Just within the last 18 months, four important health insurance carriers have anounced they are leaving the Colorado market – leaving hundreds of thousands of Colorado residents and thousands of employers scrambling to replace their coverage.
First, Bright Health announced it was pulling out of the Colorado market in October.
Then Humana announced it would no longer sell policies in the group market in Colorado, though it continues to sell its Medicare-related offerings and dental/vision insurance products.
Then Oscar Health pulled out, citing commercial and regulatory issues in Colorado.
Most recently, Colorado-based Friday Health Plans ran into a liquidity crunch and could not find enough financing to support its recent rapid growth, and announced it will shut down nationwide.
Are you a Friday Health policyholder? See our FAQ on Friday Health.
That leaves Colorado with just a handful of remaining insurers.
Unfortunately, less competition in the marketplace is not good for consumers. Competition drives down prices, and forces companies to continually improve their products and operations to differentiate themselves from competitors.
In general, the more competition in the marketplace, the more companies will innovate to improve products and services, streamline operations, and improve the customer experience.
When there’s less competition, there is less innovation, and less incentive for insurers to keep prices down.
Who loses when an insurance company pulls out of the state? The people of Colorado.
Colorado Government Mandates Driving Up Costs
Why are companies leaving? Two words: Government overreach.
First, the Colorado legislature imposed more than two dozen additional mandates on insurance companies, over and above federal mandates under the Affordable Care Act.
Examples of these mandates include first-dollar coverage for abortions, with zero copay – forcing people who aren’t sexually active, who are sterile or infertile, or who find the practice objectionable to subsidize it for others.
Full coverage of maternity care, neonatal care and infant care, even for those at zero risk of pregnancy or childbirth, is also mandated in Colorado.
Individually, each additional mandate appears benign at first glance. But their cumulative effect made health insurance premiums less and less affordable for individuals without an Obamacare subsidy.
Next, Colorado became one of the first states in the country to roll out a so-called “public option.” But the public option mostly consisted of a state mandate to insurance carriers to lower prices by fiat.
Effectively, Governor Polis and his allies in the legislature waved an imaginary magic wand and passed a mandate requiring health insurance companies doing business in Colorado to offer the standardized public option plan in 2024 with premiums that are 10% less than their 2021 prices… and then 15% lower than that for the following year.
But historically, efforts at government price controls in complex industries have a nearly unbroken track record of inefficiency, failure, and often outright disasters. No government bureaucrat or committee is smart enough or fast enough to control pricing. It’s an impossible task even without outside pressure from politicians to artificially lower prices below the true cost of providing goods and services.
Why the State’s Actions are Hurting the Health Insurance Market
As opponents of Polis’s Colorado Option widely predicted at the time, their price control mandate almost immediately ran aground on economic realities:
Health insurance is not a high-margin business. There wasn’t much fat to trim among insurance companies to lower premiums. Especially since even as legislators and regulators were pressuring carriers to lower premiums, they continued to add more and more mandated coverages to Colorado health insurance plans.
For insurance carriers in Colorado to meaningfully lower premiums, hospitals, physicians, and other providers in Colorado would have to agree to take less money for their services.
The healthcare providers refused to take less, because they knew it would bankrupt many rural and inner city hospitals and clinics, which are already running on razor-thin margins as it is.
Many hospitals were already struggling under a severe labor shortage and increasing staffing costs. And they pointed out that they had already generally reduced their compensation to the statutory floor of 165% of Medicare reimbursement rates – the most they were required to do, by law.
Colorado consumers weren’t exactly enamored with the Colorado Option, either. Not only were the premium savings not cutting the mustard, but Colorado Option plans rely heavily on narrow provider networks of high-volume ‘take-a-number’ – style clinics and care providers in order to generate the required savings.
The price controls routinely require the Colorado Option plans to contract with the lowest bidder, not the one who offers the best value to patients. Members have very little ability to choose their own doctors and other providers.
Even with several companies departing the Colorado market, Colorado public option plans weren’t able to attract many customers. Only 35 thousand Coloradans signed up for the Colorado public option plans during the most recent open enrollment period: A lackluster enrollment far short of projections.
This creates more challenges for public option plans as it deprives them of anticipated economies of scale, and reduces their leverage when negotiating prices with health care providers.
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COLORADO HEALTH INSURANCE
Central Economic Planning Is a Failure
The results of government price meddling and price controls are predictable: Central economic planning and assignment of prices by bureaucratic diktat have a long and consistent record of failure.
And Governor Polis’s pet public option health insurance plans are no exception.
Late last year, more than 80% of the Colorado Option plans told state regulators they would not meet the state’s premium reduction requirement.
And things weren’t looking good for the second round of mandated premium decreases scheduled to come down next year, either.
After all, lower premiums don’t do much good if no policyholder can find a willing doctor or hospital who takes their insurance.Only one of the 13 carriers with a Colorado option going into 2023 – Denver Health Medical Plan – had managed to meet all of the mandated premium reduction targets for 2024.
But rather than adjust the numbers to the reality on the ground, the State of Colorado responded by threatening healthcare providers with stiff fines and sanctions if they didn’t play ball.
Insurance companies could see the writing on the wall, and didn’t stick around. Health care companies can also read the same writing: the current regulatory and legislative environment in Colorado is hostile to investment and business development – especially in healthcare.
Colorado officials deny that state policy initiatives and enforcement have anything to do with these carriers leaving the state, claiming that they are responding to national issues, not Colorado-specific ones. And that’s true of Friday Health Plans.
But shortly before Bright Health announced it was pulling out of the Colorado market, they had been slapped by the Colorado Department of Insurance with a $1 million fine for poor claims payment performance and communication problems.
Bright Health is still operating in other states. But not Colorado.
Colorado Option Plans Have Affordability Problems
Meanwhile, the Colorado Option plans continue to underperform.
In most areas of Colorado, they aren’t even the most affordable plans available. Out of Colorado’s 64 counties, the Colorado options were the most affordable Silver-level plan in only ten of them, and the most affordable Bronze-level plan in only four.
But wait. It gets worse.
Despite the price controls, the mandates, and the increasingly coercive efforts of the Colorado Legislature and Governor Polis’s insurance and healthcare regulators to force costs down (and in large part, because of them, Colorado health insurance premiums are skyrocketing.
As the Colorado Option rolled out, the average health insurance costs for Colorado 40 year-old men with a mid-range Silver plan rose 19.6% – zooming past the inflation rate and outpacing every state in the union except Georgia.
Heckuva job, Governor!
What to Do If You’re Losing Your Health Insurance
If you’re losing your plan because your insurance company is pulling out of the state, or if your health insurance premiums have gone up an unreasonable amount, there’s still a lot you can do.
Because these carriers say they will keep their plans in force until the end of the year, you can wait to sign up for a new plan until the standard Open Enrollment under the Affordable Care Act, which runs from November 1st through January 15th. Note if you want your plan to become effective January 1st, you must complete enrollment in your new plan by December 15th.
First, if your insurance were to be canceled before then (other than for non-payment), or if you lose coverage for another qualifying reason, you may be entitled to a Special Enrollment Period. This is a 60-day window during which you are entitled to sign on with a new insurance plan with guaranteed enrollment, regardless of your medical condition.
However, there is another popular and affordable alternative you can do all year round:
Healthsharing.
The Healthsharing Advantage
Health share plans are a viable alternative to overpriced and overregulated traditional health insurance plans. They also help shield individuals and families from the catastrophic financial risk of high unexpected medical bills.
Health sharing plans – also called “medical cost sharing plans,” – are not insurance policies. Instead, they are non-profit associations of health conscious people who share similar values, and who agree to help share the medical expenses of fellow healthshare plan members.
They don’t qualify for premium tax credits under the Affordable Care Act. But they are available for around half the cost of a traditional ACA-qualified health insurance plan before accounting for subsidies.
They are especially cost-effective for those in relatively good health without pre-existing conditions, and for people who don’t qualify for a large subsidy under the Affordable Care Act.
For these people and families, the savings from switching from a traditional health insurance plan in Colorado to a healthshare plan amount to thousands of dollars per year.
Healthsharing plans have no open enrollment restrictions. You can enroll at any time – though plans generally impose a waiting period on sharing costs associated with treating pre-existing conditions.
Furthermore, in contrast to ACA-qualified HMOs and PPOs, most healthsharing plans give you much more freedom to choose your own doctor.
How much will you save by switching to healthsharing?
Get some free online quotes from some of the best health care cost sharing plans operating in Colorado. If you like what you see, and you are saving money right away, you can enroll online in just minutes.
Or, for a more personalized analysis and recommendation, make an appointment with one of our experienced Personal Benefits Managers.
Either way, chances are very good you will be saving hundreds of dollars in premiums from your very first month of enrollment.
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COLORADO COST-SHARING
Conclusion About Health Insurance Companies Leaving Colorado
The departure of multiple health insurance companies from Colorado has created significant challenges for Rocky Mountain State consumers and businesses.
The departure of these carriers has reduced competition in the marketplace, leading to higher premiums and limited choices for consumers. The state’s government mandates, including additional coverage requirements and the implementation of the Colorado public option, have contributed to the departure of insurers. These mandates have added to the financial burden on insurance companies and failed to generate the anticipated cost reductions for consumers.
If you’re affected by one of these insurance company departures, know that we’re standing by to help. Our experienced Personal Benefits Managers have been monitoring the evolving situation in Colorado, and we have several affordable options to help you and your family or small business find an affordable solution.
For a free consultation and analysis, just click here, fill out a bit of basic contact information, and make an appointment with an experienced ColoHealth Personal Benefits Manager.
Here are some additional blogs on the topic: Why Is Colorado Health Insurance So Expensive? | As the Colorado Public Option Fizzles, Legislators Scramble to Find a “Fix.” | How to Shop For Health Insurance in Colorado
Here are some additional pages related to this article: Direct Primary Care | HSA Secure in Colorado
Wiley Long is the president of ColoHealth, and has been in the health insurance industry since 1987. He received his master’s degree in nutrition and exercise science at Colorado State University, and is passionate about individual healthcare freedom. Read more about Wiley on his Bio page.
