On June 5, the U.S. Department of Health and Human Services informed Mike Conway, who is the insurance commissioner for Colorado, that the state's application to implement a healthcare reinsurance program was complete and that within the next 6 months the department would decide whether or not to approve the program.
If it is ultimately approved, the program could significantly lower premiums on health insurance for those in Colorado who are purchasing it through the individual market created by the Affordable Care Act that became law under President Obama in 2010. It is expected that upwards of 250,000 people could benefit from the reinsurance program.
Experts believe that, by next year, the program could lower individual insurance premiums by more than 20%. People who live in the rural and mountain areas of the state could particularly benefit from the program, with their premiums expected to fall by more than 25% if the program is approved.
A reinsurance program is something that lets private insurance companies decrease the cost of insurance premiums. It does this by having the state government pay for policies that have excessive costs.
The office of Jared Polis, who is the governor of Colorado, issued a statement in response to the news, in which they expressed confidence that the Department of Health and Human Services would come to a decision on the matter earlier than 6 months. The governor himself said that the program was needed because people in the state are fed up with the high cost of health insurance.
Currently, the health insurance market in Colorado suffers from a lack of competition in many parts of the state. Out of the state's 64 counties, 14 of them have only one insurer serving the individual market. Because of this, monthly premiums in these counties can cost as much as $500 more than comparable policies in the Denver area.
This past May, the governor signed the bipartisan legislation that initiated the reinsurance program. The program is just one of many initiatives Governor Polis wants to implement in order to bring down the cost of health insurance in the state and to expand access to it.
But first the reinsurance program requires approval from the federal government. This is because about 67% of the cost of the program will come from federal funds. These funds currently provide tax subsidies for those in the state who purchase health insurance through the Affordable Care Act.
Colorado's reinsurance program is far from the first of its kind. A number of states have implemented similar programs. According to data compiled by the National Council of State Legislatures, at least 7 of these states have seen insurance premiums reduced by up to 20% because of such programs. Other states are currently in the process of implementing them.