Denver, CO — The Colorado Association of Health Plans (CAHP) today addressed findings in the State of Colorado’s 2023 Health Insurance Cost Report, highlighting the consistently low profitability of health insurance carriers in the state, especially compared to other healthcare stakeholders, including hospitals, pharmaceutical companies, and providers.
According to the report, health insurers’ profit margins have fluctuated between modest gains and losses over the past five years. Most notably, insurers reported a loss of 2.8% in 2023 and significantly higher losses in earlier years, including -7.8% in 2021 and -6.1% in 2022. These figures stand in stark contrast to the substantial revenues reported by providers and pharmaceutical organizations, which remain primary drivers of rising healthcare costs.
2023 Health Insurance Cost Report“Colorado’s health insurance industry operates on incredibly thin margins,” said Kevin McFatridge, Executive Director of CAHP. “The idea that insurers are the sole contributors to rising premiums ignores the larger financial picture. Insurers are accountable stewards of healthcare dollars, with over 86% of collected premiums going directly to cover medical expenses for Coloradans and 4.1% spent on state and federal taxes and fees.”
Key Insights from the 2023 Report
- Direct Healthcare Costs Dominate: In 2023, 86% of every premium dollar went to cover the cost of healthcare services, including payments to hospitals, doctors, and pharmacies. This highlights the industry’s commitment to ensuring funds are allocated to care rather than administrative overhead or profit.
- Increase in state and federal taxes in fees.
- Modest Industry Margins: The average profit margin for health insurers from 2019 to 2023 was less than 0%, reflecting losses that contradict rhetoric framing insurers as excessively profitable.
- Unbalanced Cost Trends: Providers and pharmaceutical companies have seen increasing revenue driven by rising prices, utilization, and the introduction of expensive treatments.
Setting the Record Straight
Despite public discourse often positioning insurance carriers as the primary culprits of rising healthcare costs, the reality painted by the state’s own data is more nuanced. Hospitals and other healthcare providers consistently demand higher reimbursement rates, and pharmaceutical prices continue to climb, significantly outpacing inflation.
Additionally, the growing number of mandates requiring coverage for specific procedures, medications, and treatments further contributes to rising premiums. Policymakers, seeking the best outcomes for their constituents, understandably want to ensure access to comprehensive care. However, these requirements invariably come with a cost, often leading to higher premiums for consumers.
“The costs of care—not the administrative costs or modest gains of insurers—are the true culprits behind high premiums,” McFatridge added. “We are committed to transparency and to working with policymakers to address the systemic drivers of healthcare inflation.”
A Path Forward
The Colorado Association of Health Plans remains focused on promoting cost-effective and quality care for all Coloradans. CAHP supports initiatives to increase transparency across all stakeholders in the healthcare system, including hospitals and pharmaceutical companies, which account for a significant portion of overall spending.
“We must move beyond blame and rhetoric to collaborate on solutions that tackle the root causes of rising healthcare costs,” McFatridge emphasized.
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About the Colorado Association of Health Plans
The Colorado Association of Health Plans represents the state’s leading health insurance carriers, dedicated to ensuring access to affordable, high-quality healthcare for all Coloradans. Our members provide coverage to millions across the state, focusing on innovation, transparency, and efficiency in healthcare delivery.
