Colorado insurance rates will increase more than three times the rate of inflation in 2025

With open enrollment for health insurance set to begin in two weeks, Colorado's Division of Insurance has finalized rates for premiums in the individual and small group markets.

Premium increases in both markets for 2025 are set to rise at more than three times the rate of inflation forecast for next year. Individual premium increases will rise 5.6%, and small businesses, those with 100 or fewer employees, will rise 7.1%.

However, medical inflation rises faster than consumer inflation, according to the Kaiser Family Foundation. In an August report, the foundation said that in June 2024, medical prices grew by 3.3% from the previous year, higher than the 3.0% overall annual inflation rate.

"Since 2000, the price of medical care, including services provided as well as insurance, drugs, and medical equipment, has increased by 121.3%. In contrast, prices for all consumer goods and services rose by 86.1% in the same period," the foundation reported.

For Coloradans who choose a plan outside of the Colorado Option, the state-mandated health insurance plan, premiums will average 6.1% higher in 2025 for individuals and, at the same increase, 7.1% for small businesses.

For consumers and small businesses who choose Colorado Option plans, the increase is smaller, 4.6% for the individual market and 6.8% for the small group market.

Colorado's inflation rate, as reported by state economists' most recent revenue forecast, is projected at just 1.7% for 2025 and 2.7% for 2024.

The premium increases were buried in an announcement Thursday from the insurance division and the governor's office, which touted how much Coloradans would save because of the state's reinsurance program.

In July, the division estimated that premium increases for 2025 would be 5.5% for the individual market and 8% for the small group market.

The reinsurance program is a reimbursement system that protects insurers from very high claims and is seen as a way to stabilize the insurance market and make coverage more available and affordable.

While Thursday's announcement focused on the savings Coloradans are making on health insurance premiums because of the reinsurance program, the program isn't permanent.

Colorado's reinsurance program was authorized by legislation in 2019 and was slated to expire on Sept. 1, 2023.

The state obtained two federal waivers for the reinsurance program, one that came after the 2019 law, and a second one in 2021 under House Bill 21-1232, the law setting up the Colorado Option.

That second waiver allowed the state to "capture additional federal funding for Colorado's health insurance affordability programs, including reinsurance," according to a 2021 report on the program.

The state had to seek approval from the U.S. Department of Health and Human Services for the program, and in 2022, a five-year extension was granted, meaning it expires in 2027.

In 2024, Colorado ranked 10th among states for the highest increases in health insurance premiums in the nation, according to ValuePenguin.com. The nationwide average was 4%. Colorado was at 9%, tied for 10th highest with Montana.

However, Colorado's average premium cost for a silver plan, at $535 per month, was below the national average of $584 per month.

Premiums for employer-sponsored family health plans increased by 7% in 2024 to an annual cost of $25,572, according to the annual employer health benefits survey released last week by the Kaiser Family Foundation's research division.

The KFF survey said that's the second year in a row premiums have been up by 7%.

"Employers are shelling out the equivalent of buying an economy car for every worker every year to pay for family coverage," said KFF President and CEO Drew Altman in a statement accompanying the survey. "In the tight labor market in recent years, they have not been able to continue offloading costs onto workers who are already struggling with health care bills."

In September, KFF also examined the number of people unenrolled in Medicaid as a result of the "unwinding" of Medicaid during the pandemic. Colorado ranked at the top nationwide with more than a 30% decrease in overall enrollment between March 2023 and May 2024. Adult enrollment decreased well above 40%, while child enrollment dropped around 20%. Overall, however, enrollment decreases in Medicaid are down 10% in Colorado compared to pre-pandemic levels, KFF said.