Individual market health insurance rates to drop by nearly 20 percent in 2020

Colorado Gov. Jared Polis on Tuesday announced preliminary rates for individual health insurance plans in 2020, and Vail Democratic state Sen. Kerry Donovan cited the reinsurance bill she successfully carried in the Senate.

Individual health insurance plans for those who don’t get insurance through their employers are projected to decrease in Colorado by an average of 18.2 percent after years of double-digit increases that have hammered small businesses and self-employed entrepreneurs.

Rates in Colorado’s mountain resort communities have spiraled out of control.

“For far too many Coloradans, particularly those in rural communities, the cost of a health insurance plan looks more and more like a second mortgage. That’s a cost few can afford and the reason why I worked hard to create a reinsurance program,” Donovan said of HB19-1168.

“The reinsurance program is an innovative, Colorado solution that will help people save money on healthcare and have a real and immediate impact on Coloradans all across the state,” Donovan added.

Here’s the press release from Polis:

Polis Administration Projects 18.2 Percent Average Decrease in Premiums for Individual Health Insurance Plans in 2020

Reducing Health Care Costs Has Been a Top Priority For Polis

DENVER – Today, the Colorado Division of Insurance (DOI), part of the Department of Regulatory Agencies (DORA), announced that for the first time ever, Colorado health insurance companies that sell individual plans (for people who do not get their health insurance from an employer or government program) expect to reduce premiums by an average of 18.2 percent (-18.2%) over their 2019 premiums, provided the reinsurance program is approved by the federal government. These are the health insurance plans available on the Connect for Health Insurance Exchange, the state’s health exchange made possible by the Affordable Care Act (ACA).

“For the first time in the history of our state’s health exchange, premiums are dropping. Premiums in the individual market are projected to go down by 18.2 percent on average next year, and as much as 41 percent in some areas of the state, so long as the Federal government approves our bipartisan reinsurance program. 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,” said Colorado Governor Jared Polis. “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. I’m just thrilled to save people thousands of dollars on health care so they have more left to enjoy life. By saving families money and helping more Coloradans gain affordable, quality health care for their families, we can reduce costs across our health care system and continue our state’s strong economic growth.”

Colorado’s proposed reinsurance program — a bipartisan policy that has produced double-digit premium reductions in other states — is primarily responsible for these lower premiums. These decreases range from 10.3 percent (-10.3%) to 33.5 percent (-33.5%), all tallying to an average reduction of 18.2 percent (-18.2%) over 2019 individual premiums, across all plans, from all companies, across the state. Without the proposed reinsurance program, the companies’ requested premium changes would add up to an average increase of 0.5 percent (+0.5%). Find a description of the reinsurance program at the end of this release (“What is Reinsurance”).

“These decreases are why we worked so hard to pass the reinsurance program,” said Insurance Commissioner Michael Conway. “All of us — the Governor, the DOI, the bill’s bi-partisan sponsors, and the consumers who testified in support of the bill — knew that this would be the result for a program that has shown similar results in seven other states. This will make health insurance more affordable across Colorado, and it can be especially impactful in the higher cost areas in the mountains, Western Slope and Eastern Plains.”  

The information below on the companies, plans and requested premium changes is preliminary, and only reflects what the companies have requested, not the final approved plans for 2020. The final, approved plans for 2020 will be made available later this year in late summer / early fall. 

• 2020 Individual Preliminary Premium Changes by Insurance Carrier
• 2020 Individual Preliminary Premium Changes by Area and Carrier

All Companies Return, Plus One More

For the third year in a row — 2018, 2019 and now 2020 — the same seven companies are returning to offer on-exchange, individual plans: Anthem, Bright Health, Cigna Health and Life, Denver Health Medical Plans, Friday Health Plans, Kaiser Foundation of Colorado and Rocky Mountain HMO. And a new company — Oscar Health — is entering the market, showing that the state’s successful health exchange is growing stronger. Oscar is a technology-driven insurance company that over the last six years has offered plans in Arizona, California, Florida, Michigan, New Jersey, New York, Ohio, Tennessee and Texas. For 2020, Oscar will be offering individual plans in the Denver area. 

“Threats and uncertainty continue to plague the ACA at the federal level,” continued Commissioner Conway, “Yet, here in Colorado, we continue to maintain the stability in our ACA markets, which helped bring another insurer to our state.” 

What is Reinsurance?

House Bill 19-1168 (HB19-1168) passed this past legislative session, establishes a reinsurance program starting in 2020 for the individual health insurance market – the seven to eight percent of people in the state who do not get their health insurance through their employer or through a government program. Reinsurance works by paying a portion of high-cost claims – such as those incurred after major accidents or due to serious health conditions. As insurance companies don’t have to pay that portion of the high-dollar claims, they can lower the premiums for individual health insurance plans.

As the reinsurance program brings health insurance premiums down, the amount of money the federal government has to spend on ACA tax credits will also go down. But rather than letting the federal government pocket the money, Colorado is asking 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. The DOI submitted an application to the federal government to allow the pass through of that money in the spring and is awaiting approval of the program. If is approved, the DOI will be required to submit reports to the federal government on the effectiveness of the program. In addition, HB19-1168 directs the DOI to study the effects of the program after two years, in particular focusing on affordability and the impact to consumers eligible for ACA tax credits. For more information, visit the DOI’s “Reinsurance Program” webpage.