Preliminary reinsurance plans for 2021 reflect savings of about 17%

Peak Health Alliance CEO Tamara Pogue speaks Sept. 9, 2019, at the Keystone Lodge in Keystone about a reduction in health insurance premiums in Summit County.
Photo by Liz Copan / Summit Daily archive

Editor’s note: This story has been updated to more accurately reflect the nature of the reinsurance program.

KEYSTONE — People who plan to use Colorado’s reinsurance program in 2021 will save an average of about 17.4% compared to what they would pay without the program, according to a new release from the Colorado Division of Insurance.

The state agency released preliminary reinsurance plans for 2021 on Wednesday, July 29, and is accepting feedback on the plans until Aug. 26. The finalized plans will be released in September.

The preliminary plans reflect a 2.2% increase in premium rates compared to 2020, according to the news release. In 2020, the state’s reinsurance program — which aims to bring down insurance costs by reimbursing insurers for the highest cost claims — saved people across Colorado an average of about 20% on their premiums compared with 2019.

The savings reflect an average for Colorado, but it’s likely people who purchase insurance on the individual market in Summit County will save more, said Tamara Pogue, CEO of Peak Health Alliance, an insurance purchasing collaborative based in Summit County. 

“There are deeper savings for folks on the Western Slope and the Eastern Plains than there are on the I-25 corridor,” Pogue said. “So when the Division of Insurance uses that 17.4%, it’s the average. You may still see greater than 17% in the mountains.”

Because people on the Western Slope pay higher insurance premiums on average, those use the individual market see greater savings than people on the Front Range. 

Pogue said she was happy to see that premiums are increasing only 2.2%, which suggests the market is stable. 

“There was a lot of concern that, because of the instability created by COVID, there were going to be pretty significant increases in premiums,” she said. “So 2.2 is basically flat, and I would say that’s really good news for consumers in Colorado.”

Pogue said the Peak Health Alliance is not sure how the preliminary plans will affect premiums for its consumers. 

State Rep. Julie McCluskie, who sponsored the original reinsurance bill, said the new 17.4% number is exciting. 

“The fact that we’re at 17% — and these are preliminary, they’re not the final numbers — I’m pleased that we are on track to be close to where we were for premium reductions for another year,” she said. 

Sixteen insurance companies plan to offer individual and small group plans in 2021, including Bright Health Insurance, which is Peak Health Alliance’s carrier for the year. A total of 755 individual and small group plans will be reviewed by the division, according to the release.

Division of Insurance spokesperson Vincent Plymell said the division looks at the math involved in each plan to determine whether prices are right for the carriers.

“It’s like a big math problem,” he said. “The insurance companies have to show their work. … They have to show all of their reasoning behind it.”

Pogue said Peak Health will be giving feedback on the plans. Specifically, the nonprofit wants to see that plans are becoming more affordable with decreases or stability in premium rates. Peak Health Alliance is also hoping for plans with lower deductibles and greater behavioral health coverage.

“One of the troubling trends in terms of affordability in health insurance is the increase in deductibles, not just increases in premiums,” she said. “At Peak, we look at the total package for what a family, individual or business is going to pay over the course of the year. That includes the premium, the deductible and the coinsurance.”

Earlier this month, Gov. Jared Polis visited Silverthorne to sign a bill extending the reinsurance program for five years and expanding coverage to people previously left out of the program.

Along with extending the state’s reinsurance program, the law aims to provide more access to insurance for low-income people who receive federal subsidies under the Affordable Care Act. In its first year of operation, the program caused those people to spend more on health insurance than they did before. It also expands coverage to undocumented immigrants.

“We’re expanding coverage so more people can participate,” McCluskie said. “Reinsurance isn’t the solution to our broken health care system, but it was a really important and critical first step in stabilizing the individual marketplace, getting more people enrolled in health insurance coverage and making sure we’re doing the best that we can given how high health care costs are at this point.”

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