Health insurance rates are expected to go up in 2025 – but the state says reinsurance program is keeping prices from going up faster

Health insurance rates on the individual market may rise 5.5% next year. That's a bit below average compared with prior years.

The state's insurance division has released a preliminary look at the numbers for 2025.

Health insurance premiums for people who pay for their own coverage are expected to go up 5.5%. The rise is lower, 4.2%, for what are called Colorado Option plans, which are part of a state program that aims to give better coverage for less money.

Just about 5% of people buy their own private health coverage. About half the people in the state get it through their employer.

The rates are closely watched to see if reforms in health policy are helping manage health insurance costs for consumers. Gov. Jared Polis thinks they are.

"Colorado is leading the nation in saving people money on health care," he said in a news release. "We need to continue pushing hard to save people money on health care."

The governor's office and two agencies, the Division of Insurance and Department of Regulatory Agencies, said premiums would have gone up higher, almost 23%, if Colorado didn't have what's called a reinsurance program, which helps protect insurers and lower health premiums.

The state's reinsurance program works by paying a portion of high-cost claims. That allows insurance companies to lower the premiums for individual health insurance plans.

The insurance division estimates the program will save Coloradans a big chunk of money, to the tune of $477 million, in 2025. It said some areas of the state especially are benefiting.

"In many counties in the western half of Colorado, premiums would be more than 40% higher without reinsurance. In Mesa County, premiums would be 43% higher if reinsurance wasn't in place," the release stated.

During open enrollment in 2023, about a third of 34% of all health insurance plan choices made through Connect for Health Colorado, the state health insurance exchange, were for Colorado Option plans. That's a 188% rise in enrollment from the year before, according to the state.

One Colorado consumer health advocacy group, the Colorado Consumer Health Initiative, said it was "cautiously optimistic" to see rates increase in that overall 4-6 percent range.

"However, along with high prescription drug costs, Colorado families are still taking the hit when insurance carriers and others in the health care industry could better control their costs," said Adam Fox, the group's deputy director in a news release. He noted several insurers in the individual market proposed average increases at or above 8% in the individual market. "Those require much closer scrutiny," he said.

The group said it would review the proposed increases closely, along with the general public and give feedback to the insurance division to "hopefully put further pressure on these proposed increases." In mid-October, final, approved plans and premiums will be made available. Between now and then the DOI will review information companies filed to ensure that changes in premiums are justified and plans comply with regulations at the state and federal level.

To read more stories from Colorado Public Radio, visit www.cpr.org.

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