Only one of the eight health insurers operating in Colorado has indicated it will comply with the requirement to lower monthly premiums for all customers who buy the new standardized health plans, known as the “Colorado Option” — though more are possible before the state sign their final prices next month.
Unlike a true public option, Colorado Option plans are sold by private insurance companies. The main difference is that they follow a stricter design, so your out-of-pocket costs are similar regardless of the insurer plan one chooses. However, they have different networks of doctors and hospitals and charge different amounts for specific drugs.
Colorado Option health insurance plans are set to reduce monthly premiums by 5 percent from the baseline when they debut in 2023, further reducing to a 10 percent reduction in 2024, said Adam Fox, deputy director of the Colorado Consumer Health Initiative . Ultimately, premiums will have to drop 15% by 2025.
But the requirement will not apply this year.
While much of the focus in legislative discussions about Colorado’s option has been on reducing rates by striking better deals with hospitals, they can get to those reductions in a number of ways, Fox said. The exception is that there are more out-of-pocket limits in the Colorado Option plans, so they can’t just pass the cost on to people who need to use their insurance.
Monthly premiums don’t actually have to drop as much as 5 percent because there’s an allowance for inflation in the cost of health care, Fox said.
Denver Health was the only insurer to meet the requirement for all plans sold under the Colorado Option framework, according to a Colorado Consumer Health Initiative analysis of preliminary rate filings. Final prices won’t be released until mid-October.
Anthem, Friday and Kaiser Permanente met the goal in their initial filings for only some of the plans they proposed to sell in the individual and small group markets. Bright Health, Cigna and Rocky Mountain health plans do not qualify for any plans. United Healthcare’s documents were redacted to the extent that it is unclear whether some plans met the target, according to the analysis.
The fact that Denver Health was able to meet the goal for all of the plans it offers shows that the goal is not unrealistic, Fox said.
“Some of these carriers really don’t make that much of an effort,” he said.
Vince Plymel, a spokesman for the Colorado Department of Insurance, said the final rates are generally lower than the preliminary ones the department makes public over the summer.
Health insurance companies present their quoted prices along with information about how much they expect to spend on medical care and prescription drugs for customers, as well as their overhead and profits. The department then decides whether they have shown that the rate they are seeking is the right one.
“Sometimes these changes are across the board and affect the nationwide averages we’re talking about, and other times the changes may be more specific to a company or the plans in a certain region or a certain plan tier,” he said.
In 2023, there is no penalty if Colorado Option plans do not meet the goal of reducing premiums by 5 percent, Plymell said. However, if they don’t meet the 2024 goal — a 10 percent reduction — the department could order hearings to determine why they didn’t, he said.
“The industry has said it believes it can achieve premium reductions. However, if the market fails to do so, the division has the power to step in until 2024,” he said.
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