Should Colorado become a single rating area? DOI conducting study

Earlier this month, Governor Hickenlooper signed HB1336 into law. The law directs the Colorado Division of Insurance to “study the impacts and viability” of merging the whole state of Colorado into a single rating area for health insurance premiums. DOI spokesman Vincent Plymell noted that the DOI was eager to get going on the study. Per the text of the legislation, they have until August 1, 2016 to report the findings of their study to several legislative committees.

The state currently has nine rating areas, and premiums vary considerably across them. Along the front range, premiums are relatively modest. But in the mountains, premiums are among the highest in the whole US, and that’s been the case since long before the ACA. For people who qualify for premium subsidies, the dramatically higher premiums in the mountains are offset by much higher subsidies in mountain communities.

Should Colorado become a single rating area?But for people who don’t qualify for subsidies, the premiums can be unaffordable, even with relatively high incomes. For people with incomes between 400 and 600 percent of the federal poverty level, there’s definitely a subsidy cliff in the Colorado mountains. These people can easily be paying 20+ percent of their household income for health insurance, and there’s currently nothing they can do about it.

Subsidies aren’t available if their income is over 400 percent of the poverty level, and there simply aren’t any less-expensive plans available – on or off-exchange – in those communities. People in this situation can consider an HSA-qualified plan, as HSA contributions might bring their modified adjusted gross income down to a subsidy-eligible level, and they should enroll through the exchange if there’s any chance at all that they might end up qualifying for subsidies during the year.

Hillary Clinton has proposed capping health insurance premiums at 8.5 percent of income for everyone, regardless of income. A proposal like that would eliminate the subsidy cliff in the Colorado mountain communities, and would do away with the need to have a merged rating area for the whole state. But that would depend on Clinton getting elected, and Congress going along with her plan. Without something like Clinton’s proposal or a merged rating area, there’s no realistic relief from unaffordable health insurance premiums for people in the Colorado mountains whose income is too high for subsidies, but too low to make health insurance an affordable chunk of the budget.

Whether you agree or disagree with the prospect of Colorado becoming a single rating area likely depends on where you live. If you’re in the mountains – particularly if you don’t get a premium subsidy – you’re probably in favor of the idea. If you’re along the front range, you might be opposed simply because rates will likely increase for people along the front range if the whole state is lumped together for rating purposes. People in the eastern plains currently pay more than those on the front range, but less than folks in the mountains – their views might be somewhere in the middle.

But until the DOI conducts its study and creates a report outlining the anticipated impacts and viability of a merged rating area, we’re all just speculating about the details. Yes, we know that rates would go up for people on the front range, but by how much? Rates would decrease in the mountains – presumably to a level more in line with what we currently pay along the front range – but we wouldn’t know just how much the balance will tip for each area until after we see what the DOI finds in their study.

About Louise Norris

Louise Norris has been writing about health insurance and healthcare reform since 2006. In addition to the Colorado Health Insurance Insider, she also writes for,, Verywell, Spark by ADP, and Boost by ADP, and Gusto. Follow on twitter and facebook.

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