‘You shouldn’t have to pay your deductible twice’ — Lawmakers search for solutions after insurance implosion

The state Capitol in Denver, Jan. 8, 2024.

When the health insurer Friday Health shut down its Colorado operations last summer, it left 30,000 Coloradans scrambling for new health insurance. It wasn’t just a hassle — it came with thousands of dollars of costs for some patients. 

Now, state lawmakers are considering changes that could reduce the fallout for future victims of insurance company meltdowns. A new bill would minimize the extra costs that can rack up for consumers who lose their insurer midyear.

“You shouldn't have to pay your deductible twice or hit your out-of-pocket maximum twice,” said Rep. Kyle Brown, a Democratic sponsor of the measure. “It's not your fault that the insurance company went out of business and therefore you shouldn't be on the hook for this again.”

It’s a response to the Friday Health debacle. The company shut down its Colorado business in the middle of the plan year, when many consumers had already spent hundreds — or thousands — of dollars toward meeting their deductible. 

Normally, once the deductible is reached, the insurer starts paying out for more health-care costs. But when Friday’s members were forced to switch to new insurers, they essentially lost all their progress. Many of those that signed on with new insurers, found themselves back at zero.

Under Brown’s bill, that progress wouldn’t be lost in the future. If an insurer collapses, consumers could carry over their progress on out-of-pocket costs to their new plans. Essentially, the new insurer would have to cut the customer a break.

“This is something that I think we should do to protect patients and make sure that they don't have to take on unreasonable healthcare costs that they weren't expecting,” he said.

The bill wouldn’t help people who were affected by the Friday Health shutdown, instead applying only to future incidents.

Last year, state officials asked insurers to voluntarily honor the deductibles of Friday Health clients. Kaiser Permanente and Denver Health Medical Plan obliged, but others refused.

Lauren Gibbs, a Lakewood-based Realtor, said she lost out on thousands of dollars when she had to switch from Friday Health.

“I didn't get this help when I needed it, and that $3,000 is still on my credit card and I'm paying interest on it,” she said on Friday. She supports the idea of the new bill, but she also sees it as merely treating a symptom.

Experts say Friday Health grew too fast, offering unrealistic prices in some of its markets and ultimately building an unsustainable business. (Another investor-powered “insurtech” company, Bright Healthcare, also recently left the Colorado market, although it did so in a more orderly fashion.)

“I really think we need to go upstream to the regulators. It just shouldn't be allowed to happen,” Gibbs said.

Colorado state officials say they policed Friday Health closely, even forcing it to raise its prices. They have put some of the blame on other states, where the carrier was allowed to grow much more aggressively.

Insurance carriers haven’t said much yet about the new statehouse bill, but they are raising concerns about its financial implications.

“The Colorado Association of Health Plans is working with the sponsor on amendments to ensure that Coloradans are made whole while protecting the stability of Colorado’s health insurance market,” wrote Saskia Young, executive director of the Colorado Association of Health Plans. The organization didn’t offer further detail.

The measure’s sponsors also include Rep. Andy Boesenecker and Sen. Dylan Roberts, both Democrats. It’s scheduled for its first hearing on Feb. 13 at the House Health & Human Services Committee.