Last week, House Speaker Nancy Pelosi (D-CA) commended Colorado as a state that is “leading the way” on improving the Affordable Care Act (ACA). Amidst recent federal actions to expand unregulated insurance products and roll back or undermine some of the ACA’s major reforms, states have faced the choice whether to shore up the ACA and enact market stabilization policies or to embrace the lowered federal standards. As Speaker Pelosi noted, Colorado is one state that has stepped up to protect its residents and its market.
The ACA led to historic coverage gains across the country, and Colorado is no exception; since the law’s implementation, the state’s uninsured rate was cut almost in half. Colorado took advantage the ACA’s reforms by expanding Medicaid, operating its own health insurance exchange, and codifying the law’s consumer protections into state law. In 2019, Colorado continued its efforts to shore up the ACA through a series of state-level policy changes.
Previously on CHIRblog, we’ve highlighted state efforts to bolster the ACA and improve access to affordable, quality health coverage. In this installment of States Leaning In, we look at some of Colorado’s recent actions to shore up their individual market and protect consumers.
The Colorado Playbook
State Reinsurance Program
Last month, Colorado received approval from the Centers for Medicare & Medicaid Services for a federal waiver to establish and help fund a state reinsurance program. Reinsurance is a risk mitigation mechanism that reduces premiums by reimbursing insurers for high-cost claims. The ACA included a federal reinsurance program, but after the program expired in 2017, state insurance markets lost a critical buffer. Since the end of federal reinsurance, 12 states have launched or are about to launch their own programs, capturing federal pass-through funding for the program through Section 1332 Waivers available through the ACA. Early analysis indicates that those programs are successfully holding down premiums.
Colorado’s program, which will launch next year, is already doing just that: reinsurance is predicted to reduce rates up to 30 percent. One unique feature of Colorado’s program is that it targets benefits to the highest-priced regions of the state. These welcome premium reductions come after double digit increases in 2018, and an almost 6 percent increase last year. In addition to premium reductions and expected enrollment increases, the state’s marketplace also gained a new entrant, with Oscar offering plans in the Denver area beginning in Plan Year 2020.
Exploring a Public Option
During the past legislative session, the Colorado legislature took up multiple bills that proposed paths to a public option, or a state-backed health plan available on the private market. One of the legislative proposals would have established a pilot program to allow residents of a particular region to buy into the state employee health plan. While this proposal was eventually removed from consideration, the legislature passed another bill charging state officials and stakeholders with developing a proposal for a state public option. The enacted legislation indicates that a state public option aims to decrease costs for consumers, increase competition, and improve access to affordable, quality health care.
State officials are currently in the process of soliciting stakeholder feedback and developing recommendations for a state public option. Providers, insurers, consumer advocates and others have weighed in on the feasibility, scope, and design. The final policy proposal will be submitted to the state legislature by mid-November.
Harnessing a Communities’ Purchasing Power to Lower Costs: The Peak Health Alliance
Colorado’s mountain communities have faced high health care prices, owing to a lack of competition and the high cost of providing care in rural areas. To address this issue, a group of employers and individuals in Summit County formed a cooperative that negotiates prices directly with hospitals. The Peak Health Alliance has leveraged its purchasing power to reduce hospital rates, and marketed the lower prices to health insurance partners that will offer plans to its members.
This week, Governor Jared Polis and the Colorado Division of Insurance announced that residents of Summit County in the Peak Health Alliance will see rate decreases ranging from 39 to 47 percent next year, thanks in part to the cooperative’s efforts to reduce costs as well as the state’s new reinsurance program. Governor Polis and Insurance Commissioner Michael Conway have aspirations of taking the model statewide. To enable meeting that goal, the state legislature passed a bill earlier this year adding consumer protections and collective rate negotiating power to state statute governing health care cooperatives.
Tackling Surprise Medical Bills
In addition to policies to improve the affordability of insurance, Colorado took steps to shield consumers from surprise medical bills by enacting “balance billing” protections. Balance billing occurs when consumers receive care from an out-of-network facility or provider and the insurer does not pay the entirety of the bill, leaving the consumer to pay the balance. This practice can lead to astronomically high medical bills for consumers seeking needed care.
The new Colorado law sets payment standards for insurers and providers when consumers receive emergency care at an out-of-network facility, or non-emergency care from an out-of-network provider at an in-network facility, other than cases where consumers voluntarily use out-of-network providers. It prohibits providers from balance billing and limits consumer cost-sharing in these situations. The new law also establishes an arbitration process for insurer and provider payment disputes. These new standards make Colorado one of just 13 states that have enacted comprehensive protections against balance billing.
Combatting the Growth of Non-ACA-Compliant Coverage
Last year, the Trump administration expanded the availability of short-term, limited duration health insurance (STLDI). At the federal level, STLDI is exempt from the ACA’s consumer protections, including the requirement to cover preexisting conditions and the prohibition against charging sick people higher premiums. In light of this rule, Colorado adopted rules to set higher standards for STLDI sold in Colorado, applying a number of the ACA’s reforms and consumer protections, like the requirement to cover a comprehensive set of benefits. And because these new regulations may cause insurers to cease selling STLDI in Colorado, the state also established a special enrollment period for consumers enrolled in such products who lose coverage when they are not able to renew their plan because their insurer ends its sale of STLDI.
Promoting Mental Health Parity
This year Colorado also acted to strengthen consumer protections by passing a new law and adopting emergency regulations that improve the coverage of mental health and substance use services in private health insurance. These new policies enshrine federal standards for mental health parity and stipulate that carriers must comply with certain network adequacy, treatment limitation, and other coverage requirements to ensure timely and adequate access to mental health services and medications. They also use the state’s rate review power to ensure compliance with the Mental Health Parity and Addiction Equity Act (MHPAEA), and appropriate funds to implement the new standards.
Colorado has long been a model for state health insurance reform. By taking advantage of the ACA’s many opportunities to expand coverage, the state reduced its uninsured rate and increased access to comprehensive, affordable insurance. But Colorado has gone beyond embracing the ACA and enacted numerous state-level policies aimed at market stabilization, affordability and consumer protection. The state has found innovative solutions to suit its unique landscape, and responded to federal attempts to whittle away the ACA’s reforms through actions that seek to defend and grow coverage gains. As more states look for ways to improve their markets and create more access to quality and affordable insurance, Colorado’s policy playbook – and early indications of its success – should inspire and motivate state policymakers to look at similar solutions.