Colorado Gets Federal Waiver Amendment Clearance, Will Launch Public Option

Colorado will become the first state in the nation to amend a federal exemption to create a public health insurance option for 2023, the Department of Health and Human Services said Thursday.

HHS is giving the green light to a modified 1332 State Innovation Waiver that will create a “Colorado Option” that will use federal funds to create a public health plan designed to reduce the state’s uninsured rate and provide more affordable insurance coverage for residents. In 2021, 6.6% of Colorado residents had no health insurance, according to a survey by the Colorado Institute of Health.

The Colorado option will be available to residents who enroll in individual market health plans, as well as small employers with fewer than 100 employees. Insurers must offer Colorado Option plans in every county they operate in and meet premium reduction targets by 2025 public hearing.

A Colorado option is expected to cut average consumer exchange premiums by 15% by 2025, HHS said. By 2027, the state expects the program to cover 32,000 previously uninsured residents, increasing the number of public exchange participants by 15%.

“We are thrilled to partner with Colorado as part of our shared commitment to lower healthcare costs and provide greater access to quality, affordable healthcare,” HHS Secretary Xavier Becerra said in a press release. “The Colorado option will help thousands more families sign up for health insurance. I applaud Governor Jared Polis and encourage all states to use innovative ways to ensure health care is accessible to their residents.”

Colorado represents the first state to amend the federal 1332 waiver to create a public option, although the state is not the first to unveil a public health plan for residents.

In 2021, Washington State contracted with private insurers to launch a public option called Cascade Select for the individual market.

In 2026, Nevada will contract with private health plans and managed care organizations to offer a public option in the individual market and possibly the small group market.

“Colorado’s option is groundbreaking and a step in the right direction to lower the uninsured rate while investing in affordable and better health coverage and advancing health equity,” Chiquita Brooks, administrator of Centers for Medicaid and Medicare Services, said in the news. Lasur. release. “We encourage all states to consider innovative ways in the future to use the Section 1332 exceptions to expand and improve coverage and reduce costs for their residents.”

The modified waiver is expected to save the federal government money that regulators will pass to the state. Colorado officials will then use those federal dollars to create subsidies for residents with coverage, including those who are not eligible for federal assistance.

But health care providers and insurers have previously expressed skepticism that Colorado’s program can achieve its goals. For example, insurance trade group AHIP said the waiver structure depends on continued subsidization of the extended exchange plan adopted by the American Rescue Plan. Congress has not committed to expanding subsidies.

“Colorado, like many other states, is seeing an increase in the number of health care plans and policies being offered in the individual market. This means Colorado consumers have access to more choice and benefit from lower premiums driven by competitive market dynamics.” —Chris Hathaway, Vice President. president of public affairs for insurance trade group AHIP, wrote in a November letter commenting on the rejection. “The new public policy should promote competition in the marketplace, not through the strict implementation parameters of the Colorado Option by dropping a project that would likely increase insurance premiums for all Colorado residents.”

The Colorado Hospital Association took a “neutral” stance on the proposal in April 2021.

“The accessibility improvement provided by this bill depends on the victims and the management of Colorado hospitals,” Chris Tholen, president and CEO of CHA, said in a news release last year. “It’s critical that we carefully enforce and enforce this legislation to ensure that hospitals can continue to be vital resources for their communities.”

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