The more than 200,000 Coloradans who buy health insurance on the state’s individual marketplace could see a significant rate reduction in 2020. Gov. Jared Polis said bipartisan legislation that lawmakers passed last session to set up a reinsurance program is the main factor driving the decrease.
“Next year, not only the first time in the history of the exchange, their rates have gone down, but a very significant decrease, 18.2 percent,” the governor said in a news conference Tuesday alongside Michael Conway, the state’s commissioner of insurance. “That will save families thousands of dollars that they can put back into our economy, invest in their kids, invest in their home, or do whatever they like, to enjoy the Colorado we love.”
The projections released by Polis show that average individual premiums in 2020 will drop by more than 18 percent and that some rural and mountain residents' rates will plunge 33.5 percent. Polis said a few could see a 41 percent drop.
The state says about 7-8 percent of the population buys insurance through Connect for Health Colorado. These are people that don’t qualify for government health care or don’t get the benefit through their workplace. Polis hopes that with lower rates it’ll also reduce the number of people who don’t have any health insurance.
“It's just simple market economics that when the price goes down and people obviously want insurance, it's never a question of that. It's whether they can. We will be happy in any decrease in the number of uninsured and I'm confident that will occur.”
Reinsurance can be best described as insurance for insurance companies. The goal is to ensure high-cost cases don’t drive up rates for everyone else. The state is expected to find out in September whether the federal government will approve a waiver to set up a program.
Colorado’s reinsurance plan would use $260 million, including both federal and state funds.
“We are hearing incredible things from the federal government about our chances to get the waiver approved,” said Insurance Commissioner Michael Conway. He added that state officials have discussed this particular plan with the federal government for the last eight months and feel confident about it. “They have told us that everything looks like it makes sense.”
Geography is a driving factor for the state’s insurance rates. Fourteen of Colorado's 64 counties have just one insurer for the individual market and rate increases have been significantly higher on the Western Slope and parts of rural Colorado. Tamara Drangstveit, the head of the Peak Health Alliance has been a longtime critic of the premiums in Summit County.
“I've talked about the mom who had to choose between her own breast cancer care and sending her daughter to college. I've talked about the parents that have to leave Summit County because they can't afford both health insurance and childcare.”
Drangstveit pointed out that the cost of childcare in Summit is $9,000, which is the premium decrease a family of four is expected to see in much of the Western Slope. At least eight states have seen rates drop after adopting reinsurance programs, according to the Kaiser Family Foundation. Some opponents in Colorado didn’t like how it would be funded and worried that it could lead to hospitals cutting some services.
The Associated Press contributed to this report.