Monthly premiums could increase 4% next year for Colorado Option health insurance plans and 6% for other types of plans sold on the individual marketplace, on average, according to new data from the state Division of Insurance.
The Colorado Option is a standardized health plan that covers more services without out-of-pocket costs than the average plan. The option plans were supposed to lower premiums by 10% this year, after accounting for inflation, but only about one-third succeeded. They were, however, some of the cheaper plans available to Coloradans, and about one-third of individual market customers bought one this year.
The average premium increase would be higher for small businesses, at about 8%, if the Division of Insurance approves. Companies selling on the marketplace in Colorado have to submit their proposed rates to the division, which determines if they are justified based on the cost of covering care. The final rates will become public in October.
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Last year, insurers asked for about an 8% increase for Colorado Option plans and an 11% increase for non-Option plans. Most ultimately received smaller increases.
The division estimated premiums would have risen about 23% if the state didn’t have a reinsurance program in place. Reinsurance basically backstops insurance companies, so they don’t have to pay as much for the relatively small percentage of customers who require the most expensive care. Since federal law limits how much insurers can earn in profits, they have to pass at least some of those savings on to customers through lower premiums.
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