Colorado estimates $411 million in health insurance savings on individual market, but rates are still going up next year

Premiums for Coloradans who buy their insurance on the individual market will increase this year, but by a combined $411 million less than if the state hadn’t taken steps to rein them in, the Colorado Division of Insurance announced Monday.

Some Coloradans buying coverage on the individual market could see additional savings on their out-of-pocket insurance costs. Next year, people earning up to 250% of the federal poverty line — $75,000 for a family of four — will qualify for lower deductibles and copays. Previously, the cutoff was 200% of the poverty line, or about $60,000 for four people.

The funds to reduce out-of-pocket costs are available because the federal Centers for Medicare and Medicaid Services allowed Colorado to repurpose some of the money that it saved. When premiums go down, the federal government doesn’t have to pay out as much in tax credits to people buying on the individual marketplace.

Most of the estimated 24% reduction from what premiums would have been comes from reinsurance, which essentially acts as a partial backstop, limiting what insurance companies have to pay out for their customers with the most expensive needs. Since federal law requires companies to spend 80% of the monthly premiums they collect on paying for customers’ care, if they’re on the hook for less money, rates go down.

The Division of Insurance’s review process, which determines whether companies can have the premium rates they requested, and the Colorado Option accounted for about three percentage points of the 24% reduction. The Colorado Option is a standardized plan that had a target to reduce premiums by 10% this year.

Gov. Jared Polis said he was “thrilled” with the combined results.

“This is why we have the process,” he said.

Most companies selling on the individual market received smaller increases than they asked for, though the difference was less than two percentage points. The exception was Denver Health Medical Plan, which asked for a 7.8% increase but received more than double that.

Kate Harris, deputy insurance commissioner, said the division determined Denver Health’s plans needed higher rates to be sustainable, but found savings with the other insurers.

“It’s really important that all their rates are appropriate,” she said.

The average premium increases on the individual market for 2024 will be:

• Anthem: 12.7%
• Cigna Health and Life Insurance Company: 7.1%
• Denver Health Medical Plan: 19.6%
• Kaiser Foundation Health Plan of Colorado: 10.5%
• Rocky Mountain Health Maintenance Organization: 6.5%

Select Health, which is affiliated with Intermountain Health, also joined the market in Colorado for the first time. Intermountain, which is based in Utah, gained a foothold in Colorado last year by merging with SCL Health.

The Division of Insurance estimated that the average increases would have been 30% or more without reinsurance. The biggest savings were on the Western Slope, where it estimated premiums would have gone up more than 50%.

About one-third of Colorado Option plans on the individual market met the goal of reducing premiums by 10%. Those 25 plans are available in 15 counties, where about three-quarters of Coloradans live.

Harris said 73 contracts between insurers and hospitals were renegotiated to reduce rates, contributing to lower premiums overall.

“Even if they aren’t at that 10% decrease, as the 25 (plans) are, there are still savings that are being realized for Coloradans,” she said.

Last year, about 13% of people who bought insurance on the individual market chose Colorado Option plans. Polis said he thinks it could benefit the marketplace as a whole, by bringing in more customers.

“People who are uninsured or who have had to buy into some other option might find the exchange more attractive,” he said.