As it prepares to enter its second year, one of Gov. Jared Polis' top health insurers is facing serious questions raised by insurers about its viability.
The dispute concerns a health insurance program called the Colorado Option. The Colorado Option is a government-designed insurance plan, the first of its kind, that private insurance companies must sell to individuals who purchase health insurance on their own or to small businesses that purchase insurance for their employees. Their goal is to provide better services at lower prices.
But the new betting claims raise questions about whether insurers can do it, and whose fault it is if they can't.
The failure of the Colorado option would be a blow to Polis, who often cites the program as one of his administration's major political achievements.
"Colorado's option is lowering premiums, saving people thousands of dollars in health insurance and more in the future," Polis said at a news conference earlier this month.
Here's the problem: State law requires Colorado option plans to be sold at lower rates for the first three years. In 2023, the first year the Colorado option was sold, plans would be priced at 5% of the 2021 insurance offer after adjusting for inflation. Plans for 2024 are expected to be 10% lower than for 2021.
This month, insurers were asked to tell the state Division of Insurance whether those goals could be met by 2024. Only Denver Health Medical Plan, which has a relatively small market share, said. Everyone else said they couldn't.
"Colorado Health Insurance Careers continues to work to lower premiums for Colorado residents, and we consistently maintain that premium reduction goals are arbitrary and unrealistic," wrote Brandon Arnold, deputy director of the Colorado Association of Health Insurance Plans. a professional insurance group. In an email to the Sun.
lack of goals On the one hand, it was not surprising. Insurers have had a track record of meeting 2023 goals. No other Denver Health plan has met their 2023 goals for every Colorado option plan sold.
But most have met the goals of at least some of their plans by 2023. (Insurers sell Colorado option plans in three metal levels (bronze, silver and gold) in each state. That way insurers can rate and offer them. Dozens of Colorado option plans statewide in any given year.)
That doesn't apply in 2024. All insurance companies except Denver Health say they won't meet their price reduction targets, at least for most of the Colorado option plans they're currently selling.
Among the group, where insurance companies cover 11 individual claims in the individual and small group markets, only two providers, Cigna and UnitedHealthcare, said they could meet multiple goals for their plans. But Cigna and United expect not to cover most of their plans, and the remaining nine insurers expect not to cover all of their plans.
In explaining this, insurers have been highly critical of the Colorado Option program.
"Colorado's public option forces insurers to offer standard plans at artificially and actuarially unreasonable premium rates," one Rocky Mountain HMO insurer wrote in a statement.
In other words, insurers say they can't sell Colorado option plans at the asking prices without losing money.
"The world has changed" Insurers offer several reasons why they may not lower your Colorado options premiums enough.
They say the state's inflation estimates don't take into account actual increases in health care spending, or what insurers call the "utilization pattern," which is the increase in the number of health care services people use in a given year. Insurer Anthem, for example, wrote in its filing that the state's inflation method was the "sole reason" some plans missed their price targets in 2023 and that continuing to use the method would "cause even more price problems". Reduction requirements in 2024 and beyond.
Insurers also say the plans' benefits are too great for the low prices. And they say the prices set by the government do not take into account the fact that insurers set rates for 2021 based on data collected in early 2020 from 2019, which is before COVID-19.
"The world has changed since the premium reduction targets were created," Kaiser Permanente wrote in one of its filings.
However, consumer advocates say the insurers' explanations are not convincing. Mannat Singh, executive director of the Colorado Consumer Health Initiative, which supports the Colorado Option program, said insurers have sometimes included strong consumer protections as a reason for not meeting price targets. As an example, insurers cited documents citing problems with surprise billing laws that prevent consumers from being billed for an unexpected hospital stay.
"It is disappointing that consumer protection is to blame for this, and we hope that insurers and hospitals will do more to enforce the necessary restrictions," Singh wrote in an email.
Insurers basically say the hospitals are not at fault Perhaps most importantly, the article attempts to debunk one of the main reasons why insurance prices are so high.
An insurance company says it can't meet price targets because hospitals charge too much. And the insurance company, Cigna, says it still won't honor many of its plans, even though it could lower hospital costs.
It's important because it potentially weakens the state's most powerful tool for lowering option prices in Colorado: hospital prices. The law allows the Division of Insurance to charge hospitals lower prices to help insurers meet Colorado's choice goals. But the law places a limit on the lowest prices the government can set.
Some insurers have written in their filings that their contracts with hospitals are at or below this floor and that they still cannot meet the goals of the Colorado option. One insurer, Anthem, said the cap actually prompted a working health care provider to seek a price increase because Anthem was paying providers less than the state's lower limit.
"(The Colorado Option) and its methodology for reducing premiums and reimbursing providers, in its terms, are factors that prevent us (and, we believe, most other providers) from providing actuarial fees at mandated levels from the government," Anthem. wrote in the application.
So what will drive option prices even lower in Colorado? For some insurers the answer is nothing.
"We see no sustainable path to fully achieving the 2024 targets," Kaiser Permanente wrote.
Future public hearings However, the insurers' reports are preliminary. This means that something else can change to lower prices. And, if they don't, government regulators can find ways to lower prices.
One way may be a new tool that lawmakers seem willing to give the Insurance Division. House Bill 1224, passed earlier this week by the state House of Representatives, would give the state insurance commissioner clearer authority to limit the amount insurers can withhold from option premiums, profits and Colorado administrative expenses.
In the documents, insurers receive a budget of between 0.8% and 4.1% of premiums collected for revenue. This figure includes money that insurers set aside as reserves to help pay medical bills in years when they underestimate the costs of their claims. Insurers have set a margin of 8.6% to 16% for administrative costs.
The state also has another way to lower Colorado option rates. Regulators will hold rate review hearings this summer, where the Insurance Division could question why insurers haven't met their targets and push for changes to rate plans. Citizens will also have the opportunity to comment.
Singh, of the Colorado Consumer Health Initiative, said his organization hopes to hold insurers accountable during the hearings.
"As insurers are forced to offer discounts on these plans, they will become more competitive with cheaper and more predictable coverage options for consumers," he wrote.
Colorado Insurance Commissioner Michael Conway said the latest requests from insurers are just the first step in the process.
"These are initial offers for 2024 under Colorado's option," Conway said in a statement. "The chapter hopes that all interested parties and the public will have the opportunity to participate in the hearing process.
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