Purpose:  To address affordability of health insurance by controlling provider reimbursements and consumer premiums

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Main Provisions:

Bill Status

  • Introduced in House - March 18, 2021
  • Passed the House (40-23) - May 10, 2021
  • Introduced in Senate and assigned to Health & Human Services – May 11, 2021
    • Becomes effective upon Governor’s signature or upon becoming law without his signature

Main Provisions

 

  • On or before January 1, 2022, Commissioner must establish a standardized health insurance plan (SHIP), that complies with State and Federal laws, for carriers to offer in the individual and small group markets. 
  • SHIP must:
    1. Offer bronze, silver, and gold coverage levels;
    2. Include at least all essential health benefits plus pediatric care;
    3. Be offered through the Colorado benefit exchange and in the individual market through the Public Benefit Corporation;
    4. Be a standardized benefit plan design that:
      1. Is created through a stakeholder engagement process that include representation of physicians, health care industry, consumers; health care workers, and individuals representing diverse communities
      2. Has defined benefit design and cost-sharing that improves access and affordability; and 
      3. Improves racial health equity and decreases racial health disparity through a variety of means, e.g. improving perinatal health-care coverage; providing first-dollar coverage for certain high value services, such as primary care and behavioral health 
      4. Is actuarially sound;
      5. Complies with the Federal Act, including the risk adjustment requirements;
      6. Meets network adequacy standards, as stated in the bill, and allows consumers to easily compare carrier SHIPs
    • Beginning January 2023, insurance carriers must charge premium rates lower than the standard rates for other health plans offered in the individual and small group markets

Premium Rate Rules

  1. The requirements listed below must account for policy adjustments deemed necessary to prevent people with low and moderate incomes from experiencing net increases in premium costs
  2. Commissions paid to insurance producers must be comparable to the average commissions paid for other plans offered in the individual and small group markets

 

Additional Provisions:

Premium Rate Requirements

  1. 2023 - Carriers offering health plans in the Individual or small group market in a given county in 2021 must: 
    1. offer the SHIP to that same group, i.e. individual market or small group market, throughout the entire county
    2. offer the SHIP at a premium rate that is at least 6% lower than the premium rate, in that county, for health plans offered in the 2021 calendar year, as adjusted for medical inflation 
  3. 2023 - Carriers not offering health plans in the Individual or small group market in a given county but who will offer a SHIP in 2023 must:
    1. offer the SHIP at a premium rate that is at least 6% lower than the premium rate, in that county, for health plans offered in the 2021 calendar year prior to the application of the Colorado Reinsurance Program, as adjusted for medical inflation 
    2. offer the SHIP at a premium rate that is at least 6% lower than the average premium rate for plans offered in that county for that market, i.e. individual or small group, in 2021, as adjusted for medical inflation 
  5. 2024 - Same provisions as a. and b. above but substituting 12% instead of 6%
  6. 2025 - Same provisions as a. and b. above but substituting 18% instead of 6% 
  7. 2026 and thereafter – annual percentage increases in SHIP premium rates are limited to the medical inflation rate relative to the previous year

Other Considerations

Insurance carriers unable to meet the premium rate requirements or network adequacy standards must notify the Commissioner, by specific annual deadline, and include actuarial proof.  

  • In this case, a public hearing will be held and an office of insurance ombudsman will represent the interest of consumers
  • Based on outcomes, the Commissioner may establish reimbursement rates based upon various factors providers must accept those reimbursement rates without balance billing the consumer 
  • Providers who fail to participate in the SHIP or who fail to accept the reimbursement rate, after receipt of a warning, may receive an administrative fine not to exceed $5,000 per calendar year against any applicant, licensee, certificate holder, or registrant [fine increases to $10,000 - $40,000 per day for the first 30 days for hospitals who refuse to participate and may include suspension or revocation of the hospital’s license]

Opportunities

Challenges

  • Economic and health outcomes for those who elect to use the reduced premium
  • Potential to increase plan options in all communities 
  • Increased state revenue from fines issued or realized “pass through” fund savings returned from the federal government
  •  
  • Lower provider reimbursements will impact their income and may reduce the number of providers available for care
  • Health care providers may reduce services based upon the reduction reimbursements, i.e. less or fewer service(s) provided for the amount paid
  • New cost in infrastructure to develop/implement the SHIP plan, including staffing, legal services, etc. (2021-2022 = $1.199 million + 5.4 FTEs)
  • Exchange fees, Connect for Health Colorado, are funded by health insurer fees, currently 3.5% of premiums for 2021 – reduced premiums will lower the revenue collected to operate the Exchange The number of policies purchased would need to increase to offset the loss in revenue

On the Horizon

Next Steps

  • The bill is in review in the Senate.  
  • Possible amendments may change provisions
  • Final costs depending on approval of Section 1332 waiver to the Federal Government to potentially qualify for “pass through” dollars that may flow back through to the State due to savings on Federal subsidies

Action Steps

  • Take action here to tell your lawmaker to oppose this option
  • Watch for final version coming out of the Senate’s Health and Human Services committee
  • Understand any corresponding tax implications to fund the program



 

Resources