Dramatic health insurance rate drop possible next year
Rates for people buying their own health insurance could drop dramatically in 2020 — but only if the federal government green-lights a new program aimed at cutting those costs.
Insurance rates on the state’s individual market could decrease for the first time in years, by an average of 18.2% next year. That’s a far cry from the drumbeat of steep rate hikes that came to be expected as
But before those savings can kick in, the federal government must allow
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The program has been touted as insurance for insurance companies. By using state and federal funds to pay for the most costly bills submitted to insurers each year, those companies theoretically can pass along those savings to consumers in the form of lower monthly rates.
“That will save families thousands of dollars that they can put back into our economy, invest in their kids, invest in their home, or do whatever they like to enjoy the
State Insurance Commissioner
If the program isn’t approved, insurance rates could stay steady across much of the state.
Average premiums — the monthly cost of insurance plans — are expected to increase 0.5% across
The same will largely be true in the
It all marks a significant shift from years of rate increases on the individual market, which insures people who do not have employer- or government-based coverage. In
Average insurance rates in 2019 rose a modest 5.6% across
The greatest savings could take place in Pueblo and across much of the Western Slope and other rural areas, division officials said.
For years, rural communities, particularly mountain towns, have faced some of the highest insurance rates in the nation.
But next year, rates could drop 26% to 30% in those areas if the new program is approved. If not, rates still could drop a few percentage points in most of those areas.
“It looks as though reinsurance is going to work as advertised,” said
At least seven other states have won federal approval for reinsurance programs.
But they scrapped that proposal amid concern that federal officials would not approve it. The lawmakers instead hewed much closer to programs adopted in other states, relying on a complicated formula using
The rates announced Tuesday were preliminary and represented insurers’ requests for 2020.
State regulators now must review insurers’ proposals over the next couple of months to ensure they meet state and federal laws. They’ll ask insurers to justify premiums and benefits, and residents can submit comments to the
Rocky Mountain HMO and Denver Health Medical Plan proposed the greatest year-over-year rate cuts, with prices expected to drop 29% to 34%.
The smallest proposed decreases still stretched into double digits. A batch of
The biggest winners from Tuesday’s announcement likely will be people who do not receive federal tax credits to lower their monthly insurance bill, Hanel said. They are people who earn four times the federal poverty level, which is
Still, some observers said years of increases have left coverage out of reach for many — meaning more work is needed, even if reinsurance is approved.
“Does this get us really where we need to be, where premiums are affordable for everyone? No, probably not all the way there,” said
“Realistically, if we want to bring premiums down in a much more sustained fashion, we’re going to really have to start grappling with some of the underlying costs.”
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