Source: The Denver Post
Funding for Colorado programs that lower the cost of health insurance is running short by about $140 million, and lawmakers are looking to impose new fees on major insurers and sell bonds to help fill the hole — at least for one more year.
Senate Bill 178 would require the five largest health insurance companies in the state to pay $8 million each while authorizing $100 million in bond sales, which the state would repay out of the $140 million of insurer taxes it receives each year. The affected companies are Anthem Blue Cross Blue Shield, Cigna, United Healthcare, CVS Aetna and Kaiser Permanente.
The one-time fee and bond sales would get the programs managed by the Colorado Health Insurance Affordability Enterprise through the next fiscal year, said Rep. Lindsay Gilchrist, a Denver Democrat and one of the bill’s sponsors.
The bill also would extend a current law allowing taxpayers to collect up to $9 million in tax credits for donations toward insurance affordability programs, which would divert that money away from the general fund. Typically, insurance companies are the only donors toward those programs.
Four people affiliated with the insurance industry spoke in opposition to the bill during a committee hearing Thursday. The Colorado Association of Health Plans, an insurer trade group, said companies would have to pass the $40 million on to their customers.
“We are committed to working with policymakers on short- and long-term solutions that improve affordability and sustainably fund (the affordability programs). This approach moves us in the wrong direction,” the group said in a statement.
Twenty-three people who identified themselves as advocates, county commissioners and members of the hospital industry expressed some degree of support in their comments, with some full-throated endorsements and others who saw the current bill as a partial solution they could build on. The Colorado Children’s Campaign asked committee members to support the bill because it worried kids would go without medical care if their families lost coverage.
“Colorado needs to sustain the Colorado Health Insurance Affordability Enterprise so that families who buy insurance through the state marketplace do not see their monthly premiums increase beyond what they can afford,” director of health policy Toni Sarge said in a statement.Colorado created the Health Insurance Affordability Enterprise to combine federal funds and an annual fee on insurance companies, and to use that money for three programs: reinsurance, subsidies for insurance purchasers on the marketplace and OmniSalud, which reduces the cost of purchasing marketplace coverage for a few thousand undocumented people.
Currently, Colorado charges a 1.15% fee on nonprofit health insurance companies’ premiums and a 2.1% fee on for-profits’ premiums to help fund the three programs. The fees on health insurers brought in $123.7 million in 2025, according to the enterprise’s annual report.
The five carriers that would pay the additional $40 million pay 97% of the fees, or about $120 million.
“The fee no longer brings in enough money to cover those programs,” said Rep. Kyle Brown, a Louisville Democrat and bill sponsor. “Our funding is falling off a cliff, and we need to shore this up so people don’t get hurt.”
Reinsurance is essentially a backstop for insurance companies, limiting how much they have to pay for the subset of unlucky customers who need expensive health care. Because they know they won’t have to pay as much, they can set premiums lower for everyone.
In the current year, the Colorado Division of Insurance estimated reinsurance saved an average of $1,411 per enrollee, with average savings about three times higher on the Western Slope. In 2025, it cost about $407 million, with almost 90% of the funds coming from the federal government.
Essentially, when premiums are lower, the federal government doesn’t have to pay as much in tax credits, and it agreed to funnel that money to the state to continue keeping premiums down. After enhanced tax credits expired at the end of last year, the government’s cost to subsidize individual marketplace buyers — and therefore, its potential savings from reinsurance — dropped, meaning it passes less on to the state.
The Division of Insurance projected that if the legislature does nothing, the board governing the Health Insurance Affordability Enterprise would have to reduce the amount that insurance companies can collect through reinsurance, causing them to raise premiums by about $2,000 for an average family of four.
The state uses the insurer fee to subsidize marketplace enrollees earning less than four times the poverty line, or about $132,000 for a family of four. The Division of Insurance estimated it saved an average of $627 per enrollee, with more significant savings on the Western Slope and Eastern Plains, at a combined cost of about $39.4 million.
Currently, the state pays insurance companies $80 for the primary policyholder and $29 for additional covered family members to reduce costs.
The division has proposed lowering those subsidies to $10 and $4, raising costs and causing about 20,000 people to drop out of the marketplace, the division projected.
State funds also have to cover the costs of OmniSalud, which essentially replaces the federal tax credits for undocumented people. Last year, it covered about 12,000 people at a cost of $81.4 million, saving about $7,559 per person. Enrollment dropped to 6,700 this year as the state lowered the cap to save money, and it would have to fall to 3,900 next year if nothing changes.
“If we do not pass this bill, there will be a drastic cut to all three of these programs,” said sponsor Iman Jodeh, an Aurora Democrat.
According to the bill’s fiscal note, the existing funds haven’t fully covered expenses since the 2023-24 budget year, and the enterprise has stayed afloat by tapping rapidly dwindling surpluses from previous years.
A bill during August’s special session to keep the affordability programs running through 2026 included up to $100 million from selling tax credits to insurance companies, reducing their premium taxes in the future. The Colorado Department of the Treasury reported it has sold about two-thirds of the credits and is working to sell the rest by a June 15 deadline.
The bill passed the Senate finance committee on a 6-3 vote Thursday, moving forward to the appropriations committee. At least three of those who voted for it said they had hoped to have a plan to make the insurance affordability plans sustainable by this point, rather than another one-year rescue package.
Sen. Chris Kolker, a Democrat from Centennial, voted to move the bill forward but said he wasn’t comfortable borrowing money that would take more than a decade to pay back to cover one year’s expenses.
“When a business does that, they lay people off,” he said.
Sen. Adrienne Benavidez, a Denver Democrat, also voted yes but said she would like to see more of the money come from bonds, to reduce the risk that insurers will pass on the fee to customers.
“Hopefully, that $40 million can be addressed somehow,” she said.
Sen. Kyle Mullica, a Democrat from Federal Heights and one of the bill’s sponsors, said he also wasn’t thrilled to bring a one-year fix again, but lawmakers hadn’t been able to come up with a long-term plan between sessions. Passing the bill will keep people covered while buying time to find a solution, he said.
“We’re trying to do the best we can with the hand we’ve been dealt,” he said.
