Colorado Option has standout enrollment at 13 percent

Now that open enrollment season is closed, states are tallying up their relative success in enrolling state residents for health insurance they otherwise might not have.

For the first year, Colorado’s Department of Insurance rolled out the “Colorado Option” health insurance, a program that standardizes benefits across individual and small group health insurance companies, expanding upon the Affordable Care Act’s mandated coverage to give consumers and businesses standard baselines for coverage. The Colorado Option standardization applies to small group plans – for businesses with under 100 employees – and individual plans (plans that aren’t offered through employers).

As of Jan. 10, 2023, around 35,000 people have enrolled in Colorado Option plans, 25,000 of which enrolled through the state’s health insurance marketplace, Connect for Health Colorado. A news release from the Colorado Division of Insurance (CDOI) notes the 25,000 enrollees constitute 13 percent of eligible open enrollment enrollees. Since this is the first year the Colorado Option has been available, the uptake is remarkable – for perspective, the CDOI reports Washington’s state standard options had a 1 percent enrollment rate.

“I am extremely proud of the work of our team at the Division of Insurance. Kyle Brown, Kyla Hoskins and the rest of the DOI team built a Colorado Option plan that people are obviously excited about,” said Colorado Insurance Commissioner Michael Conway in a news release. “In Washington state, their public option only had approximately 1 percent of total enrollment in its first year. The fact that we are at 13 percent far surpassed my hopes for what we would achieve in our first year.”

The Colorado Option expands ACA standards to offer no-cost primary care, no-cost mental health visits, and, in a first for state standard health plans, explicit benchmarks for covered care for transgender patients.

Although a state news release acknowledged obtaining gender-affirming health care for transgender patients under the Colorado Option could still be a bureaucratic morass, the CDOI compiled the Gender-Affirming Care Coverage Guide to help people understand their health plan benefits if they have a standardized plan.

Requirements for health insurance carriers under the Colorado Option

While these myriad changes may be hailed as a win for consumers, other states will likely watch to see how insurance carriers approach the regulatory changes in that state. While most Americans obtain health insurance through employment, about 4 percent of the Medicare-ineligible population gets insurance through their state exchange.

In addition to extending coverage requirements for carriers, the CDOI also has requirements that premiums will adjust downward (with a caveat for inflation) over the next few years.

According to the CDOI: “For this year, insurance companies were required to have premiums for Colorado Option plans that are 5 percent lower than 2021 premiums (with adjustments for inflation). For the 2024 Colorado Option plans, premiums must be 10 percent lower than 2021 premiums and for 2025 plans, they must hit a 15 percent reduction target. And starting this year, the DOI will have the ability to hold the industry accountable for meeting the target, set by the legislature, through hearings if the industry fails to do so.”

The CDOI asserts that the commissioner’s office has the authority to enforce these premium reduction expectations using the rate review process. If a company fails to meet the reduction standard for a Colorado Option plan, the news release says, “the Commissioner of Insurance will hold public hearings during the summer of 2023 for the plans for 2024.”