November 2, 2023 | Updates

ICYMI: A Rising Trend: Increasing Premiums Make the Colorado Public Option a Cautionary Tale  

WASHINGTON, D.C. – Signs of failing state public options continue to emerge as open enrollment season begins. In the latest example, Colorado’s public option is failing to deliver on its promise to make healthcare more affordable with Coloradans facing Rocky Mountain high premium increases.   

As Colorado created its public option, advocacy groups said the bill would “bring more affordable and equitable insurance options to Coloradans… By reducing costs on a standardized plan structure that provides lower out-of-pocket costs, deductibles and copays.” (Colorado Consumer Health Initiative, 5/26/21)  

In reality, health insurance premiums in the individual market went up 10% during the law’s first year (2023) and are expected to rise again next year.   

While some are touting increased premiums as a win, the facts are clear – costs are going up. The state’s Division of Insurance (DOI) announced that individual market health insurance premiums will rise by nearly 10 percent in the 2024 plan year. This news represents a failure to deliver the choice and lower prices.  

Dive Deeper:  

  • Proponents of the Colorado Option see these numbers as a victory when in fact, they’re hurting the market. 
    • Since implementing the Colorado Option, insurers like Bright HealthCare and Friday Health have left the exchange market, resulting in thousands of Coloradans scrambling for new insurance with fewer options to choose from.  (Colorado Public Radio, 8/10/23
    • “So far only one-third of the individual plans and 80% of Colorado Option plans on the small employers market are hitting the state’s targets, the Colorado Sun reports.” (Axios, 11/01/23
    •  “Colorado’s Health Care Future, which opposes the law, called it a broken promise that is only leading to higher prices and less competition.” (Axios, 11/01/23
  • An analysis by NovaRest, an independent actuarial consulting firm recently highlighted how the Colorado Option has fallen short on the promise to save Coloradans money on their health care. The actuarial analysis demonstrates how this state government-controlled health insurance system is increasing costs for Coloradans and reducing competition in the state’s health insurance market. 
    • “In plan year 2023, consumers in most counties would be able to achieve more premium savings by shopping for the lowest premium plan rather than selecting a Colorado Option Plan, which is generally not the lowest premium plan available.” (NovaRest, 4/11/23
    • The analysis found that “Colorado Option-related restrictions will also make it more difficult for the Colorado market to attract new issuers to participate in the individual or small group [Affordable Care Act] markets.” (NovaRest, 4/11/23
  • Washington – the first state to implement a public option – has struggled for years to offer affordable plans that are popular with enrollees. 
    • In Washington, “enrollment remains paltry, and while the cost of the health insurance plans has decreased, state health officials said the policies available are still too expensive.” (Politico, 12/27/22
    • “To keep premiums low, [Cascade Care plans] pay providers no more than 160% of what Medicare does—lower than the 174% that other plans on the state’s exchanges pay, on average.” 
      • “State officials gambled that providers would accept low payments in exchange for a guaranteed flow of patients with the public option plan. They’re losing that bet.” (Forbes, 2/13/23) 
    • “The state is forcing hospitals to accept the public option’s low payment rates, even if those rates don’t cover their costs.” (Forbes, 2/13/23) 


Independent research shows that a national public option could spell the same type of trouble for states across the country. An analysis by FTI Consulting found a federal public option would ultimately destabilize the market for private insurance, hinder access to providers, and threaten consumer choice as private insurers gradually leave the individual market entirely. As insurers gradually exit the marketplaces, nearly 300,000 Americans enrolled in ACA coverage would be removed from their existing health plan in the first year following the introduction of a public option.  



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