DOI - Vincent Plymell
Governor's Office - Melissa Dworkin
Colorado Option and Reinsurance Programs combine for unprecedented savings for Coloradans
DENVER - Today, the federal government, through the Department of Health & Human Services and the U.S. Department of the Treasury, is announcing that the Colorado Division of Insurance (DOI) will receive $245 million in pass-through funding for its health insurance programs for 2023. This amount includes funds for the Colorado Reinsurance Program, and for the first time, the Colorado Option program.
While a number of states have reinsurance programs, this is the first time the federal government has provided pass-through funding in recognition of cost savings for a combined program such as Colorado’s waiver plan. In its decision, the federal government recognized that the impact of Colorado’s Reinsurance Program and the Colorado Option was that they reduced premiums for Coloradans in the first year. Specifically, the impact of the Colorado Option was to reduce the second-lowest cost silver plans throughout the state by an average of 4.7%.
“This $245 million in federal funding will directly reduce insurance costs for Coloradans. Saving people money on health care has been a top priority since day one. Colorado is now proudly the first state in the nation to receive this federal support for the money-saving Colorado Option which, along with the bipartisan Reinsurance program, will further cut health care costs,” said Governor Polis.
Yesterday, Lt. Governor Dianne Primavera, joined President Biden and Vice President Harris in the East Room of the White House for an announcement of a new effort to lower the cost of prescription drugs and health care costs for seniors.
“Colorado is a national leader when it comes to saving people money on health care,” said Colorado Lt. Governor Dianne Primavera and Director of the Office of Saving People Money on Health Care. “The first year they were available, over 35,000 Coloradans enrolled in Colorado Option plans and the OmniSalud program, and the Reinsurance program continues to drive down premiums. This announcement from our federal partners allows Colorado to keep making health insurance products even more affordable for residents. Access to quality coverage has a wide array of health benefits and promotes financial security for Colorado families. We look forward to continuing this important work because the wellness of our neighbors is foundational to our strength as a state.”
“This is unprecedented. Not only is this the largest amount of pass-through funding we have seen, it is an acknowledgment from the federal government of the savings from the Colorado Option, teaming up with the Reinsurance Program for a one-two punch in saving people money on health care,” said Colorado Insurance Commissioner Michael Conway. “While special interests have always played politics with these programs, this award from our federal partners shows that the Reinsurance Program continues to deliver on the more than $1 billion dollars the program has reduced premiums since it began. And today’s announcement shows that the federal government objectively analyzed the impact of the Colorado Option and the Reinsurance Program, and found that overall, they reduced premiums and made coverage more affordable.”
These pass-through funds will go back into the Reinsurance Program to continue to lower premiums, as well as provide direct subsidies to lower out-of-pocket costs (such as co-pays or coinsurance) for eligible Connect for Health Colorado consumers, and support the OmniSalud program.
“This announcement is a win for all Coloradans - including the hospitals and insurers that have fought these programs in the past,” added Commissioner Conway. “My sincere hope is that we will all work together moving forward to continue to deliver for Coloradans.”
History of the Programs
In 2019, Governor Polis signed the Reinsurance Program into law. The legislation was sponsored by Representatives Julie McCluskie and Janice Rich, and Senators Kerry Donovan and Bob Rankin. In 2021, Governor Polis signed legislation into law to create the Colorado Option. This legislation was sponsored by then-Representative, now Senator, Dylan Roberts and Representative Iman Jodeh, and Senator Kerry Donovan.
The Reinsurance Program has already reduced premiums for Coloradans by $1.1 billion ($1,180,015,815) for 2020 - 2023. The initial estimate for 2024 shows that premiums would have been 21% higher than they would have been without the program, which equates to $357 million in savings. This brings the total estimated saving for the program to $1.5 billion.
Colorado Option plans were first made available this year, with over 35,000 people enrolling in the plans and accounting for 13% of the 2023 open enrollment activity with Connect for Health Colorado. For comparison, Washington state’s public option plan only garnered about 1% of enrollment in its exchange for its first year.
The Colorado Option consists of health plans with standard benefits from all current individual and small group health insurance companies. These standard benefits are the same across all companies, allowing consumers and businesses to easily compare and choose plans that fit their needs. In addition to covering all essential health benefits required by the Affordable Care Act (ACA), the Colorado Option plans offer free primary care and free mental health health visits, and have been designed to improve access, affordability, and racial health equity.
Both the Reinsurance Program and the Colorado Option were authorized by the federal government through a process called a 1332 waiver. Section 1332 of the Affordable Care Act (ACA) allows states to develop innovative approaches to health insurance by changing or waiving parts of the ACA. If a state can reduce the cost of health insurance for its residents, and by doing so, save the federal government money, the 1332 waiver allows that state to receive those federal savings in the form of “pass-through funding” from the federal government.
Pass-through funding is the result of money saved by these programs - money the federal government does not have to spend on health insurance subsidies for the Affordable Care Act (ACA). Rather than the federal government keeping the savings, the savings are passed back to the State of Colorado and applied to programs to make health insurance more affordable and accessible.