Tuesday, July 23, 2019

If feds approve reinsurance, Colorado's premiums are likely to decrease

Posted By on Tue, Jul 23, 2019 at 10:13 AM

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The Colorado Division of Insurance has predicted that health insurance premiums will decrease next year — as long as the federal government OKs a reinsurance program that state lawmakers passed this session.

Colorado health insurance providers expect premiums on individual plans (for those who do not get insurance through an employer or a government program) will decrease by an average of 18.2 percent.

In the Colorado Springs area, premiums would decrease by an average of 15 percent. (See a full breakdown of projected impacts here.)

The proposed reinsurance program is a state enterprise that covers a portion of high-cost claims so that insurance carriers can lower premiums. It's contingent on the federal government's approval of a waiver under the Affordable Care Act, which allows states to try innovative strategies to improve access to health care.

The program would be funded partly through a special fee assessed to hospitals, and partly through "pass-through funding" from the federal government. 

The state Division of Insurance describes the "pass-through funding" this way:

Under the Affordable Care Act (ACA), for people with household incomes under 400 percent (4 times) of the Federal Poverty Level, tax credits from the federal government are available to help make health insurance in the individual market more affordable. These tax credits are tied to health insurance premiums, so that when premiums go up, tax credits go up, and when premiums go down, the tax credits also go down.

As the reinsurance program brings health insurance premiums down, the amount of money the federal government has to spend on tax credits will also go down. But rather than letting it pocket the money, Colorado will ask the federal government to pass that money through to the state to fund the reinsurance program and maintain the lower premiums and stability it will bring to the individual health insurance market.

"Reducing health care costs for Colorado families has been a primary focus of my administration, and today we are seeing the first signs that our hard work is paying off,” Gov. Jared Polis said in a July 16 statement announcing the possibility of lower premiums.

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