A panel of lawmakers approved, on a party-line vote, a bill intended to fix issues with the Colorado Option, the state-designed health insurance program that launched its first open enrollment period late last year.

The Colorado Option, the subject of House Bill 1224, mandates that health insurers reduce premium costs by 5% for 2023, compared to 2021 premiums, within the individual and small group market. Insurers will be held accountable for those reductions beginning later this year.

In 2024, that number actually increases to 10%, and for 2025, by 15%. 

The law, passed in the 2021 session, required the Colorado Division of Insurance, whose major responsibility is to regulate insurance companies, to come up with a state-designed health insurance plan that health insurers would be mandated to offer.

In a Friday hearing of the House Health & Insurance Committee, health insurers complained that the Division of Insurance, which designed the Colorado Option, is looking for ways through HB 1224 to promote Colorado Option over other health plans. Supporters applauded the bill for largely the same reason — that it would make Colorado Option easier for consumers to find and purchase.

The first time Coloradans could enroll in the program occurred in the 2023 plan year, and while it didn’t deliver on the savings promised by supporters, it attracted about 35,000 Coloradans, with about 25,000 who enrolled through the state’s Connect for Health Colorado insurance website. The 25,000 is about 13% of those who enrolled for 2023, according to a Division of Insurance news release. The other 10,000 enrolled through OmniSalud, which is available to Coloradans without proper documentation.

House Bill 1224 is sponsored by Democratic Reps. Iman Jodeh of Aurora and Kyle Brown of Louisville, who was formerly deputy commissioner for affordability programs at the Colorado Division of Insurance and part of the team that developed the Colorado Option.

Brown said the Colorado Option is increasing competition, with 36 new plans added for 2023, but that, in most counties, it is the cheaper plan.

Jodeh said it proposes to make changes to the Colorado Option plan on the Connect for Health website to make it easier for people to find and compare plans. The goal is to encourage, not limit competition, she said. It would also give the commissioner of insurance the discretion to determine when a public hearing is most beneficial. Those public hearings, under the original law, would review why a carrier did not meet the premium reduction targets.

Rep. Matt Soper, R-Delta, raised concerns about the power the bill gives the insurance commissioner. He questioned whether the bill would give the commissioner the authority to prioritize plans based not on cost but as a way to promote the Colorado Option plan over those on the exchange, he said.

That point was driven home by Jason Hopfer, who represents the Colorado Association of Health Plans, which seeks an amendment to the bill. He pointed out the state law that created Connect for Health, which states the exchange would foster a competitive marketplace for insurance.

But the bill, he said, says something else — the exchange shall develop a format for displaying the Colorado Option in a manner “that encourages value-based shopping and allows consumers to easily compare” the Option plans, in effect promoting the Option over other health plans. 

“How do you have an exchange whose mission is to foster competition within the marketplace and an exchange that is being directed to give preference to one product in the marketplace?” he asked.

Hopfer said this new concept of value — a term that isn’t defined in state law, much less the bill — as a judgment for deciding who gets on the exchange and where, puts the thumb on the scale for Colorado Option.

“This language assumes DOI and the state knows what consumers value, and what they should value,” he said.

Melanie Herman, an insurance broker, said there is no “one size fits all” approach to insurance, and that value is hard to define as every client has different needs. Customers who were previously members of Bright Health and Oscar, two companies that pulled out of Colorado last year, were given one “suggested plan” when they visited the exchange website — the Colorado Option — and only 4% of those customers enrolled in the Option plan, she said.

The bill was not amended to address those concerns.

Erin Miller, vice president of health initiatives at the Colorado Children’s Campaign, said the bill will improve the Colorado Option, make it easier for consumers to find, and will improve health equity. Helping more Coloradans find these plans will also help the state draw down federal funds, Miller said. 

The Colorado Option is a game-changer for families that lacked access to affordable health care, said Dr. Chester Cedars, a retired physician. He lauded the bill for making it easier for people to find out information about the state plan.  

The bill passed on an 8-1 vote, with two Republicans absent. It now heads to the full House.