Feds OK Colorado reinsurance waiver, which will lead to big (but temporary) individual health plan cost reductions in Summit County
FRISCO — The federal government has approved the waiver required for Colorado to start its own reinsurance program. When the $260 million pool for exorbitant individual health claims goes live next year, it will save an average of 18.2% for individual health insurance plans statewide and 29% for individual plans on the Western Slope.
In announcing the waiver approval, Gov. Jared Polis was joined by Summit County Rep. Julie McCluskie, D-Dillon, and state Sen. Kerry Donovan, D-Vail, who were prime sponsors for the bill that set up the state’s reinsurance program and waiver application. Polis signed the bill in May at the Family & Intercultural Resource Center in Silverthorne.
The waiver, which is permitted under the Affordable Care Act, allows states to find innovative ways to use federal and state dollars allocated for implementation of the ACA. The Center for Medicare and Medicaid Services approved the waiver after the application was submitted May 20.
The waiver approves state initiatives that meet the following requirements:
- Provides access to health care that is at least as comprehensive and affordable as would be provided absent the waiver
- Provides coverage to a comparable number of residents as without the waiver
- Does not increase the federal deficit
Colorado joins eight other states — Alaska, Hawaii, Maine, Maryland, Minnesota, New Jersey, Oregon and Wisconsin — in receiving the federal waiver. With the exception of Hawaii, those states used the waiver to create their own reinsurance program.
In Colorado, the two-year reinsurance program will have a drastic impact in the short term. Projections from the state’s department of insurance show as much as a 33.5% reduction in certain plans available to individual buyers on the health exchange marketplace, with a 29% average savings across all individual Western Slope buyers.
Reinsurance acts as insurance for health insurance companies to help pay for so-called “super-users,” the 5% of health insurance customers whose complex medical conditions make up about half of all health care spending nationwide. The Western Slope, which has a smaller user base with few providers available, will see the biggest individual plan savings.
Reinsurance does not apply to employer-based health plans, but lower costs for individuals may boost insurance enrollment, which could have trickle-down savings for employer health plans. In Summit County, about 1 in 5 people are uninsured, mainly due to the high cost of individual plans.
In terms of dollars, the reinsurance program is expected to save an average of $9,000 for a Western Slope family of four that buys health insurance on the marketplace.
“Bringing down the outrageous cost of health care in our state has been a top priority for my administration from the beginning, and this is a significant milestone on our way toward achieving that goal,” Polis said in a news release. “We’re already seeing the direct impact this program will have on premiums on the individual market. That’s thousands of dollars in savings that Coloradans can put toward paying the mortgage, saving for college or retirement, taking a family vacation or just living their lives.”
“While we are celebrating the approval of the federal waiver for our reinsurance program, the real celebration is for working people across our state who will see significant reductions in their insurance premiums come January,” McCluskie said. “I am grateful to the many people across my district who shared their personal, and sometimes painful, challenges affording health care in our rural communities.”
The reinsurance program will go into effect in January 2020 and last two years. McCluskie said the program was always meant for short-term relief and that innovative solutions like Summit County’s Peak Health Alliance are expected to create the long-term savings for which the state has been looking.
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