Colorado Option and Reinsurance Programs continue to deliver savings to make insurance more affordable and accessible.

DENVER - On September 3, 2024, the federal government, through the Department of Health & Human Services and the U.S. Department of Treasury, announced that the Colorado Division of Insurance (DOI) will receive a record $361 million in pass-through funding for its health insurance programs, surpassing the $245 million received in 2023.

This funding demonstrates a recognition from the federal government of the reduced premiums for Coloradans and the combined savings from Colorado’s Reinsurance and Colorado Option programs.

“Colorado is leading the nation in action to save people money on health care and we continue working to build on successful efforts like Reinsurance and Colorado Option that are helping more people keep their hard-earned money. We appreciate this funding from the Biden-Harris administration, and look forward to this opportunity to pass these savings onto Coloradans,” said Governor Jared Polis.

Since 2020, reinsurance has reduced premiums for Coloradans by an estimated $1.6 billion. The initial estimate for 2025 shows that the program will save Coloradans 23% on their premiums, which equates to $477 million in savings, bringing  the total estimated savings for the program to over $2 billion.

In 2023, Colorado Option plans were first made available and over 35,000 people enrolled, accounting for 13% of the 2023 open enrollment activity with Connect for Health Colorado. In 2024, enrollment in Colorado Option plans jumped to 80,000 people, accounting for 34% of enrollments in Connect for Health Colorado.  

“As Director of the Office of Saving People Money on Health Care, I’m thrilled to see Colorado be recognized for our work, but even more excited that we can continue saving Coloradans money on the care they need. We will continue pushing for ways to help all Coloradans access low-cost, reliable, and quality care,” said Lt. Governor and Director of the Office of Saving People Money on Health Care, Dianne Primavera.

“I am incredibly thankful for the hard work of the teams at Treasury and HHS to get us here,” said Colorado Insurance Commissioner Michael Conway. “Their collaborative nature has been amazing. I also am incredibly thankful and could not be prouder of our team at the Division. They worked incredibly hard to deliver these savings for the people of Colorado. Their hard work means we increased federal funding for our programs by nearly 50%. It proves once again that the Reinsurance Program and the Colorado Option continue to deliver for the people of Colorado to save people money on health care.”

While other states have reinsurance programs that receive pass-through funding from the federal government, Colorado is unique in having a waiver (specifically a 1332 waiver based on section 1332 of the Affordable Care Act - ACA) that combines two savings programs.

These pass-through funds will go back into the Reinsurance Program to continue to lower premiums, as well as provide direct subsidies to lower out-of-pocket costs (such as co-pays or coinsurance) for eligible Connect for Health Colorado consumers, and support the OmniSalud program.

In 2019, Governor Polis signed the Reinsurance Program into law. The legislation was sponsored by Representatives Julie McCluskie and Janice Rich, and Senators Kerry Donovan and Bob Rankin. In 2021, Governor Polis signed legislation into law to create the Colorado Option. This legislation was sponsored by then-Representative, now Senator, Dylan Roberts and Representative Iman Jodeh, and Senator Kerry Donovan.

The Colorado Option, signed into law by Governor Polis in 2021, consists of health plans with standard benefits from all current individual and small group health insurance companies. These standard benefits are the same across all companies, allowing consumers and businesses to easily compare and choose plans that fit their needs. In addition to covering all essential health benefits required by the ACA, the Colorado Option plans offer free primary care and free mental health visits, and have been designed to improve access, affordability, and racial health equity.

Both the Reinsurance Program and the Colorado Option were authorized by the federal government through a process called a 1332 waiver. Section 1332 of the ACA allows states to develop innovative approaches to health insurance by changing or waiving parts of the ACA. If a state can reduce the cost of health insurance for its residents, and by doing so, save the federal government money, the 1332 waiver allows that state to receive those federal savings in the form of “pass-through funding” from the federal government.

Pass-through funding is the result of money saved by these programs - money the federal government does not have to spend on health insurance subsidies. Rather than the federal government keeping the savings, they are passed back to the State of Colorado and applied to programs to make health insurance more affordable and accessible.