Colorado Option's working, raising tough questions | OPINION

Thanks to the Colorado Option, families in our state are finding more affordable, high-value, easy-to-understand health coverage plans! Recent premium rate hearings conducted by Colorado's Division of Insurance (the Division) clearly show the Colorado Option is delivering quality health insurance at a more affordable price.

Our healthcare system should be focused on providing the care people need, when they need it and improving and maintaining people's health. Unfortunately much of our health care system has evolved into big business seeking to maximize prices and profits, and grow ever bigger to dominate the market rather than advance health. It has also become increasingly complex, difficult to navigate and exceedingly expensive.

The Colorado Option was passed by the Legislature in 2021 to address the growing affordability crisis driven by skyrocketing health care costs. Colorado Option plans are standardized with consistent benefits and cost-sharing, making it easier to make choices based on quality, providers that participate in the plan and price. The plans prioritize benefits that improve accessing basic care and begin creating culturally responsive provider networks.

Using 2021 as the benchmark, Colorado Option plans were to reduce premium costs by 5% this year and a cumulative 10% for 2024, adjusted for inflation. The Division is directed to conduct public hearings on premium rates when plans fail to meet the target reductions, and to establish carrier reimbursement rates for hospitals and health care providers based on a formula if necessary. This holds health care entities accountable in a whole new way.

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However, insurers were supposed to file complaints if a hospital or provider was preventing premium reductions because of high reimbursement rates, but only one insurer — Cigna — did so.

The Division stepped in to file complaints against a number of hospitals data showed were preventing premium reductions in the individual market. Financial analyses showed most of the big hospitals identified can and should reduce reimbursement rates to reduce costs for Colorado Option plans. Reimbursement margins on individual market plans were significantly higher than the average across all commercial insurance plans. University Hospital of Colorado, a tax-exempt, "non-profit" entity, had an average overall commercial insurance reimbursement of 232% of what Medicare pays for services vs. their real, break-even costs of 128% of Medicare.

Individual market plans are mind-bogglingly more skewed. Rocky Mountain Health Plans reimburses near 450% of Medicare and Anthem around 475% to University of Colorado Hospital. People enrolled in individual market plans pay University Hospital of Colorado roughly 322% or 347% above the break-even mark through those insurance plans. At St. Anthony Hospital in Summit County, a Centura "non-profit" hospital, Anthem, Kaiser, Cigna, and Rocky Mountain Health Plans all reimburse between 430 to 525% of Medicare, despite the hospital's 131% of Medicare break-even point.

This valuable new information from the hearing process raises a few important questions: why didn't more carriers file complaints when there seems to be a clear opportunity for savings? Why didn't they take the opportunity to try to keep costs down? We know some hospitals like Denver Health and some of our rural hospitals are struggling, but analyses show our big hospitals and hospital systems have weathered the pandemic and are continuing to bring in sizable profits and are generally raking in big margins, particularly on individual market plans.

Knowing they would be subject to further public scrutiny, insurers and hospitals rapidly reached agreements for lower reimbursement rates just before the hearings were to take place. That's how the Colorado Option is supposed to work. These reimbursement savings now must be verified and passed on to consumers through lower premiums that will meet or get closer to the Colorado Option benchmark savings. It's imperative to scrutinize insurers' rate filings to ensure carriers are held accountable for reducing premiums for Coloradans.

The Colorado Option is an important win-win, lowering and controlling the underlying costs of health care that jeopardize Coloradans' health and economic stability while offering a standardized health plan designed to better address growing racial and health disparities. Though the Colorado Option public hearing process can improve — with better data presentation and predictability of the hearing schedules — Colorado has demonstrated that adopting a public option with the right tools can work to control underlying health costs.

But the questions still remain: why didn't insurers pursue these savings and why are big hospitals' margins so excessive for some plans?

I urge Colordans seeking their own health insurance and small businesses to consider these high-value Colorado Option plans — because this model is working to bring better and more affordable health insurance options for you.

Adam Fox is the deputy director of the Colorado Consumer Health Initiative, a nonpartisan, nonprofit, membership-based group advocating for equitable access to high-quality, affordable health care. CCHI serves Coloradans whose access to health care and financial security are compromised by structural barriers, affordability, poor benefits, or unfair business practices of the healthcare industry.