In accordance with HB19-1004, we recommend that Colorado establish a public option that is structured as a public-private partnership and initially sold in the individual market, both on and off the exchange, starting in the 2022 plan year. In the draft report, our actuaries estimated the proposal would result in plans available in 2022 that are about 9-18 percent less expensive than available plans. This final recommendation is aligned with that target. We the plan be administered by private-sector carriers, be available statewide to any resident seeking coverage in the individual market, and that people can utilize federal subsidies, if applicable. We recommend it be offered in the catastrophic, bronze, silver, and gold metal, and that it promote quality through standardized benefit designs.
This is going to be very good news for folks who do not receive subsidies. They will see a significant premium decrease.
However, as I wrote in September, the multiple public option plan will have premium increases for subsidized buyers who purchase plans priced below the benchmark:
Our analysis suggests that introduction of a single public option plan in each rating area of Colorado would reduce the contribution a sample subsidized consumer would need to make to the premium of the lowest-cost plan in each metallic tier by 40.0 percent to 73.4 percent. Introduction of multiple public option plans in each rating area would, by contrast, decrease net premium contributions by 6.5 percent for the lowest-cost gold plan while increasing the contribution required for bronze and silver plans by 15.7 and 0.7 percent, respectively.
The fact that Colorado’s 2019 market currently has limited spreads between the least expensive silver plan and benchmark plan contribute to this disparity of impact between the single public option and multiple public option scenarios….
Colorado is attempting to reduce gross premiums. They are also attempting to keep all the insurers in the market to maintain competition and reduce political opposition to this plan. Those are reasonable goals. However, due to the structure of the subsidy system, these choices creates winners and losers. The winners will be non-subsidized families seeing significantly lower premium options. The major losers will be some clinicians seeing lower payment rates and subsidized buyers who are currently purchasing plans priced below the benchmark.