Last week, state Democrats introduced what is likely to be one of the most debated measures of the 2021 legislative session.

The bill (HB21-1232), known as the “Colorado Option,” seeks to shrink health care costs and would potentially create a public, state-run option for health insurance on the individual and small-group markets. Currently, about 15 percent of insured Coloradans buy their plans on these markets. Most Coloradans—around 50 percent—receive employer-sponsored health insurance. 

Democratic lawmakers and non-partisan advocacy groups, like the Colorado Consumer Health Initiative (CCHI), that are championing the Colorado Option describe it as a reasonable approach to combating long-standing inequities in health care access and affordability. Those opposed, including hospitals, private insurers, and most Republicans, argue it ignores recent industry progress to lower costs and that it would narrow health insurance options for Coloradans while increasing costs. 

We explored the origins of the Colorado Option, what exactly the bill proposes, and views from folks on both sides of the issue. Ahead, everything you need to know. 

The Backstory 

The Colorado Option is the outcome of years-long efforts by Democrats to improve health care affordability and access in our state. “Wow, today has been a long time coming,” Representative Dylan Roberts, a prime sponsor of the bill, said in a virtual press conference last week shortly before the Colorado Option was introduced. The efforts, Roberts said, started in 2019 with the passage of a bill (HB19-1004) that directed the state to develop a proposal detailing the design, costs, benefits, and implementation of a state option for health care coverage.

Using the findings from that proposal, Roberts, along with Representative Chris Kennedy and Senator Kerry Donvoan, introduced legislation (HB20-1349) in early March 2020 to enact a public health insurance option. The bill received swift backlash from hospitals and private insurers before it was deserted in May because of the COVID-19 crisis. 

Still, the bill’s sponsors indicated they would resume their efforts in 2021. And last month Governor Jared Polis anticipated the bill’s revival during his State of the State address. “We look forward to adding an affordable Colorado Option that will give Coloradans—especially in rural communities—more choice and savings when it comes to selecting a health care plan,” said Polis, a longtime supporter of health care reform.

On Thursday, March 18, Roberts, Donovan, and Representative Iman Jodeh introduced the Colorado Option to the General Assembly as prime sponsors. Twenty-six other Democratic state lawmakers joined on as co-sponsors of the bill. 

What the Bill Proposes

The Colorado Option looks very different than last year’s proposal. Instead of automatically enacting a public health insurance option, as the 2020 bill would have done, the Colorado Option takes a two-phased approach that first gives private insurers a chance to lower premium costs without government intervention—an opportunity the industry asked for, Roberts said. 

In phase one of the bill, the state’s commissioner of insurance would create a standard design for a health insurance plan. The design would be developed with input from the health care industry and Coloradans from diverse communities, and it would include elements aimed at improving racial health equity.  

Starting in 2023, private insurance companies would be encouraged to offer plans that use this standard design in every zip code in which they also offer their own individual and small-group plans. They would be asked to sell plans that are the same as what the commissioner of insurance designed at a premium rate that is at least 10 percent less than what they offered on the individual and small-group market in 2021. By the end of 2024, they would need to cut the premium rate by 20 percent compared to 2021. 

If the insurers fail to implement a standard design plan and meet the 20 percent reduction benchmark, then phase two of the bill would go into effect. In that phase, the state would introduce a public option for health insurance on the individual and small group markets in 2025. The public option would be run by a nonprofit entity set up by the state, making it quasi-governmental. The plan, which would be based off the standard design created in phase one, would be offered at “an affordable price” and would “expand pre-deductible services, streamline coverage, and lower outrageous out-of-pocket costs,” said Roberts. 

Doctors and hospitals would be required to accept patients on the plan, and state officials would determine how much doctors and hospitals would be reimbursed for services performed under the plan. Some providers could get reimbursed at a higher rate, an exception that is meant to protect rural and safety-net hospitals, as Colorado Public Radio reported. 

No one would be forced to buy the plan, but Roberts estimated that about half of Coloradans who currently buy their health insurance on the individual and small-group markets would opt for the public option. The plan would be paid for with federal funds and customer premium payments. 

What Supporters Say 

The Colorado Option, its supporters say, is a reasonable solution to long-existing problems in health care access, affordability, and equity. 

If passed, the bill would offer “real competition in the individual and small-group market—something that is badly needed in many parts of our state,” said Roberts. Ten of Colorado’s 64 counties have only one option for health insurance on the individual market: Eagle, Jackson, Logan, Moffat, Phillips, Rio Blanco, Routt, Sedgwick, Washington, and Yuma. Colorado’s rural and mountain communities have some of the most expensive health insurance in the country, said Donovan. A family of four in Gypsum, Colorado, for example, could pay close to $40,000 annually for insurance, said Roberts. 

On top of improving health care in rural Colorado, the Colorado Option would benefit residents of color who have been harmed by “decades of systemic and institutional racism,” said Jodeh. She said that Black and Asian Coloradans are nearly 1.5 times more likely to be uninsured than their white counterparts and that Latinx and Native Coloradans are uninsured at 2.5 times the rate of white Coloradans. “By simply insuring more people, especially BIPOC communities, everyone wins,” Jodeh said. “Having access to equitable, quality health care plans that actually covers the services and procedures they need is health care equity.”

Colorado Consumer Health Initiative (CCHI), a nonprofit, non-partisan advocacy group that supported the 2020 bill, is backing this year’s measure, too. The effort, CCHI deputy director Adam Fox told 5280, has taken on renewed importance the past year as many Coloradans have lost their employer-based insurance as a result of the economic fallout of the pandemic. “We’re trying to make sure that we’re putting more affordable coverage in reach of as many Coloradans as we can,” he said. 

Healthier Colorado, another non-partisan, nonprofit advocacy group, is rallying behind the bill as well. “Healthier Colorado supports the Colorado Option because every Coloradan deserves accessible, quality, and affordable health care!” the organization tweeted last week.

What Critics Say

In early March, when lawmakers were still drafting the bill with input from the health care industry, Roberts told 5280 that the process had “been much less heated and partisan than it was last year.” 

“It’s certainly not without controversy because changing the status quo is hard,” he said, “but it has been much more collaborative and productive this year than it was last year.” Even so, the bill’s introduction last week triggered outcry from the health care industry with critics arguing the bill would actually worsen the problems it intends to solve. 

Colorado Association of Health Plans (CAHP), the trade association of the state’s health insurance industry, expressed its disapproval of the bill the day it was introduced. In a press release, executive director Amanda Massey pointed out that health insurance plans have already increased competition across Colorado counties and worked to reduce premiums by 28 percent in the last two years. “Instead of continuing to partner with health plans to build upon this unprecedented progress, this proposal ignores these recent successes achieved by the market in favor of arbitrary, moving targets that will ensure industry failure,” Massey said. 

The Colorado Hospital Association (CHA), which opposed the 2020 bill, has yet to take a formal stance on this year’s proposal. But in a written statement issued last week shortly before the bill was introduced, CHA chief strategy officer Katherine Mulready said the organization believes the bill, as currently drafted, sets the industry up for failure in phase one. “To be successful, the targets must be reasonable and evidence-based, the rules determining success or failure should be clear and simple, and accountability should be fair,” Mulready said. “This draft does not meet those goals.” As for phase two, it “simply goes too far,” she added. “It provides too much authority to the state and will cause too much uncertainty. If triggered, it could significantly damage health care access and quality for years to come.” 

Colorado’s Healthcare Future, a project by Partnership for America’s Health Care Future Action (a nonprofit consortium of hospitals, private insurers, pharmaceutical companies, and health care providers) launched a nearly $1 million TV ad campaign against the bill before it was even introduced. In a statement CHF spokesperson Tyler Mounsey criticized the Colorado Option, saying, in part, that it would “put politicians in control of Coloradans’ health care—instead of patients and medical professionals—and could increase costs for Coloradans, while threatening patients’ access to quality care, services, and coverage choices.” (When reached for comment CHF provided 5280 with the same statement it released last week.) 

What’s Next? 

The bill must now pass in both the Colorado House and Senate. If that happens, it will then go to the Governor, who has the power to sign it into law. With Democrats controlling both the House and the Senate and Polis being a longtime advocate for health care reform, there’s a solid chance the bill could become law. Its sponsors, at least, are confident. 

“It is our best chance in years to increase access and lower the cost of health care across the state for everyone,” said Donovan. 

Added Roberts: “I look forward to getting this bill signed into law.”