One of Governor Jared Polis’ flagship healthcare policies, which is preparing to enter its second year, is now facing significant issues raised by insurers about its sustainability.
The controversy concerns a health insurance program called the Colorado Option. The Colorado Option is the first-of-its-kind state-designed insurance plan that private insurers are required to sell to individuals purchasing health insurance on their own or to small businesses purchasing insurance for their employees. is. We aim to offer better profits at lower prices.
But the new premium filing raises the question of whether insurers can pull off the feat — and who should be held responsible if they can’t.
A setback in the Colorado Option would be a blow to The Police, which often praises the program as one of the administration’s key policy achievements.
“The Colorado Option will lower your premiums and save you thousands of dollars in health insurance costs,” Polis said at a press conference earlier this month.
Here’s the problem: State law requires the Colorado Option Plan to be sold at progressively lower rates for the first three years. In 2023, the first year the Colorado option was sold, he had to price the plan 5% lower, adjusted for inflation, than the insurer’s 2021 offering. The 2024 plan should be 10% below the 2021 rate.
This month, insurers had to tell state insurance departments whether they could meet their 2024 targets. Only one Denver Health Medical Plan, which has a fairly small footprint in the market, said it could.
“Colorado health insurers have continued to work to reduce premiums for Colorado citizens and have consistently said the targets to reduce premiums are arbitrary and unrealistic,” said an insurance industry group. Brandon Arnold, associate director of the Colorado Health Insurance Association, wrote: By email to Sun.
In some ways this was not surprising. The insurer had a spotty record of meeting its 2023 target. The Denver Health plan hit his 2023 target for every Colorado Option plan sold.
However, most insurers were able to meet at least some of their targets in 2023. We offer dozens of Colorado Option Plans statewide a year. )
Not so for 2024. All but Denver Health say they will miss their markdown targets on at least most of the Colorado Option plans they sell today.
This group includes 11 separate rate filings by insurers in the personal and small group markets, but only two insurers, Cigna and UnitedHealthcare, said they could meet their targets with a small number of plans. I’m here. However, Cigna and United expect to miss targets on most plans, and his nine other insurers expect to miss targets on all plans.
In explaining this, the insurer offered a wilting criticism of the Colorado Options Program.
“Colorado’s public option requires insurers to offer standard plans at artificially and mathematically unsound premium rates,” one insurer, Rocky Mountain HMO, wrote in a filing.
In other words, the insurance company is saying that you can sell the Colorado Option Plan at the price you want and not lose money.
“The world has changed”
Insurers cite several reasons why they may not be able to sufficiently reduce the cost of Colorado Options.
They said the state’s inflation calculations don’t take into account the actual increase in health care costs or what insurers call “usage trends,” the increase in health care people use in any given year. For example, the insurance company’s anthem said that the state’s inflation calculation method was “the only reason” some plans were unable to meet their price targets in 2023, and that continuing to use this method would be an “insurance It will create an even bigger challenge with fees,” he wrote in the filing. Reduction requirements after 2024. ”
Insurers also say the benefits of the plans are too rich for the low price. And they said the state-mandated price takes into account everything that happened before COVID, since insurers set rates for 2021 assembled in early 2020 based on 2019 data. says no.
“The world has changed since premium reduction targets were set,” Kaiser Permanente wrote in one of the filings.
But consumer advocates see the insurers’ explanations as flimsy. Manat Singh, executive director of the Colorado Consumer Health Initiative, which supports the Colorado Options Program, said insurers may include critical consumer protections among the reasons they are missing price targets. Told. As an example, she pointed to filings by insurance companies that referred to issues related to the law on sudden claims.
“It is disappointing that they are blaming consumer protection and hopes that insurance companies and hospitals will do more to meet the necessary cuts,” Singh wrote in an email.
Insurance companies say hospitals are not responsible in most cases
Perhaps most importantly, the petition seeks to poke holes in one of the major debates as to why insurance premiums are so high.
Only one insurer stated that it was unable to meet its price targets because hospital bills were too high. Its insurer, Cigna, says that even if it manages to lower hospital prices, it will fall short of the goals of many plans.
This is important because it potentially undermines the state’s strongest tool for depricing Colorado options: setting hospital prices. By law, the insurance department can mandate lower hospital prices to help insurers meet the goals of the Colorado Option. But the law also places limits on the lower price limits that states can set.
Many insurers said in their report that they were already at or below the floor with hospitals and still missed the Colorado Option’s goals. Anthem, one of the insurers, argued that the restrictions actually prompted contracting health care providers to seek higher rates.
“(The Colorado Option) and its premium reduction and provider reimbursement methods will, on its own terms and conditions, provide actuarially sound rates at levels dictated by the state. career),” the anthem wrote in the filing.
So what works to further reduce the price of Colorado options? For some insurers, the answer is nothing.
Kaiser Permanente said: “We do not see a viable path to full compliance with the targets in the 2024 benefit year.
hearing is coming
However, the insurance company’s filings are only provisional. That means something could change to bring the price down. If not, state regulators may be able to find ways to bring prices down.
One way is with a new tool lawmakers seem ready to offer to the insurance sector. House Bill 1224, which passed the state House earlier this week, gives the state insurance commissioner the power to limit the amount insurers can deduct profits and administrative expenses from the Premium of a Colorado Option. It’s empowering.
In the filing, the insurer reported budgeting between 0.8% and 4.1% of premiums collected to fund profits. This amount includes an amount set aside as a reserve to help pay for medical expenses in years when insurance companies underestimate claims costs. Insurers have built in administrative expense margins of between 8.6% and 16%.
The state also has another way to lower interest rates on Colorado options. Regulators will hold rate review hearings this summer, allowing the insurance sector to question why insurers have failed to meet their targets and to argue for changes in plan pricing. Members of the public can also provide comments.
Singh of the Colorado Consumer Health Initiative said her organization wants to hold insurance companies accountable through public hearings.
“Insurers must offer reductions on these plans so they can be more competitive with predictable and more affordable coverage options for consumers,” she wrote.
Colorado Insurance Commissioner Michael Conway said recent filings by insurers were just the first step in the process.
“These are the first 2024 applications for the Colorado Option,” Conway said in a statement. “The department looks forward to having the opportunity for all stakeholders and the public to participate in the upcoming public hearing process.”