Jensen Werley, Denver Business Journal

The Colorado Division of Insurance said that reinsurance is expected to save Coloradans an average of 20.8% on the individual health insurance market in 2021, compared to what premiums would be without the program. However, it’s another story for those in the small group and large group markets.

Reinsurance gives the state a pool of money to help insurance companies cover large claims, which in turn keeps prices lower for the public because the cost of the high-price claims are no longer distributed across all plans.

Overall, people who buy individual plans should see premiums decrease an average of 1.4% compared to their premiums in 2020. Originally, it was thought that premiums would increase year over year, based on preliminary information submitted by the insurance companies. On the Western Slope and in southwest Colorado, the savings are even more significant with a 38% improvement compared to what it would be without reinsurance.

When reinsurance was approved in 2019, it was announced premiums for 2020 would decrease by an expected 20.2%.

While the individual market is seeing decreases, the small group market, for employers with two to 100 employees, will likely see a 3.8% increase over 2020 premiums. Thirteen companies will offer Colorado’s small businesses 429 health insurance plans for 2021.

That 3.8% has groups like the Colorado Chamber of Commerce concerned, as it impacts both employees and employers of small- and medium-sized businesses, which are already being hard-hit by the Covid-19 pandemic.

“One of the concerns we’ve always raised as the Colorado Chamber of Commerce was, for those workers employed by those businesses that provide health insurance, what would that cost look like [when you factor in reinsurance],” said Loren Furman, senior vice president for state and federal relations at the Colorado Chamber of Commerce.

Furman said that she suspects cost-shifting is to blame for the small group market increase and said rates are expected to increase 2.1% at a minimum in the large group market, according to a health insurance carrier that is a member of the chamber.

There are similar concerns from the Colorado Association of Health Plans, the state trade association for the health insurance industry.

“We’re happy to see the individual insurance market stabilizing rates and that they continue to be affordable,” said Amanda Massey, executive director. “But there are still concerns to what’s happening in the small and large group market, in terms of how reinsurance is structured and impacted those small and large group rates.”

The Division of Insurance, however, said that cost-shifting is not the case here. In fact, the 3.8% increase is down from its preliminary estimate of a 5.7% increase.

But because of reinsurance, the 2021 small group increase is less than what it’s been in previous years, said Michael Conway, insurance commissioner.

In 2020, the average increase was 7.9% and the year before it was closer to 9%.

He said the increase is in line with medical inflation.

“The stability of reinsurance helps the small group and large group as well,” Conway said. “You’re not seeing the instability that comes with having people who are uninsured … Bringing more stability to the market benefits the rest of the market as well.”

In press release, the Division of Insurance said it insisted that insurance companies could not shift the cost of uncertainty caused by Covid-19 onto Colorado consumers. The DOI said it gave insurance companies additional direction this year, such as reducing Covid-19-related cost increases and putting a cap on what companies can charge for anticipated use of medical services in 2021.

Overall, there will be 326 individual plans offered in Colorado. The Colorado Consumer Health Initiative, a nonpartisan nonprofit that advocates for consumer health care, said that this highlights the success of reinsurance. Consumers will see more choice, CCHI said, as the number of counties with only one carrier offering plans on the individual insurance market is dropping to 10, down from 22. However, CCHI said Coloradans in those 10 counties are seeing some of the highest premiums in the state.

“A big reason why I ran for Governor was to save people money on healthcare, and I’m excited that we are making progress with 20.8% average premium savings in the individual market from reinsurance, with rates coming down an average of 1.4% for next year,” Gov. Jared Polis said in a prepared statement. “My administration is committed to helping save people money even more on health care and the bipartisan reinsurance program is already delivering real results for hardworking families and individuals across our state. But we can’t rest on our laurels, we must do more to drive down health care costs.”

Open enrollment for 2021 health insurance will be from Nov. 1, 2020 to Jan. 15, 2021. To have coverage in place by Jan. 1, individuals must be enrolled by Dec. 15.

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