Colorado ACA Marketplace guide 2023

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 fairly robust insurer participation. Bright and Oscar both left the exchange after 2022, but six insurers offered a total of 337 on-exchange plans in the individual/family market for 2023 (plan availability varies considerably from one area to another). Friday Health Plans stopped accepting new enrollments in May 2023, but will continue to service existing policies through the end of the year. Utah-based SelectHealth plans to join Colorado’s exchange for 2024.

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:

• Anthem
• Cigna
• Denver Health
• Friday Health Plans (new enrollments no longer accepted)
• Kaiser
• Rocky Mountain Health Plans

There were eight participating insurers as of 2022, but Bright Health and Oscar Health both exited Colorado’s individual market as of 2023. For 2024, SelectHealth plans to join the exchange.

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.

Across the insurers that offer individual/family health coverage in Colorado for 2023, the average pre-subsidy rate increase was 10.4% (the rate changes ranged from a decrease of 2.6% for Denver Health, to an increase of 25.1% for Friday Health Plans; note that Friday stopped accepting new-enrollments as of May 2023).

But Colorado also debuted standardized Colorado Option plans for 2023, which have lower premiums and some enhanced benefits, including $0 primary care and mental health care (the Colorado Option is described in more detail below). The state noted that about 35,000 people enrolled in Colorado Option plans in their first year. 

In 2023, the average full-price (pre-subsidy) premium for plans purchased through Connect for Health Colorado was about $513/month. That was among the lowest in the nation; only six states had lower average full-price premiums (Idaho, Massachusetts, Maryland, New Hampshire, Utah, and Virginia), and the national average was about $605/month.

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 2023 coverage, nearly 75% of Colorado exchange enrollees qualified for premium subsidies. The average subsidy amount was $404/month, and the average after-subsidy premium (even when we include the quarter of enrollees who pay full price) was $143/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.

2020: Average premiums decreased by 20%, thanks to the state’s new reinsurance program.

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 Option plans are standardized health plans that are offered by the state’s individual and small group health insurers. During the open enrollment period for 2023 coverage, approximately 35,000 Colorado residents signed up for Colorado Option plans, including 13% of the people who enrolled in plans through Connect for Health Colorado.

In addition to standardized benefits, Colorado Option plans must achieve targeted premium reductions over time. Here are the details that were included in the Colorado Option legislation that the state enacted in 2022, and additional legislation that was enacted in 2023:

• By January 2022, an advisory board would develop a standardized plan design, including bronze, silver, and gold coverage levels (the details of the standardized plan designs for 2023 are available here). Insurers that offer individual and small group health coverage in Colorado are required to offer this standardized plan as of 2023, in all counties where they offer any coverage. If there’s a county where no carriers offer coverage, the Division of Insurance could step in and require a carrier to offer the standardized plan in that county (this has not yet been an issue; 63 of the state’s 64 counties have at least two participating insurers).
• In 2023, insurers must offer the standardized plans with premiums that are at least 5% lower than the carrier’s 2021 rates, adjusted for medical inflation. Another 5% reduction must be achieved in 2024 and 2025, bringing standardized plan rates to 15% lower than the carrier’s rates were in 2021 (but the adjustment for medical inflation means that it won’t actually be 15% lower in terms of actual dollar amounts, as medical inflation is expected to continue to be positive). 
• The methodology for calculating the rate reductions as of 2024 is outlined here.
• H.B.1224, enacted in 2023, gives the Colorado Division of Insurance more time to review Colorado Option rate filings (2024 filings were made publicly available in March 2023), and gives the agency authority to limit insurers’ profit and administration expenses.
• If a carrier is not able to meet the premium reduction targets, or to maintain an adequate provider network, a public hearing will be held. Depending on the circumstances, the insurance commissioner may then step in to establish reimbursement rates for medical providers. The rates would have to be at least 135% of Medicare rates for doctors, and at least 155% of Medicare rates for hospitals.
• For 2024, the preliminary rates filed by insurers indicate that most insurers have said they cannot meet the 2024 rate reduction target for any of their plans. The Colorado Division of Insurance will hold hearings in the summer of 2023 in an effort to find ways to drive the proposed rates lower. 
• If network adequacy issues arise, the insurance commissioner can step in to require hospitals to accept the plan and its reimbursement rates. If it comes to that, the legislation includes a fine for non-compliance. It could be up to $10,000 per day, increasing to up to $40,000 per day after 30 days of continued non-participation. The version that passed the House in early May also included a fine of up to $5,000 per year for physicians who refuse to participate in the program, but that was removed in the Senate.
• The state submitted an amendment request for its existing 1332 waiver (which authorizes the state’s reinsurance program through 2026) to recoup whatever savings the Colorado Option program will generate for the federal government, and that amendment was approved in June 2022 (premium subsidies are smaller if rates are lower; using a 1332 waiver allows the state to receive that money and put it towards making the program work and funding the state’s Health Insurance Affordability Enterprise, as opposed to letting the federal government keep the savings).

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.

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 pays 42% of eligible claims in rating areas 1, 2, and 3 (Boulder, Colorado Springs, and Denver), It pays 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 pays 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). Colorado received $196.7 million in pass-through funding in 2022.

A record-high 201,758 people enrolled in coverage through Connect for Health Colorado during the open enrollment period for 2023 coverage, marking the first time enrollment had surpassed 200,000 people. The increased enrollment in recent years has been driven in large part by the American Rescue Plan‘s subsidy enhancements, which will remain in place through at least 2025.

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, 2022, and again in 2023. 

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):

• 2014: 125,402 people enrolled. In addition, nearly 182,000 people qualified for the state’s expanded Medicaid program. 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: 140,327 people enrolled. Ninety percent of Colorado’s exchange enrollees picked nonprofit health plans in 2015 (Colorado HealthOP, which was an ACA-created CO-OP, Kaiser Permanente, and Rocky Mountain Health Plans).
• 2016: 150,769 people enrolled.
• 2017: 161,568 people enrolled. 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, which run their own exchanges and conduct their own marketing and outreach.
• 2018: 161,764 people enrolled.
• 2019: 170,325 people enrolled.
• 2020: 166,852 people enrolled.
• 2021: 179,607 people enrolled.
• 2022: 198,412 people enrolled.
• 2023: 201,758 people enrolled.

Three insurers currently offer dental plans through the Colorado Marketplace. Learn about dental coverage options in Colorado.