State seeks Federal funding to help expand health insurance coverage.
DENVER - On November 30, the Colorado Division of Insurance (DOI), part of the Department of Regulatory Agencies (DORA), submitted a Section 1332 Innovation Waiver Request for the Colorado Option.
If the waiver is approved and the health insurers satisfy the requirements of the legislation, the Colorado Option will provide over $135M annually, and more than half a billion dollars over the life of the waiver, in federal funding to expand access to affordable, quality health insurance. This includes new support for Coloradans that have been left out of the financial help provided under the Affordable Care Act (ACA), and expands subsidies for some consumers enrolled through Connect for Health Colorado.
“This request is another critical step in not only bringing down the number of uninsured in our state, but also in helping people get affordable, quality health insurance. This will give them access to preventive care, care for chronic conditions and the regular, necessary care that is so important during this pandemic,” said Colorado Insurance Commissioner Michael Conway. “If this waiver is approved, it will help us to build a more equitable health care system for all Coloradans and continue our commitment to lower premiums in the individual market.”
How will the waiver help Coloradans?
The pass-through funds would be used for a program that would expand access to individual health insurance plans with $0 premiums, as well as expanding the availability of financial help for out-of-pocket costs such as co-pays, deductibles and coinsurance (collectively called “cost sharing”). The funds will also be used to offer additional assistance to people with household incomes below three times the Federal Poverty Level (300% of the FPL).
In addition, the lower premiums and additional assistance that will be provided under the Colorado Option are expected to increase enrollment in individual health insurance plans (meaning health insurance that is not from an employer). The federal funds will also be used to expand coverage to Coloradans that do not receive subsidies from the Affordable Care Act. Initial actuarial estimates suggest that by 2027 the number of people signing up for insurance is expected to grow by 25,000 - an increase of 11.5% in the individual market.
What is a 1332 Waiver Request?
Section 1332 of the 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 “federal pass-through funding.”
To put these innovations into practice, a state must submit a waiver request to the federal government to waive certain provisions of the ACA.
Like several other states, Colorado currently has federal approval to operate a Reinsurance Program -- approval that was granted through a 1332 waiver request. Colorado’s Reinsurance Program reduces premiums and increases the affordability of health insurance in Colorado’s individual health insurance market. The program has resulted in average savings of over 20% in each year it's been in place, and the federal government recently approved the continuation of the program through 2026. This new 1332 waiver request is an amendment to Colorado’s existing federal waiver, and will combine Colorado’s existing Reinsurance Program with the Colorado Option program under a single waiver.
If approved, this 1332 waiver amendment will allow Colorado to fully implement the Colorado Option and lower insurance premiums even further than the current Reinsurance Program, while addressing underlying costs, and providing additional subsidies to communities of color. Preliminary estimates indicate the waiver amendment could bring in an additional several million dollars to Colorado to support health insurance coverage and improvements in health equity for people typically underserved in health care.
The Colorado Option was enacted through HB21-1232, which was signed into law by Governor Polis in June 2021.
Find more information about the Colorado Option at the Division's Colorado Option website.
t the Division's Colorado Option website.
About the Division of Insurance:
The Colorado Division of Insurance (DOI), part of the Department of Regulatory Agencies (DORA), regulates the insurance industry and assists consumers and other stakeholders with insurance issues. Visit doi.colorado.gov for more information or call 303-894-7499 / toll free 800-930-3745.
DORA is dedicated to preserving the integrity of the marketplace and is committed to promoting a fair and competitive business environment in Colorado. Consumer protection is our mission. Visit dora.colorado.gov for more information or call 303-894-7855 / toll free 800-886-7675.