Polis Celebrates Colorado’s New Reinsurance Program, Which Could Lower Premiums In The Future

John Daley/CPR News
Gov. Jared Polis announces that Colorado’s waiver to establish a reinsurance pool was approved at the state Capitol on Wednesday, July 31, 2019.

The federal government has approved a program that aims to lower costs for consumers, Gov. Jared Polis announced Wednesday. The program is called reinsurance, and it could potentially help save Coloradans thousands of dollars a year.

In the health care world, the most expensive patients who account for about half the national health spending are called super-users. Those patients, perhaps 5 percent of the total number, drive up costs for insurers and insurance customers.

But in recent years, states have come up with a fix: reinsurance. It’s essentially insurance for insurance companies, to help them cover the costs from those patients. At a press conference, the governor, joined by state lawmakers and local officials, celebrated the federal green light for a reinsurance program here.

“The waiver for reinsurance has been granted!” Polis said, drawing cheers from the crowd that assembled in the west foyer of the state Capitol. “Rates in Colorado will go down for the first time in history — 18.2 percent average statewide next year.”

The state also projects even bigger savings on premiums, around 33 percent, in high-cost areas like the Western Slope.

Adam Fox, director of strategic engagement with the Colorado Consumer Health Initiative, said the move will help consumers, especially those who have to purchase a plan through the individual market and those who don't qualify for federal tax credits. 

"This is great news for Coloradans,” Fox said. “It means that people can save money on their health insurance premiums and hopefully have a little more money to cover some of those out-of-pocket costs or put towards other needs in their daily lives." 

A typical family of four could save more than $3,300 a year on premiums on the Front Range — and nearly three times that in western Colorado. 

Democratic state Sen. Kerry Donovan represents counties in the mountains, where people pay some of the nation's highest premiums.

"Us being able to focus on saving them $9,000 a year if they're on the individual market, that's real money back into their family’s budget," she said. 

But hospitals are a bit skeptical, and worry high-deductible health plans will erode savings. 

"We are a little suspect of that,” said Katherine Mulready, senior vice-president and chief strategy officer with the Colorado Hospital Association. “We want to make sure that total affordability, both premiums and out-of-pocket costs, the savings that we're talking about today of 18.2 percent, really get through to consumers."

Polis said deductibles should remain stable, and state insurance commissioner Michael Conway said the program has bipartisan support.

"It's important to remember that this isn't just a blue state issue. We see red states doing it too," Conway said.

Colorado is the eighth state to start a reinsurance program, tied with North Dakota, which also got federal approval Wednesday, Conway said.

State leaders say consumers will start seeing savings as soon as next year.