DENVER (AP) — Colorado health insurance premiums on the individual market set up under the Affordable Care Act could drop markedly next year once the federal government approves a state reinsurance plan, Gov. Jared Polis said Tuesday.
Polis released projections showing that average individual premiums in 2020 will drop by more than 18%, and that some rural and mountain residents’ rates will plunge 33.5%. Polis said a few could see a 41% drop.
If approved by federal officials, the reinsurance program could help more than 250,000 Coloradans who buy coverage on the individual market created under former President Barack Obama’s health care law.
That’s about 8% of individuals who buy plans on the state exchange called Connect for Health Colorado and who don’t have an employer or government insurance plan.
Reinsurance allows private insurers to lower premiums by having the state take on portions of their highest-cost cases. The Division of Insurance announced Tuesday that eight private firms plan to participate in the market next year.
Polis signed bipartisan legislation in May to create the reinsurance program. It’s one of several measures he’s signed into law to expand access to insurance coverage and rein in health care costs, from hospital fees to insurance premiums to prescription drug prices.
On June 5, the U.S. Department of Health and Human Services informed Colorado that its application for reinsurance approval was complete. A final decision is expected by early September but could come much sooner.
Federal approval is needed because roughly two-thirds of the reinsurance program will be paid for with federal funds currently used for tax subsidies for patients purchasing insurance under the Affordable Care Act.
“For the first time in the history of our state’s health exchange, premiums are dropping,” Polis said in a statement. “The thousands of dollars people save can go to buying a home, saving for college or retirement, or whatever Coloradans want to do with it.”
Fourteen of Colorado’s 64 counties have just one insurer for the individual market, and monthly premiums there can be $500 higher than in metropolitan Denver.
At least eight states have seen rates drop after adopting reinsurance programs, according to the Kaiser Family Foundation. Others, including Montana, are seeking U.S. approval.