In a video recently posted on Twitter, Governor Polis claims his administration has reduced health insurance premiums for Colorado families in the individual market by an average of 20.2%. For a family of four, this would mean hundreds of dollars in monthly savings – but the facts tell a very different story.
CLAIM: Governor Polis: “A family of four buying insurance on the individual market will see a savings of $350 to $860 each month.”
FACT: This is not true for the vast majority of families who obtain health insurance in the individual market – and the Polis administration knows it isn’t true.
The governor is referring to the impact of a newly created reinsurance program in Colorado. Under the state’s reinsurance program, hospitals and taxpayers would help insurance companies cover some of their high-cost claims, so insurance companies could offer lower premiums to customers in the individual market.
We’ve written about this reinsurance program before. Colorado hospitals support reinsurance as a way to help consumers pay less in premiums. In fact, hospitals are contributing $40 million per year to the new program. But we have also expressed concern that the Polis administration is overstating the benefits of the program to the public.
That is certainly the case in the Nov. 6 video message tweeted by Governor Polis. Weeks before, an independent analysis warned there could be “sharp increases in net premiums” for some people who buy health insurance on the individual market.
Starting next year, for a family of four in Denver making $95,000 per year, “their net premiums are going to increase by 49 percent (from $355/month to $529/month),” warned health insurance broker Laurie Norris. Even if the family shops around for another insurance carrier, the best they can hope for is a 47 percent increase in net premiums, Norris wrote in her Oct. 20 analysis.
It all comes down to the way the reinsurance program interacts with federal tax subsidies for health insurance on the individual market.
Under the federal Affordable Care Act, individuals and families with incomes up to 400% of the federal poverty line receive tax subsidies to offset the cost of health insurance premiums in the individual market. For perspective, that means a yearly income of $103,000 or less for a family of four and $49,960 for an individual, according to HealthCare.gov.
As the Polis Administration tinkered with insurance premiums, it caused those subsidies to drop – even more than the premiums themselves. So now, the majority of individuals and families who most need help will end up paying more for their health insurance.
It’s an example of how changes in the health insurance market may have unintended consequences that harm families instead of helping them — especially when local changes conflict with complex and uncertain federal regulations which individual states like Colorado cannot fix on their own.
The impact of lower federal subsidies is a major issue, because the vast majority of Coloradans in the individual health insurance market receive these subsidies. According to a report commissioned by Connect for Health Colorado, the number is roughly 110,000 policyholders or close to 80 percent of the individual market.
That same report, it should be noted, found the policyholders receiving individual-market subsidies would see 19% average premium increase from 2019 to 2020. A reduction in average premiums of 18% would be limited to higher-income families and individuals who don’t qualify for the federal insurance subsidies, according to the Oct. 14 report, which was conducted by the healthcare actuarial firm Wakely.
These findings are no secret. In addition to the Oct. 20 analysis, The Colorado Sun published a detailed report on this very subject on Nov. 1, calling it “a pothole in Gov. Jared Polis’ much-touted road map on health care.”
“It’s one of the unintended consequences,” State Rep. Julie McCluskie told the news outlet. Colorado Insurance Commissioner Michael Conway, one of the governor’s top health advisers, was quoted as saying “we just have to figure out a way to deal with the downstream impacts on the subsidized population.”
Unfortunately, the very same day of The Colorado Sun’s report, Governor Polis published a column of his own in The Denver Post which pretended the problem of higher net premiums – already acknowledged by his own administration – didn’t exist.
“Across the state, hundreds of thousands of Colorado families who buy their own health insurance will save an average of 20.2% on their premiums this coming year,” Governor Polis wrote. “As a result of this policy, the typical family of four who gets their health care from the exchange will save $6,193 per year on average…”
Even if Governor Polis didn’t know about the net increases facing many families in the individual insurance market when his Denver Post column ran, he surely knew about it five days later when he posted his video on Twitter.
We all support the cause of expanding healthcare coverage, bringing down the costs of health insurance, and ensuring continued access to high quality patient care in Colorado. But exaggerating the benefits of new initiatives like the reinsurance program, and creating false expectations in the minds of the public, will only undermine this cause.
If we want to lower the cost of healthcare coverage without threatening the quality of care that patients expect and deserve, policymakers need to level with the pubic and stick to the facts. Otherwise, their proposals – especially the so-called state option – will risk doing more harm than good, no matter how well-intentioned they may be.