Most Colorado Option health insurance plans do not yet meet 5% cost reduction requirement – ​​InsuranceNewsNet


Only one of the eight health insurers operating in Colorado showed they would meet the requirement to lower monthly premiums for all customers buying the new standardized health plans known as the ‘Colorado Option’ – although others may do so before the state won’t approve its final tariffs 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 out-of-pocket costs are similar regardless of which insurer plan someone chooses. However, they have different networks of doctors and hospitals and charge different amounts for specific drugs.

Colorado Option health insurance plans are expected to reduce monthly premiums by 5% from the baseline when they debut in 2023, declining further to a 10% reduction in 2024, said Adam Fox, deputy director of the Colorado Consumer Health Initiative. Ultimately, premiums are expected to fall by 15% by 2025.

But the requirement will not be enforced this year.

While legislative discussions on the Colorado option have largely focused on cutting rates by making better deals with hospitals, they can get those cuts in a number of ways, Fox said. The exception is that there are more limits on out-of-pocket expenses in Colorado Option plans, so they can’t just shift expenses to people who need to use their insurance.

Monthly premiums don’t have to drop 5% because there’s an allowance for inflation in the cost of health services, Fox said.

Denver Health was the only insurer to meet the requirement for all plans sold under the Colorado Option, according to an analysis by the Colorado Consumer Health Initiative of preliminary rate filings. Final rates will not be published until mid-October.

Anthemfriday and Permanent Kaiser hit the mark in their initial filings for only some of the plans they offered to sell in the individual and small group markets. Glowing HealthCigna and Rocky Mountain Health Plans did not meet the requirement for either plan. United Healthcare the filings were redacted to the point that it’s unclear whether any plans hit the mark, according to the analysis.

The fact that Denver Health was able to meet the goal of all proposed plans, showing that the goal is not unrealistic, Fox said.

“Some of these carriers really don’t put in much effort,” he said.

Vince Plymelspokesperson for Colorado Division of Insurancesaid final rates are generally lower than the preliminary rates the division releases over the summer.

Health insurance companies submit their proposed rates along with information on how much they plan to spend on medical care and prescription drugs for customers, as well as their overhead and profit. The division then decides whether it has demonstrated that the rate it is looking for is the correct one.

“Sometimes these changes are general and impact the statewide averages that we’re talking about, and other times the changes may be more specific to a company or the plans in a particular region or at some level of plans,” he said.

In 2023, there is no penalty if Colorado option plans do not meet the 5% premium reduction target, Plymell said. However, if they don’t meet the 2024 goal – a 10% reduction – the division can order hearings to determine why they haven’t, he said.

“The industry has said they believe they can get premium cuts. However, if the market fails to do so, the division has the power to intervene in 2024,” he said.

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