Colorado becomes 2nd state to create own public insurance option

Colorado became the latest state to pass a law that creates a new public insurance option to be sold on and off the Affordable Care Act’s (ACA's) insurance exchanges.

The legislation, signed by Democratic Gov. Jared Polis Wednesday, would create individual and small group health plans starting in 2023. It became the second state after Washington to pass a public insurance option, and several more could come after it.

The standardized plan must offer healthcare coverage on the bronze, silver and gold levels and offer all pediatric and other essential benefits.

Colorado’s insurance commission must also create rules regarding network adequacy for the public option plan.

Each carrier on and off the exchanges starting in 2023 shall offer the standardized plan premium of at least 6% less than the premium rate for health benefit plans offered by the carrier this year, adjusted for medical inflation, the law said.

In 2024, each carrier must offer a standardized plan premium of at least 12% less than the premium rate for plans offered by that carrier in 2021. After 2026, carriers must limit any annual rate hikes to no more than medical inflation relative to the prior year.

Any carrier that cannot meet the premium rate requirements has to notify state regulators of the reason.

The head of Colorado’s state-run ACA exchange praised the new law.

“I’m looking forward to seeing the good ideas from our business, insurance and advocate partners as they develop the details of the plan,” said Kevin Patterson, CEO of Connect for Health Colorado. “We stand ready to implement this exciting, new initiative on our Marketplace.”

Colorado’s decision comes as moves for a federal public option look dim in Congress.

While President Joe Biden has supported a public option, the White House declined to include it in the latest budget request to Congress. The budget instead pressed for a federal public option that provides Medicaid-like coverage for states that have not expanded Medicaid under the ACA.

House and Senate committee leaders are also seeking public feedback on ideas for a federal public option but have gotten stiff pushback from provider groups.