DOI projects 18.2 percent average decrease in 2020 premiums for individual market

On July 31, Gov. Jared Polis announced that the federal government approved Colorado’s application for a 1332 waiver to establish a reinsurance program. With the program in place, combined with other market factors, Colorado health insurance companies that sell individual plans expect to reduce premiums by an average of 18.2 percent over their 2019 premiums, and premiums could go down as much as 41 percent in some areas of the state, according to figures from the Colorado Division of Insurance.

Individual plans are for 7 to 8 percent of Coloradans who do not get their health insurance from an employer or government program and instead buy insurance through Colorado’s Connect for Health Colorado insurance marketplace. Reinsurance works by the state paying a portion of high-cost claims. As insurance companies don’t have to pay that portion of the high-dollar claims, they can lower the premiums for individual health insurance plans. And as health insurance premiums go down, the amount of money the federal government spends on tax credits will also go down. But rather than the federal government pocketing the savings, they will pass that money through to the state to fund the reinsurance program. The process for the 1332 wavier was established under the Affordable Care Act.

“We are thrilled to announce that Colorado has received federal approval for our reinsurance program, which will directly reduce health care premiums for hundreds of thousands of Colorado families,” Polis said in July 31 news release. “Bringing down the outrageous cost of health care in our state has been a top priority for my administration from the beginning, and this is a significant milestone on our way toward achieving that goal. We’re already seeing the direct impact this program will have on premiums on the individual market. That’s thousands of dollars in savings that Coloradans can put toward paying the mortgage, saving for college or retirement, taking a family vacation, or just living their lives.”

“This approval highlights Colorado as a leader in making the individual health insurance market affordable and accessible for its citizens,” said Insurance Commissioner Michael Conway. “I am proud of all of the work over the last three years that the DOI has put into making this possible, as well as the support of Gov. Polis and the Legislature. Bold actions require bold leadership.”

Over the past three years, the division conducted studies, talked frequently with the Centers for Medicare and Medicaid Services, and worked with actuaries to study the program from different angles, Conway said. Then in January 2019, as part of his top priorities to save Coloradans money on health care, the governor called on the legislature to work together to pass reinsurance during his state of the state address. The bill that established the program, HB19-1168, directs the DOI to study the effects of the program after two years, in particular focusing on affordability and the impact to consumers eligible for ACA tax credits.

The premium reductions are preliminary and only reflect what the companies have requested, not the final approved plans for 2020. The DOI will continue to review the plans and premiums for 2020 for the individual health insurance market and release the final approved plans by October. All of the preliminary 2020 facts and figures are available on the Division’s webpage for health insurance plan filings, located in the “for consumers” section.

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