Costs will spike, 100,000 Coloradans will lose health coverage if Trump spending bill passes, regulators say

The state agency that regulates health insurance announced Tuesday that it estimates more than a third of people who buy insurance on their own in Colorado could drop coverage due to rising prices if certain subsidies are not extended and the federal reconciliation bill passes as-is.

That number — 110,000 people choosing to go without insurance due to affordability — would be an astonishing rollback of health coverage gains made since the implementation of the Affordable Care Act. And, coupled with coverage losses due to Medicaid provisions in the bill, it could lead to a spiking uninsured rate with serious implications for the health of Coloradans, the financial well-being of health care providers and the operations of employers.

"The ripple effects of this are going to be massive," Colorado Insurance Commissioner Michael Conway said. "There won't be any corner of our health care system that won't be touched by what's about to come down."

The precise mechanisms of the potential price spike are complex and get to the inner workings of how insurers set premiums and how the state has tried to keep those prices down. They combine the expiration of subsidies that help people buy insurance, the resulting decline in federal funding for a state program that helps hold insurance prices in check, and the effective end of a deft policy maneuver that Colorado and other states had used to boost subsidy amounts.

Gov. Jared Polis sent a letter to Colorado's Congressional delegation Tuesday warning them of the consequences of passing the reconciliation bill — the giant spending measure that has already cleared the U.S. House and is named by supporters as the One Big Beautiful Bill Act.

"The federal government is looking to devastate Colorado's health insurance market, patients, and the health care system as a whole," Polis wrote. "The cost of health care and insurance is too high and this bill will increase costs on hardworking Coloradans."

Here's an explanation of some of the issues and how they could impact insurance prices.

Enhanced premium subsidies are set to expire

People who purchase health insurance on their own — i.e. without help from an employer — may be eligible for federal subsidies depending on their income.

During the COVID-19 pandemic, Congress created enhanced subsidies on top of the existing subsidies. These enhanced subsidies were more generous for people with lower incomes but also stretched to people making more money — ending what had been a sharp "subsidy cliff" where people making over 400% of the poverty line suddenly had to pay the full price of insurance.

The state estimates about 80% of the roughly 300,000 people who bought a plan through the state's insurance exchange, Connect for Health Colorado, received a subsidy this year. About three-quarters of people eligible for a subsidy were able to buy a plan for an effective price of under $100 per month.

The enhanced subsidies are set to expire at the end of the year, though, and the reconciliation bill does not extend them.

Connect for Health Colorado estimates ending enhanced subsidies would mean a drop of $328 million in tax credits for Coloradans. In his letter, Polis said the end of the enhanced subsidies would cause effective premium prices for people who receive them to double in 2026.

"Tens of thousands of Coloradans will no longer be able to afford their health care," Polis wrote.

He urged federal lawmakers to put an extension for the enhanced subsidies in the bill.

Support for the state's reinsurance program would decrease

Colorado's most powerful tool for combating insurance price increases — and perhaps Polis' proudest health care achievement — is a system known as reinsurance.

The program works by creating a big pool of money, drawn from both a fee on insurers and federal funding, and then using that money to help insurers pay their highest-cost claims. This, in turn, allows insurers to spread the savings around to everyone in the form of premium prices that are lower than what they would otherwise be.

Colorado created its program with bipartisan support in 2019 and saw an immediate drop in premium prices the following year.

Numerous states — both Republican-controlled and Democratic-controlled — have reinsurance programs, and the impact is noticeable.

Take the examples of Colorado, Wyoming and Montana. Both Colorado and Montana have reinsurance programs. This year, the two states' average monthly "benchmark" premiums — the middle-of-the-road price used to calculate subsidy amounts — are $463 and $554, respectively. In Wyoming, which does not have a reinsurance program, the average benchmark premium is $871.

The Polis administration estimates that reinsurance has saved Colorado consumers more than $2.1 billion since its inception.

But the program's funding is at risk because the end of the enhanced subsidies will shrink the amount of money the federal government sends the state. Colorado receives that funding because reinsurance saves the federal government money — by not having to pay out as much in premium subsidies. The annual funding amounts are calculated based on an estimate of those savings.

Without the feds on the hook for paying enhanced subsidies, reinsurance's savings will be less. That means the federal government will send Colorado less money — about $100 million less per year, Conway said, or about a 30% reduction.

Conway said he told insurers this week he expects the reinsurance program to have a lower impact on premium prices in 2026. He estimated that lower impact will result in an additional 7% increase in premiums along the Front Range next year and as much as 16% in rural areas, where insurance prices had once been among the highest in the nation.

No more "silver loading"

The Affordable Care Act also contains another way to help people pay for health care. The law requires insurers to reduce out-of-pocket costs for people who make just enough that they don't qualify for Medicaid.

Unlike premium subsidies — which lower the up-front costs of buying insurance — these so-called cost-sharing reductions work on the back-end of the leger, the deductibles and co-insurance amounts people have to pay when they receive health care.

During the administration of President Barack Obama, the federal government reimbursed insurers for providing these discounts. But President Donald Trump, during his first term, ended that practice.

The result could have sent premium prices soaring as insurers priced in the benefit, but states including Colorado responded with a clever move. They told insurers they could pile the costs of having to fund the cost-sharing reductions only on silver plans — the middle tier in the bronze/silver/gold hierarchy of insurance choices.

Silver plans are the only plans eligible for cost-sharing reductions. But they are also the plans used to determine how much of a subsidy people receive. More expensive silver plans mean a larger subsidy, which can be used to purchase any plan.

This maneuver, known as "silver loading," had an extraordinary effect: The federal government spent more money not funding the cost-sharing reductions than it had funding them. But the reconciliation bill ends this by resuming federal funding for the cost-sharing reductions.

Connect for Health estimated that what people pay on average for their premiums would increase by 39% due to the end of silver loading. Conway estimated that would result in 30,000 to 35,000 people being unable to afford coverage in Colorado.

Conway said two other provisions in the reconciliation bill — one that would shrink the open enrollment window and another that would end automatic renewals of insurance plans — could also result in fewer people being covered.

"We should do everything we can to lower costs for Colorado," Polis concluded in his letter, "and instead, this reckless legislation will increase them."