Source: Modern Healthcare
States can mitigate the effects of shrinking federal subsidies and spiking premiums – to a point, according to Colorado Insurance Commissioner Michael Conway.
The Connect for Health Colorado exchange already offers additional “wraparound” subsidies that complement federal premium tax credits and offers the Colorado Option, a form of “public option” plan, Conway said. In addition, Colorado is among the states that employ reinsurance for some high-cost medical expenses, thereby keeping exchange premiums lower, he said.
But none of this can make up for what millions of exchange members are on the verge of losing, Conway said. “We can replace the federal subsidies,” he said. Conway has been insurance commissioner under Gov. Jared Polis (D) since 2019.
At the end of this year, the enhanced federal tax credits in place since 2021 will expire. Premiums for 2026 have risen significantly as health insurers anticipate a smaller, sicker and costlier exchange population at the same time financial assistance is set to revert the original, less-generous level from the Affordable Care Act of 2010.
The interview has been edited for length and clarity.
What can states do?
We’ve set up structural tools within Colorado to deal with those types of affordability challenges. We have our reinsurance program, we have our Colorado Option, we have a state-based premium wrap subsidy.
As long as we can find the funding for those tools, we can do a lot to offset the rising insurance premiums for folks. We can’t replace the federal subsidies, we have no ability to do that in total, but we can at least offset some of the pain people are going to see.
But even with that, instead of it being a 174% average premium increase going into next year for the folks that get fede subsidies, we’re talking about it dropping down to 100%-101% average premium increases. It’s still unmanageable for people, it’s still going to put people in the position where they’re making impossible choices.
What’s Colorado’s approach?
The impetus behind those programs was all about affordability.
Prior to the expiration of the enhanced premium tax credits, we had a cost-share wrap in place for the state, because t law that was passed requires us to focus on providing more assistance to people under 400% of the federal poverty lev And with the increased subsidies at the federal level, it just made sense for us to focus on helping people pay for their cost shares.
With the expiration of the enhanced premium tax credits, we made the decision to change and provide some premium assistance to hopefully keep people covered. What we’re estimating is that instead of losing 100,000 people from the market, we’re going to only lose 75,000 people from the market.
How are health insurers responding to shifts in exchange policy?
We had two of our larger plans – [Elevance Health subsidiary Anthem Blue Cross and Blue Shield of Colorado] and Rocky Mountain Health Plans, which is a subsidiary of [UnitedHealth Group] – they were both going to pull back in the state and the individual market, I think, in large part because of the uncertainty that’s being caused by everything. Obviously, they were very worried about what the risk pool dynamics were going to look like with the expiration of the enhanced premium tax credits.
Long story short, we ran a bill during our special session over the summer to provide more funding into our reinsurance program and into that state-based premium wrap. And because of those actions, in large part because of that bill getting through, both of the companies reversed course and they stayed in the market.
We’ll continue to have those struggles, especially if the risk pool deteriorates substantially. If that’s what happens in 2026, I am very concerned about what 2027 and beyond will look like. We still have companies that are interested in coming into the market in Colorado and I think we’ll have at least one, if not maybe two, new carriers going into the 2027 plan year. But there’s a lot of uncertainty.
Are there legislative solutions?
The additional funding that we got for the premium wrap and to boost our reinsurance program was $100 million. Bu was just for one year, so we will be going back to the Legislature again, assuming that [Congress] does allow the tax credits to expire.
We’ve had a relatively stable healthcare market ecosystem across the board for the last four or five years. Between Medicaid in Colorado – really, in large parts of the country, obviously in all the expansion states — the marketplace is working really well. You’ve got employers – small employers in particular – that were moving folks from their small employer plans into the individual market, which just points to the fact that the markets were relatively stable. They’ not anymore, because of actions at the federal level.
From my vantage point, we need to be doing everything we can to tell that story and fight to get back to the place of stability that we’ve been at over the last four to five years. Obviously, that will necessitate changes – like rolling back the changes that they’ve made to Medicaid – and it will necessitate them to extend the enhanced premium tax credits But I’m a firm believer that we don’t need to reinvent the wheel all over again.
