Colorado is leading the charge in trying to reshape health insurance with its Colorado public option.
Supporters claim it will lower premiums and expand access to care. Critics warn it could disrupt the healthcare market and limit choices. So, what’s the reality? Let’s break it down.
Understanding the Colorado Public Option
When Governor Jared Polis signed the legislation, Colorado became the second state after Washington to introduce a public health insurance option.
The plan targets individuals who buy their own insurance and small businesses with fewer than 100 employees.
With federal approval secured, the Colorado public option launched in 2023. It competes with private insurers, promising average premium reductions of 22.3%. To further cut costs, the state introduced a subsidy program for those who don’t qualify for federal assistance under the Affordable Care Act.
To manage the system, Colorado created a new government agency—the Colorado Public Option Authority.
This central planning body oversees the rollout and enforcement of price controls, ensuring insurance carriers meet state-mandated premium reductions.
Supporters believe these measures will stabilize the market and increase enrollment. But is that the full story? Let’s take a closer look.
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The Dream: Possible Benefits of the Colorado Public Option
Supporters of the Colorado public option believe it will drive down costs and expand health coverage.
They claim it will:
- Reduce average premiums statewide by up to 14%.
- Increase individual market enrollment by 11%, adding about 10,000 people to the system.
- Cut individual market premiums by 22.3% in 2023.
- Stabilize the market, leading to a 4.1% enrollment increase.
How will this happen? Price controls.
Under the plan, Colorado requires insurance companies to reduce premiums by 15% by 2025 for individuals, families, and small businesses. The state enforces these reductions through its Public Option Authority, which oversees compliance.
But does government-controlled pricing actually work?
The Reality: The Public Option Won’t Work!
The track record suggests otherwise.
Government projections on health insurance costs often fall short. For example, the Affordable Care Act was expected to reduce annual family premiums by $2,500, but in reality, costs continued to rise.
Price controls also have a history of unintended consequences. When governments force lower prices, providers often respond by cutting services, reducing staff, or withdrawing from the market altogether.
We’ve seen this in:
- Prescription drug price caps, which have led to shortages in some medications.
- Medicare and Medicaid reimbursement rates, which many doctors avoid due to low payments.
- Rent control policies, which have historically reduced housing supply rather than improving affordability.
The same risks apply to the Colorado public option. If insurers and providers can’t operate profitably under the state’s mandates, access to care will shrink, and patient options will suffer.
Provider Participation in the Colorado Public Option: Challenges and Developments
When Colorado introduced its public option, concerns arose about provider participation, particularly among rural hospitals.
These facilities feared that lower reimbursement rates could jeopardize their financial stability. Similar apprehensions were observed in higher-cost urban markets, where larger hospital systems hesitated to join the plan.
To address potential provider shortages, Colorado implemented measures to encourage participation.
The state mandated that insurers in the individual and small-group markets offer Colorado Option plans wherever they operate. The Division of Insurance holds the authority to require hospital participation and set reimbursement rates if insurers fail to meet premium reduction targets.
Despite these measures, some insurers have exited the Colorado market. Oscar Health, for instance, withdrew from the state in 2023, citing regulatory challenges and a focus on profitability. Cigna + Oscar announced they would not renew small group plans effective January 1, 2025, affecting small businesses seeking group coverage.
These departures have raised concerns about reduced competition and consumer choice in Colorado’s health insurance market.
Fewer insurers could lead to higher premiums and limited options for consumers. Critics argue that such outcomes contradict the principles of economic liberty and free markets, which are essential for ensuring prosperity and freedom.
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The Hidden Costs of the Colorado Public Option
At first glance, the Colorado public option promises lower premiums, but those savings come with trade-offs.
Price controls may make coverage more affordable on paper, but they can also lead to fewer healthcare options, longer wait times, and reduced quality of care.
As providers receive lower reimbursements, hospitals and clinics may limit the number of public option patients they accept.
This means:
- You may need to pay out-of-pocket for care at certain hospitals.
- Waiting lists could grow as fewer doctors take on Colorado Public Option patients.
- Some treatments and procedures may no longer be available if they aren’t financially viable for providers.
- Doctors may spend less time with each patient, as clinics take on higher patient loads to stay afloat.
Instead of expanding choices, the Colorado public option could push the state’s healthcare system closer to a Medicaid-style model—more bureaucracy, fewer providers, and longer waits.
Explore Your Options Before You Enroll
With open enrollment starting November 1st, now is the time to review all your healthcare options.
A government-managed plan isn’t your only choice. Many free-market alternatives provide flexibility and control over your care. These options allow you to choose the best providers and treatment options without restrictions imposed by state mandates.
Our Personal Benefits Managers can help you find the right plan, one that fits your needs without the limitations of a government-mandated system.
Healthcare is one of the most important investments you will make. Make sure you choose a plan that gives you access to the best care when you need it most.
Contact us today to review your options and secure coverage that puts you in control.
For Further Reading:
Leslie Alford is a Personal Benefits Manager at ColoHealth. Her aim is to help you make smart and informed healthcare coverage decisions that will fit your needs and budget. Read more about Leslie on her Bio page.
