease in average premiums for 2020. Once rates were finalized, the average rate decrease was even bigger, at 20.2%. For 2021, the Division of Insurance noted that the reinsurance program was still keeping premiums an average of 17% lower than they would otherwise have been.
And even though average premiums increased by about 10% for 2023, Colorado regulators noted that the premiums are about 32% lower than they would have been without reinsurance.
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 projected that federal pass-through funding would be $170 million in 2020 (this projection was spot-on; the actual amount was $169.5 million) and $183 million in 2021 (the state received $182.7 million).
A record-high 198,412 people enrolled in coverage through Connect for Health Colorado during the open enrollment period for 2022 coverage. The higher-than-normal enrollment was driven in large part by the American Rescue Plan‘s subsidy enhancements.
2020 was the first time Colorado’s exchange enrollment had dropped, after climbing each year from 2014 through 2019. Enrollment reached a record high in 2021, and again in 2022.
Here’s a look at Connect for Health Colorado enrollment over the years (note that the enrollment reports published by Connect for Health Colorado typically differ from the numbers published by CMS, generally due to small differences in the reporting periods):
Although the ACA requires all individual and small group health plans (effective 2014 or later) to cover ten essential health benefits, the specifics vary by state in terms of exactly what has to be covered for each of those benefits. Colorado has received federal approval to modify its benchmark plan as of 2023, to include some additional services that all ACA-compliant individual and small group plans in the state will have to cover (most states do not change their benchmark plans from one year to the next; Colorado is the only state making changes for 2023).
Colorado’s changes to the benchmark plan for 2023 include additional mental health coverage, expanded access to drugs that can be prescribed as alternatives to opioids, and up to six acupuncture treatments per year. In addition, Colorado is the first state to explicitly include gender-affirming care in its benchmark plan. This means that insurers will have to cover mental and physical health services that help transgender people align their bodies with their gender identity. Colorado already requires insurers to provide some level of gender-affirming care, but the specifics vary considerably from one insurer to another, and insurers sometimes impose specific exclusions that prevent transgender enrollees from receiving the care they need. This will no longer be the case as of 2023, due to the state’s benchmark plan change.
(Washington state will require state-regulated health plans to cover gender-affirming care as of 2022, but has not changed its benchmark plan to specifically clarify what has to be covered.)
In June 2020, Colorado lawmakers approved HB1236, which called for the creation of an Affordable Health Care Coverage Easy Enrollment Program (referred to as a Tax Time Enrollment) in the state, starting in 2022 (based on 2021 tax returns). The legislation, which was signed into law by Governor Polis in early July, is supported by the state-run exchange, Connect for Health Colorado, and is very similar to a program that Maryland implemented in 2020.
HB1236 lets Colorado residents indicate on their state tax returns that they would like Connect for Health Colorado to determine, based on the information on their tax return, whether they might be eligible for free or subsidized health coverage. If so, the exchange reaches out to the person to help them enroll in coverage — Medicaid, CHP+, or a subsidized private plan in the individual market.
The legislation creates a 60-day special enrollment period for people identified by the program as eligible for free or subsidized coverage, so that they have a chance to enroll in coverage early in the year (soon after filing their tax return) instead of having to wait for the open enrollment period in the fall. Amendments made by the Senate in June clarify that the person would have to be represented on a Colorado tax return filed by the April 15 deadline, and that the insurer will not have to further verify that the person is eligible for a special enrollment period.
A recent Colorado Health Access survey found that people with income between 139 and 400% of the poverty level (ie, people who are eligible for premium subsidies in the exchange) are more likely to be uninsured than people with lower or higher income. The easy enrollment program can help to identify these individuals and allow the exchange to provide them with targeted enrollment assistance outside of the normal open enrollment window.
Colorado Senate Bill 215 was signed into law on June 30, 2020. The law, which is known as the Health Insurance Affordability Enterprise, funds the state’s existing reinsurance program for five more years (it was previously only funded through 2021), and funds state-based subsidies to make coverage and medical care more affordable, as well as outreach and enrollment activities.
The law called for the state to start collecting a new fee assessed on health insurance premiums for health plans subject to regulation by the Colorado Division of Insurance (ie, individual plans and fully-insured group plans, but not self-insured group plans). The fee replaced the federal Health Insurance Tax, which was eliminated after the end of 2020. The bill also imposes a new assessment on Colorado hospitals, replacing (at a lower amount) the existing fee that funds Colorado’s reinsurance program.
The funding to make coverage more affordable is allocated to two separate programs. The first, which became available as of 2022, sends money directly to health insurance companies so that they can further reduce out-of-pocket costs for some people who also receive premium subsidies and cost-sharing reductions under the ACA. For 2022, applicants with household income between 150% and 200% of the poverty level are eligible for the additional cost-sharing reductions. Just like the federal cost-sharing reductions, enrollees need to select a silver plan in order to take advantage of this new benefit. For these enrollees, out-of-pocket costs (copays, deductibles, out-of-pocket maximum) will be lower than they would otherwise have been.
The second program will be state-based premium subsidies, available starting in 2023, for people with income up to 300% of the poverty level who don’t get ACA premium subsidies, including undocumented immigrants. (This was initially also supposed to include people caught by the family glitch, but the Biden administration has implemented a fix for the family glitch that is in place as of the 2023 plan year.)
Under federal rules, undocumented immigrants cannot enroll in plans through the exchange. So the state has created a separate Colorado Public Benefit Corporation that has the same plans available as the exchange, but that is available to undocumented immigrants and that allows them to take advantage of the state-funded premium subsidies.
In June 2021, Colorado enacted HB1289, which aims to improve health care access for pregnant people and children. The legislation will expand access to Medicaid coverage for undocumented pregnant people and children, and it will also create a special enrollment period for individual/family health coverage if a person is pregnant.
As of 2024, a new subsection (H) will be added in Section 3(a)(II) of the Colorado statute that governs access to special enrollment periods for people who purchase their own health coverage (through Connect for Health Colorado or off-exchange, depending on the circumstances).
Starting in 2024, a special enrollment period will be available for a person who becomes pregnant (once the pregnancy is certified by a health care provider) if they don’t already have health coverage. So pregnancy will not allow a person to switch plans, but it will allow them to newly enroll in coverage.
The pregnant person will have the option to have coverage backdated to the first of the month when the pregnancy is certified by a health care provider, or to choose to have coverage effective the first of the month following enrollment.
A handful of other states also offer a special enrollment period due to pregnancy. But this is the exception to the rule. A state has to run its own exchange in order to offer this SEP, as HealthCare.gov does not offer it (and HealthCare.gov is used by the majority of the states).
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. The state is still awaiting a reply as of 2020.
Information about S.B.132, the actuarial study, and correspondence with CMS can be found here.
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 individual market
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 had 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 2020, 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.
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 2020, 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. The Colorado Division of Insurance 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 .” 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 then-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.
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).
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 were 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, 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.
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.“
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, which became effective August 8, 2018.
Connect for Health Colorado
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.
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