Gov. Jared Polis’ administration has unveiled Colorado’s next big step in reducing health care costs, a proposal that would require private insurers to offer a state-run plan for those who pay for their own health insurance.
The so-called State Option plan stems from legislation passed by the 2019 General Assembly. The draft report released Monday is a collaboration between the Division of Insurance and the Department of Health Care Policy and Financing.
Several public meetings started Tuesday to discuss the report. The state will gather comments, then report to the Legislature by Nov. 15.
The 196-page report says anyone could enroll in the state option plan, though those who qualify for Medicare, Medicaid, Tricare, VA and employer-sponsored coverage “may be better served by staying in those programs.”
The plan would be available outside and through the state’s public exchange for individual health coverage, which connects insurers with people who need insurance, including those who get a federal subsidy to pay for it.
Insurers who offer plans in a major market and of a membership size yet to be determined would be required to offer the State Option, which the report says “will increase competition between plans and provide greater choice to more Coloradans.”
Insurers would have to carry the financial risk and contract with health care providers.
The report says the State Option will be 9% to 18% cheaper than what will be offered in 2022.
But allowing people to leave their plans to enroll in the State Option could destabilize the health insurance market, the Colorado Hospital Association said in a statement.
The State Option also might be the first step toward price control or rate setting, the Colorado Hospital Association said, and they disagree with making provider participation mandatory.
And holding the public meetings only on the Front Range leaves “zero chance for Western Slope residents and businesses to be heard,” said Diane Schwenke, president of the Grand Junction Chamber of Commerce. “Our communities have some of the highest health insurance costs in the state, and any public option plan will no doubt affect those costs going forward. Obviously, our voices don’t matter.”
But the draft plan won kudos from the Colorado Health Institute, a nonprofit health-policy research group. Executive Director Adela Flores-Brennan said the State Option is intended to create “more robust competition in the insurance market, especially in those areas of the state where only one or two insurers are offering plans in the individual market.” The draft plan notes that some parts of the state have only one insurer available.
“The structure proposed in this initial plan will make use of a familiar infrastructure and add new insurance options that have additional affordability, transparency and accountability components,” Flores-Brennan said.
“We are pleased to see measures in the plan that will help the Public Option control underlying health care costs by limiting rates paid to certain providers.”
The plan also proposes offering a set of services pre-deductible, which would give consumers more certainty about costs, she noted.
“Colorado needs to do more to control the enormous costs consumers are paying for health care when hospitals, drug corporations and insurers are raking in profits and excess revenues. This plan is a starting point to do just that,” she added.
Public comments on the plan, due by Oct. 25, can be submitted to the Department of Health Care Policy and Financing at tinyurl.com/y5w76388.
The State Option is the followup to the “reinsurance” plan set up this year so the state can help health insurers cover high cost claims.
The Polis administration claims such a plan will cut premiums for those in the individual insurance market by an average of 18%, with greater reductions in premiums for those in rural Colorado.
The reinsurance plan, which received federal approval, sunsets in 2021. The State Option would roll out in 2022, assuming the federal government grants a “state innovation waiver” to Colorado for the next step.