Will the Colorado Option bring health insurance prices down?

Health insurers and hospitals reached deals meant to help bring down the price of Colorado Option insurance plans, but it remains to be seen whether they’ve met their goal of reducing monthly costs 10%.

The Colorado Option is a standardized health insurance plan sold by private companies, not a true government-run public option. Its plans are required to cover more primary care and behavioral health services without out-of-pocket costs than most plans.

Next year, the monthly premium costs of the plans are supposed to be 10% lower than they were in 2021, after adjusting for inflation.

The insurers had to file their proposed rates for next year by June 26, and typically the Colorado Division of Insurance will release its initial findings in mid-July, said Adam Fox, deputy director of the Colorado Consumer Health Initiative.

Usually, the rates that are finalized in October only differ from those proposed in July by a few percentage points, Fox said. That may not be the case this year, because the tight deadline for rate filing may mean that the insurers didn’t fully account for any savings from negotiating lower rates, he said.

“I wouldn’t read too much into where they will ultimately be” based on the preliminary rates, he said.

About 35,000 people, or 13% of those buying on the individual marketplace, chose Colorado Option plans in 2023.

Few insurers met the target of reducing premiums by 5% in 2023, when there were no penalties for failing to do so. Documents filed in March showed only Denver Health Medical Plan expected all its plans to meet the 10% goal for 2024, though some other insurers said a handful of their offerings would make the cut.

The insurance companies and hospitals they contract with were scheduled to face individual public hearings in June, but the Division of Insurance canceled those after determining that the insurers had gotten the largest concessions the state could ask hospitals to accept. General hearings about the state of the small group and individual markets are scheduled for Thursday and Friday, respectively.

Under the law, the state couldn’t compel hospitals to take more than a 20% cut in the rates a particular insurer pays, and also couldn’t require rates below a “floor” that’s at least 65% higher than what Medicare would pay for the same services.

Colorado’s Health Care Future, a subsidiary of a national group of insurance companies, health care providers and business groups that oppose measures like public options or allowing people to buy into Medicare coverage, said the canceled hearings showed the law creating the Colorado Option was failing.

“There is nothing the hearings could have achieved to reduce costs or health insurance premiums given the flaws inherent in the Colorado state government mandates. The hearings would have been ineffective because insurers and providers had already achieved the statutory minimum reimbursement rates independent of the law to ensure access to high-quality care for patients,” the group said in a statement.

Vince Plymell, spokesman for the Division of Insurance, countered that the law’s requirements and the possibility of public scrutiny were instrumental in lowering rates.

“This year’s public hearing process has shown us that the hearings are an effective tool to get companies and health care providers to negotiate lower reimbursement rates,” he said in a statement. “Insurance companies and hospitals worked together to lower the costs of providing care, which will save consumers money on their health insurance premiums.”

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