Colorado obtains agreement to modify the federal exemption and will launch a public option

Colorado will be the first state in the nation to amend a federal waiver to create a public health insurance option for 2023, the Department of Health and Human Services announced Thursday.

HHS’s green light to the state’s amended Section 1332 State Innovation Waiver will create a “Colorado Option,” which will use federal funds to create a public health plan intended to reduce the state’s uninsured rate and provide more affordable coverage for residents. In 2021, 6.6% of Colorado residents lacked health insurance, according to a survey conducted by the Colorado Health Institute.

The Colorado option will be available to residents who enroll in individual market health plans and small employers with fewer than 100 employees. Insurers must offer Colorado Option plans in every county they operate in and meet premium reduction goals by 2025. If carriers fail to reduce premium costs during that time, the Insurance Commissioner of the State may order health care providers to subscribe to Colorado Option plans at fixed rates, following a public hearing.

The Colorado option is expected to reduce average trade premiums for consumers by 15% by 2025, HHS said. By 2027, the state expects the program to provide insurance to 32,000 previously uninsured residents, increasing enrollment in its state exchange by 15%.

“We are thrilled to partner with Colorado in our shared commitment to lowering health care costs and ensuring greater access to quality, affordable care,” HHS Secretary Xavier Becerra said in a statement. hurry. “The Colorado Option will help thousands more families get health coverage. I applaud Governor Jared Polis and encourage all states to look for innovative ways to ensure health care is within reach. their residents.

Colorado represents the first state to amend a 1332 federal waiver to create a public option, although the state is not the first to unveil a public health plan for residents.

In 2021, Washington State contracted with private insurers to launch a public option, named Cascade Select, for the personal market.

In 2026, Nevada will contract with private health plans and managed care organizations to provide a public option in the individual market and potentially in the small group market.

“The Colorado Option is revolutionary and a step in the right direction to reduce the rate of uninsurance, while investing in affordability and improving health insurance coverage, and advancing equity in health,” said Chiquita Brooks-LaSure, administrator of the Centers for Medicaid and Medicare Services. Release. “We encourage all states to consider innovative ways to use Section 1332 waivers in the future to expand and improve coverage and reduce costs for their residents.”

The amended waiver is expected to generate savings for the federal government that regulators will pass on to the state. Colorado officials will then use those federal dollars to create subsidies for residents signing up for coverage, including those who are not eligible for federal assistance.

But health care providers and insurers have already expressed skepticism about Colorado’s program’s ability to meet its goals. For example, insurance trade group AHIP said the structure of the waiver depends on the continuation of the enhanced exchange plan subsidies enacted in the US bailout. Congress has not committed to extending the grants.

“Colorado, like many states, is seeing an increase in health plans and policies offered in the individual market. This means Colorado consumers have access to more choice and benefit from lower premiums that are driven by the dynamics competitive market,” said Kris Hathaway, vice president. chairman of state affairs for the insurance trade group AHIP, wrote in a November comment letter on the waiver. “New public policies should promote competition in the marketplace, not through strict parameters implementing the Colorado Option through the Draft Waiver which is likely to increase premiums for all Coloradans.”

The Colorado Hospital Association took a “neutral” position on the proposal in April 2021.

“The affordability improvements provided by this bill depend on the sacrifice and stewardship of Colorado hospitals,” CHA President and CEO Chris Tholen said in a press release last year. . “It is essential that we implement this legislation carefully and monitor it to ensure that hospitals can continue to be vital resources for their communities.”

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