Colorado individual health-insurance premiums are expected to rise by an average of 28% next year — an increase precipitated by changes in federal law that will reduce subsidies and spur significant private-market disenrollment, according to the Colorado Division of Insurance.
While the changes won’t directly impact employers offering insurance to their workers, the cascading effects from the price hikes likely will. If 100,000 or more people drop insurance rather than pay increased premiums, as the state and insurers predict, hospitals will have to treat more uninsured and unpaying patients and likely will raise costs to patients with employer-sponsored insurance to make up for lost revenues, which will lead to higher premiums for those patients too.
Colorado Insurance Commissioner Michael Conway told The Sum & Substance earlier this month that he expected insurance costs for people in the individual market — those not ensured through work — could double next year. He explained further on Wednesday that the 28% average premium hikes were just the start of the price increases they may face.
How federal changes impact insurance premiums
Congress, in the “One Big Beautiful Bill,” cut funding for Affordable Care Act subsidies and failed to extend enhanced premium tax credits, which are used to ensure no Coloradans buying individual plans through the state’s health exchange pay more than 9% of their income. Those actions led insurers to assume that younger and healthier people will forego insurance purchases and leave sicker people with pricier needs as the remaining risk pool, which led to the proposed premium increases, Conway explained.
But the reduction in subsidies also means that people will get less help paying for the increased premiums, particularly those making at least 400% of federal poverty level who could have to put 30% or more of their income to insurance costs, Conway said. And that combination of factors likely still will lead many individual-market purchasers to pay twice or more next year what they now pay for health insurance, he said.
State insurance officials still must approve the proposed premium increases, which are the highest they have seen since premiums spiked 32% in 2018 when President Donald Trump worked to eliminate some cost-sharing reductions. But Conway said there was likely no alternative options for insurers, who must prepare to cover bills for patients who will be sicker and cost more to treat.
“They have to have the money coming in to pay the charges coming out of the risk pool they are going to serve,” Conway said in an interview. “From that first blush, it looks like their assumptions are reasonable.”
Higher risk pool impacting insurers
Some groups, while laying blame on Trump and the Republican-led Congress as state officials and the state’s Democratic congressional delegation did in a news release Wednesday, also chose to criticize insurers for seeking the increases. Colorado Consumer Health Initiative Executive Director Mannat Singh said insurers must be held accountable for “taking advantage of the Trump administration’s chaotic policy changes and … reaching for the highest possible profit at individual consumers’ expense.”
Kevin McFatridge, executive director of the Colorado Association of Health Plans, said that insurers share the concern and frustration over the significant premium increases. But they are required by law to submit actuarially sound rates that are based upon best estimates of medical and pharmacy costs, enrollment trends and policy requirements for the year ahead, he said.
To lower costs, policymakers need to re-examine the cumulative impact of mandated benefit expansions, ensure regulatory requirements are purposeful rather than duplicative and align affordability goals with sustainable market practices, McFatridge said. Individual-market premium increases have remained under 10% in Colorado for three of the past four years — including a 1.1% jump in 2022 — as Gov. Jared Polis has looked to minimize new coverage mandates that could lead to larger jumps, he noted.
“CAHP and its member plans remain committed to working with the Polis administration, the Division of Insurance, and the General Assembly on thoughtful, data-driven solutions that make health care more accessible and affordable for all Coloradans,” McFatridge said in an email.
Reinsurance program affected too
The biggest premium jumps will occur on the Western Slope and Grand Junction area (38%), followed by the Eastern Plains (33%) and the Pueblo area (30%), according to a preliminary analysis by the insurance division. Kaiser Foundation Health Plan of Colorado is seeking the lowest proposed premium hikes at 15.3%, while Rocky Mountain HMO is seeking the highest jump at 36%.
These increasing premiums also are expected to impact the state’s reinsurance program, in which fees paid by all insurers create a pool of money to treat the highest-cost individual-market claims and help to keep down premiums in high-cost areas like the mountains. The expected decrease in Coloradans buying individual plans through the state exchange will reduce federal pass-through money that the state puts to its reinsurance program and cut the reductions in premiums it’s able to make because of reinsurance by 40%, Conway said.
A bill backed by Conway this session sought to allow the Health Insurance Affordability Enterprise, which funds the exchange subsidies and the reinsurance program through fees as high as 2% on Colorado-sold insurance premiums, to raise the fees by as much as 1%. That bill died under criticism of its costs to average Coloradans, but the insurance funding issues mean it is likely to return either in the expected special session next month or in the 2026 session, advocates have said.