The new “Colorado Option” will lower insurance premiums and provide greater access to health care to more residents, promoting health equity in the state.
The U.S. Department of Health and Human Services (HHS) today announced it has approved a no-innovation request to amend Colorado Section 1332 to create a “Colorado Option”, a state-specific health insurance plan that increases health care coverage and reduces health care costs. . making insurance more affordable for nearly 10,000 Colorados starting in 2023. It is intended to reduce racial and ethnic disparities in health by providing new coverage options for Colorado residents, reflecting the Biden-Harris administration’s commitment to advancing health equity.
“We are thrilled to be partnering with Colorado in our shared commitment to lower health care costs and greater access to quality, affordable health care,” said HHS Secretary Xavier Becerra. “The Colorado option will help thousands more families sign up for health insurance. I applaud Governor Jared Polis and encourage all states to use innovative ways to ensure health care is accessible to their residents.”
Section 1332 of the Affordable Care Act (ACA) allows states to apply for a state innovation waiver to implement innovative strategies to provide residents with access to high-quality, affordable insurance coverage. Colorado was the first in the nation to accept this waiver to introduce a new and more affordable statewide health insurance option and use federal savings to support government subsidies for increased affordability and coverage initiatives. Colorado projects that approximately 32,000 Colorado residents will receive health insurance under the modified waiver by 2027, an increase of approximately 15% in the individual market.
This 1332 Waiver Amendment implements the Colorado Option, which lowers insurance premiums and health care costs, and makes it easier for consumers to compare coverage options and choose the best plan for their needs. Beginning in 2023, the Colorado Option will be available to all Colorado residents who enroll in individual marketed health plans (i.e., not through an employer) and to small employers with fewer than 100 employees. Colorado Option plans will reduce health insurance premiums for individuals, families and small businesses by 15% by 2025.
The Colorado option will operate in tandem with Colorado’s existing section 1332 waiver, the state’s reinsurance program, which is permitted to continue under the amended waiver. The modified waiver is expected to reduce premiums by an average of about $132 per person per month (or 22%). This is more than the state’s reinsurance waiver program alone, which has already reduced the state’s average premium by about 20% since its implementation in 2020.
“With this new model, Colorado is leveraging federal savings to expand statewide affordability and coverage like no other state has done before. The Colorado option is innovative and a step in the right direction for lowering uninsured rates when investing in health insurance. accessibility and improvements, and advancing health equity,” said CMS Administrator Chiquita Brooks-Lasur. “We encourage all states to consider innovative ways in the future to use the Section 1332 exceptions to expand and improve coverage and lower costs for their residents.”
The Colorado Option covers all of the basic medical benefits required by the ACA, including many expensive services such as primary care, mental health care, and prenatal visits at no charge. It will combine standard health benefit plans, required premium cuts, and increased government subsidies for those currently eligible and those not currently eligible for federal subsidies under the ACA to make coverage more affordable. The State Waiver Plan enhances competition by setting premium reduction targets for the Colorado Option and implementing improved regulatory and policy mechanisms to support ensuring that providers, hospitals, and issuers meet those targets.
In doing so, the modified waiver will generate savings that the federal government will transfer to the state to implement its waiver (referred to as federal “pass-through funding”). The State will use these savings to implement the modified exclusion and increase the availability of insurance coverage; this will include the provision of state grants through a state program to increase the financial assistance available to Colorado residents who subscribe to insurance coverage, ultimately expanding access to health care in the state. As a result, it is expected that individual market consumers will continue to receive lower insurance premiums, which should attract new consumers as well as keep current consumers enrolled in insurance coverage.
More information about the “Colorado” option can be found here: Colorado Option website.