By Kayla Zacharias

April 2021

Despite former president Barack Obama’s efforts to provide affordable healthcare to all, many Americans are still living without health insurance. As of 2018, 8.8% of Coloradans were without health insurance, and the primary reason is cost.

Lacking health insurance can lead to several outcomes. Uninsured individuals sometimes go without critical medical care, and they are less likely to receive preventative care than the insured. If they do choose to seek care, uninsured individuals sometimes face serious financial consequences. Hospital bills can quickly turn into medical debt, as those without health insurance often have moderate incomes and little savings.

In Colorado, Democratic state legislators are trying to help. HB 21-1232 (Standardized Health Benefit Plan Colorado Option) would create a public health insurance option if insurance companies don’t lower their rates over the next few years. The bill was introduced March 18 and recently faced its first committee hearing. 

Two phases are laid out in the bill. In the first, the state commissioner of insurance would develop a standard health insurance plan, determining what features the plan would offer and how high deductibles would be. Insurance companies would be encouraged to offer that plan everywhere they serve the individual and small-group markets (people who buy insurance on their own and small businesses that offer health coverage). This makes up about 15% of all Colorado residents covered by health insurance, according to the Colorado Sun. 

The bill also sets goals for insurance companies annually for the next few years. In 2023, insurance companies would set the goal of offering a standardized plan that costs at least 10% less than the premium rate offered to the individual and small-group markets in 2021. In 2024, the standardized plan should cost at least 20% less than in 2021. For 2025 and each year after, insurance companies must not increase prices by more than inflation plus 1% (relative to the previous year). 

Phase two comes into play if insurance companies don’t meet the 20% goal for 2024. In this phase, the state would create a Colorado Option Authority, which would operate as a non-profit public entity and serve as an insurance provider to offer the standardized plan. The Colorado Health Insurance Option (or Colorado Option) would cost at least 20% less than the average premium rates offered by private insurers in each county across the state. 

Under the bill, healthcare providers and facilities would be required to accept customers enrolled in any plan offered by the Authority. 

Although it faces opposition from some hospitals and insurance companies, the measure is a high priority for Governor Polis and Democratic lawmakers who have long been fighting for healthcare. There will likely be intense scrutiny of and discussions about the bill in the near future, but it has a good chance of passing as Democrats control both the House and the Senate. 

Creating the Colorado Option Authority would require a Section 1332 Waiver, which allows states to pursue innovative strategies to provide residents with affordable and high quality health insurance, from the Biden administration. Considering Biden’s commitment to protecting and ramping up the Affordable Care Act, his administration would be likely to provide it. 

If passed, HB 21-1232 would be a bigger, better version of a public health insurance option considered during the 2020 legislative session (HB 20-1349). The general sentiment of the 2020 bill was similar to that of the contemporary version, just on a smaller scale; it would have created a public plan, but no state provider to offer it. That bill was ultimately abandoned due to chaos in the healthcare industry at the start of the COVID-19 pandemic.
Follow updates associated with the bill at https://leg.colorado.gov/bills/hb20-1349.