Gov. Jared Polis on Tuesday rolled out the results of a study by the Colorado Division of Insurance that claims a new “reinsurance” program could save Coloradans an average of 18.2% on health insurance premiums, and much more in rural parts of the state.

The reinsurance program came about as a result of House Bill 19-1168, which put into motion a request to the federal Centers for Medicare and Medicaid Services (CMS) for a state innovation waiver.

That waiver, if granted, would allow Colorado to establish a reinsurance program, which would function as an insurance plan to cover the highest-cost claims paid by health insurers. 

Backers of the reinsurance plan claim such a program would substantially drive down insurance premiums for the individual market. That’s the portion of Coloradans who don’t qualify for Medicaid or Medicare, don’t get insurance from their employers or are small business owners, for example.

Those individuals and families buy their insurance, when they can afford it, through Connect for Health Colorado, the state’s health benefit exchange that was established after the passage of the Affordable Care Act (ACA), also known as Obamacare. That program currently enrolls somewhere between 225,000 and 250,000 Coloradans, according to the Division of Insurance.

About 6-7% of Coloradans are uninsured; Polis estimated Tuesday the reinsurance program could cut that uninsured rate in half. 

The program sets up a reinsurance pool, with $90 million coming from the state through the hospital provider fee, and $170 million in federal dollars that currently pay for subsidies under the ACA.

Estimated rates for rural Colorado show the greatest impact. In Grand Junction, for example, rates are projected to fall by some 27.7%. In Western Colorado, not including Grand Junction, rates could fall by as much as 29.1%. That could amount to as much as a $9,000 annual reduction in premium costs for those families.

Pueblo rates could drop by 26.7%; rates in Colorado Springs are expected to drop by 15.7%. Rates in Eastern Colorado are projected to decline by 24.9%.

Premium rates for 2020 will not be finalized until September, the same month that the state Division of Insurance expects to hear from CMS on the waiver request. All nine members of Colorado’s congressional delegation have endorsed the program, and similar programs have been launched in other states.

Polis said health insurance premiums are likely to fall for employer-paid insurance as well, given that fewer uninsured Coloradans will mean that costs decrease for hospitals overall. That’s most likely to be a benefit for Western Colorado, he said.

Commissioner of Insurance Mike Conway told reporters Tuesday that rural Colorado has felt most of the pain from high insurance premiums. Tamara Drangstveit, CEO of the Summit County-based Peak Health Alliance, said residents in her county have had to deal with “crippling double-digit premium increases,” forcing people to choose between child care and health care, for example.

The Alliance announced earlier this year it would set up a cooperative for health insurance beginning in January. It’s an idea that’s gaining favor in other parts of the state. 

Republican Sen. Bob Rankin of Carbondale, one of the sponsors of HB 1168, told reporters that he’s talked to people who can’t afford insurance and are afraid of going to the hospital.

“It’s hard to express the impact [of health insurance premiums] on young families,” he said.

But he also cautioned that the reinsurance program is little more than a band-aid on top of the ACA that will do nothing to lower the cost of health care, and backers have acknowledged that reinsurance is, at best, a short-term fix to the state’s high cost of health insurance. 

Rankin said he expects big changes will come from the cooperatives, such as the one in Summit County.

“That’s where the action is,” Rankin said, pointing to a new co-op being formed in the Roaring Fork Valley.

There are still concerns about the program, Polis said, and that’s tied to instability in the health insurance market that drove up premiums by double digits in 2017 and 2018. Those rate increases were driven in part by lawsuits, including a current federal lawsuit filed by Republican attorneys general that attempts to declare the Affordable Care Act unconstitutional.

A lower court in Texas has already made that ruling. A three-judge panel in the Fifth Circuit Court of Appeals in Louisiana heard the appeal last week.