Colorado option's insurance savings 'hypothetical', think tank says

Colorado option’s insurance savings ‘hypothetical’, think tank says

Much of the health insurance savings touted by the Polis administration is not new or “just hypothetical” because state officials have engaged in behavior that, in fact, contradicts the way consumers take decisions, a Denver-based think tank said in an analysis Thursday.

In response, the head of the state insurance agency called the study “misleading.”

The Polis administration has previously credited its actions with “achieving substantial savings” – to the tune of $326 million. In fact, Coloradans are facing a 7.4% increase in the small group market, which insures businesses with two to 100 employees, and 10.4% in the individual market, which serves people who must pay their own health insurance, in 2023.

At the heart of the problem is the Colorado Option, a state-designed health plan that insurers are to begin offering Jan. 1, 2023, and which the Polis administration has touted as a mechanism to lower insurance costs.

In a report, the Common Sense Institute, a free enterprise think tank, said the $294 million in savings — of the $326 million announced by the administration — is already being accounted for through the reinsurance program. of Colorado, which has been in place since 2020 and only affects the individual market, not the small group market.

Another $14.7 million in savings “assumes consumers immediately switch to the cheapest Colorado option plans within each metal level,” according to the analysis. Because Colorado option plans won’t be the cheapest on the market, according to the report, consumers are more likely to buy the cheapest non-Colorado option plans.

In addition, the Colorado option will pose a “range of risks to the broader health care market,” particularly to the premiums consumers pay for their health insurance.

Chris Brown, vice president of policy and research at CSI, said the required premium reductions would drop from 5% in 2023 to 10% in 2024, eventually landing at 15% in 2025, which would complicate the operating carriers in Colorado.

The plan imposes cuts on health insurance premiums, as dictated by legislation passed in 2021, but CSI said caps on future premiums are too low to allow for the rising medical costs facing the health sector. will face in the future.

This will force health care providers to choose between reducing services or passing on costs by increasing prices for most insured Coloradans, Brown said. Traditional employer-sponsored plans are likely to be impacted by these higher costs.

“I think every health care provider, hospital, doctor, physician, is going to be faced with a different set of variables in making that decision,” Brown told The Denver Gazette. “But like Colorado households, hospitals and doctors also face inflation that impacts their costs of providing care.”

“When you see these kinds of disruptions, carrier departures, big price increases, it’s a lot harder to grow and run a business,” Brown added.

In a statement, Colorado Insurance Commissioner Michael Conway insisted Coloradans will save money and suggested claims to the contrary are “misleading.”

“The Legislature, Governor Polis and organizations that care about people have worked hard over the past four years to put in place measures to save people money on health care. This is demonstrated by the $326 million in savings people can realize next year that the Colorado Division of Insurance detailed in the Oct. 25 press release,” Conway told The Denver Gazette. the division, the reinsurance program and the Colorado option save people money on health care.”

Conway added, “Health insurance companies, at different times, have fought all of these programs, so it’s no surprise that health insurers and their special interest groups continue to spread misleading information about them. We are willing to work with organizations that want to save people money on health care. We sincerely hope that anyone who funds this misleading work of the Common Sense Institute will make the decision to engage more constructively with the coming.

CSI’s analysis said the risk vendors face will be “particularly evident” in the small group market: its modeling from 2021 projects could generate 37% less revenue from small group plans. 2030.

The group noted that, already, four health insurance companies have exited the small group or individual market — or both — in Colorado.

  • Bright Health pulled all of its health insurance plans — small group and individual, as well as Medicare — from Colorado, affecting at least 55,000 consumers in eight mountain counties;
  • Humana, which plans to retire its Colorado self-insurance and small group plans by 2024, affecting 183,000 subscribers;
  • Oscar Health, which announced in May that it was exiting the consumer market; and
  • Peak Health, a cooperative that insures 6,400 people, said it would not operate in 2023.

The departures mean that hundreds of thousands of Coloradans will now have to seek health coverage elsewhere and potentially lose access to their preferred providers.

The group also said that in 2023, 91 fewer individual market plans will be offered than in 2022.

“When tighter price controls go into effect in 2024 and 2025, even more plans and carriers could be forced out of Colorado,” according to the CSI study.

Kelly Caulfield, executive director of CSI, said Coloradans will face these premium hikes amid other inflationary pressures.

“Medicare rates are going up, we know higher education tuition is going up, we know it’s getting more and more unaffordable to live in the state of Colorado,” Caulfield said. “So I think we’re asking in 23 that we hope policymakers think a little bit more about how all of these different policies interact, and that creates, I think, a more challenging environment for consumers.”

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