Source: Denver Business Journal

January 24, 2025

The number of people who enrolling in Colorado Option health plans this year reached a new high, eliciting triumphant announcements from state leaders and a dire outlook from those in the local health insurance industry.

The state’s public health insurance exchange said Thursday that 47% of its enrollees chose individual health plans under the Colorado Option name, which are health plans that share a standardized set of benefits.

The Colorado Option first became available to residents in 2023 after its existence was mandated by state law. The plans are available on the public health insurance exchange, Connect for Health Colorado, to residents who don’t get health insurance through an employer.

State leaders celebrated the plans’ enrollment numbers, which they say has helped to bring quality and affordable health insurance to many more Coloradans. The share of people selecting the Colorado Option has steadily increased from 13.7% of enrollees in 2023.

But others in the industry argue that some of the Colorado Option’s requirements are holding carriers to unattainable standards, particularly its premium reduction requirements.

“The [Colorado Division of Insurance] numbers clearly show a much tighter financial situation for carriers in the individual market in Colorado,” said Kevin McFatridge, Colorado Association of Health Plans (CAHP), in an email.

The Division’s cap on profit and contingencies for carriers at 2%, coupled with requirements for more coverage under the Colorado Option plan, has contributed to carrier losses, McFatridge said. In 2023, insurers profit margins were -11.4% on the state’s individual market, he said.

At the same time, McFatridge said, insurers are losing members in the small and large group markets. The individual health plan market is growing, likely due to the federal subsidies that offset costs for qualified individual market enrollees, he said.

The federal government this year is doling out $339 million to Colorado’s reinsurance program, which is helping to cover the state’s highest-cost health insurance claims.

The DOI has said that individual plan rates for 2025 would be an average 23% higher without reinsurance, translating to a total savings of $477 million for consumers on premiums. By the end of 2025, Colorado Insurance Commissioner Michael Conway said he expects the reinsurance program to have reduced premiums by over $2 billion.

Conway said in a statement on Thursday that the cost savings it at risk. Premiums will likely rise much higher in Colorado if Congress does not extend the subsidies, Conway said.

In all, Connect for Health Colorado said more than 282,000 people enrolled using its exchange to get health insurance for 2025, marking a 19% increase over the number of people who used the exchange for coverage in 2024.

The rise comes at the same time that hospitals and other providers say they are seeing unprecedented numbers of uninsured patients due to the end of a pandemic-era mandate that kept thousands of people enrolled in Medicaid.

The CAHP earlier this month pointed to a report released by the state on the health insurance industry, which it said offers proof that carriers are struggling financially.

“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,” the organization said in a release on Jan. 9.

McFatridge added that the Colorado Option enrollment numbers mean 53% of people are still enrolled in non-Colorado Option plans on the individual exchange.

“Colorado Health Insurers are pleased to be able to build products that are affordable options for both employers and families,” he said.