Health insurance premiums for Coloradoans who buy their own insurance are expected to rise 5.5% overall next year, slightly below the average in recent years, according to preliminary figures released Wednesday.
The Colorado Option Plan, designed by the state to offer better benefits at a lower price, is expected to see a slightly lower increase of 4.2 percent.
The figures are part of preliminary documents health insurers have submitted to state regulators for approval. The state insurance department reviews proposed rate increases and typically holds back some increases before announcing final rates in the fall.
Now, before your eyes get all misty-eyed, let me explain why this is important.
These rate increases apply to people who buy health insurance without employer assistance, which likely isn’t you: Only about 5% of Coloradans buy their own private health insurance, according to the most recent Colorado Health Access Survey Collectively, these make up what’s known as the individual market.
But while the market accounts for only a tiny fraction of the state’s insurance coverage, it has historically been politically significant, with fluctuations in its premium rates being similar to those of the Dow Jones Industrial Average, which tracks the health of the overall health system.
This political importance is also because it is where state and federal regulators can have the most influence. For example, the individual market is where many of the key parts of the Affordable Care Act are implemented, from premium subsidies to insurance exchanges. State policymakers in Colorado have also singled out the individual market as a target for reform. Governor Jared Polis’ oft-touted efforts to help Coloradans save on health care costs are heavily focused on the individual market.
That’s why the Polis administration makes such a big fuss every year when it announces next year’s individual market premium rates, essentially an annual test of whether their health care policies are working.
“Colorado leads the nation in saving Americans money on health care,” Governor Polis said in a statement Wednesday. “What we’re doing in Colorado is starting to work, and we need to continue working to save Americans money on health care.”
Polis’ health insurance initiative has two main pillars.
One is a system called reinsurance, where states use fees from insurers and federal money to set up a fund to help insurers pay their highest claims, allowing them to lower premiums for everyone.
In its announcement Wednesday, the Polis administration estimated that premiums would have risen 23% in 2025 if the reinsurance program had not been put in place, meaning the program will save people an estimated $477 million next year. Since the program’s inception, the state estimates consumers will have saved more than $2 billion by the end of 2025.
“When you step back and think about it, the fact that Coloradans stand to save $2 billion is actually quite remarkable,” state Insurance Commissioner Michael Conway said in an interview.
The Polis administration’s second major program is the Colorado Option, which creates state-designed insurance plans and requires private insurers to sell them. To keep the price of the Colorado Option low, state law gives Conway limited power to dictate hospital contract prices with insurers if the insurers’ Colorado Option premiums don’t meet certain targets.
Conway said he has never used that authority before because hospitals and insurers negotiate their own prices to lower.
“We’re bending the cost curve with the Colorado option,” Conway said.
About one-third of insurance plans purchased through the state’s insurance exchange this year are Colorado Option Plans, up from 13% in 2023, the program’s first year.
Conway said a sign of its success is that Colorado Option has proposed lower-than-average rate increases for 2025. Plans outside the Colorado Option are expected to see a 6.2% increase.
Overall, average annual premiums have increased about 6.9% in Colorado’s individual insurance market since the Affordable Care Act took effect, and while larger fluctuations have calmed in recent years, the average annual increase rate beyond 2022 remains roughly the same.
