Colorado officials accused of unfairly raising Polis’ health insurance policy

The Colorado Option, the new health insurance program that seeks to give people better coverage at lower prices, is the result of years of work by Democratic lawmakers, state officials and advocacy groups to prove that a a more consumer-friendly insurance plan can be profitable in the free market.

But now health insurance brokers say the state is unfairly trying to tilt that playing field in favor of the Colorado option.

The controversy has to do with plans offered to people who buy health insurance on their own and whose current insurance carriers leave the state.

Two carriers — Bright Health and Oscar Health — are pulling out of Colorado for 2023. Combined, about 50,000 people bought a Bright or Oscar plan this year on Connect for Health Colorado, the state’s online insurance exchange. Those people will have to choose a new plan with a new insurance company for 2023.

When they log into their Connect for Health account to make this choice, the platform will give them a “suggested plan” that they can sign up for in just a few clicks. These plans offered this year are all Colorado Option plans, a request from the state Department of Insurance to Connect for Health staff.

The Colorado Option, created by the Legislature last year, is a government-developed health insurance plan that offers a standardized set of benefits. It is then priced and sold by private insurance companies on the open market at premium rates that are required by law to eventually fall to 15% below 2021 levels, taking inflation into account. If prices don’t drop enough, the state insurance commissioner will be able to step in and dictate hospital prices to achieve premium reductions.

Gov. Jared Polis pitches his big idea — for a statewide “public option” health insurance plan — to an audience at The Colorado Sun’s Big Ideas 2020 Forum at the Cable Center on the University of Denver campus on Jan. 14, 2020. (Eric Lubbers, The Colorado sun)

The Insurance Department was heavily involved in advocating and creating the Colorado Option, a landmark policy achievement by Gov. Jared Polis and Democrats in the state legislature. State Insurance Commissioner Michael Conway, who heads the insurance department, was appointed by Polis. Thus, pushing the plans for the Colorado Option could be seen as an intervention in the free market to make a political initiative more successful.

“All of this to me is an obvious attempt to steer people toward the Colorado option, whether it’s a better fit for them or not,” said Brad Niederman, a health insurance broker, at a Connect for Health Council meeting last month.

“A much more cumbersome process”

In most counties, Colorado Option plans aren’t the cheapest this year. That means consumers who just want to find the cheapest plan could end up signing up for something more expensive than they intended if they choose the proposed plan, health insurance brokers say.

“Colorado’s option plans are more expensive than (other) plans when most people shop around on price,” said Megan Fearing, a broker and president of the Colorado State Association of Health Insurers, a brokerage group.

Fearing said she ran one offer for a customer in El Paso County and found 10 to 15 plans that were cheaper before landing on a Colorado option plan.

If consumers want to shop for a plan other than the plan offered, they must go back through the Connect for Health system and re-enter their financial information.

“It’s a much more cumbersome process,” Fearing said.

Choosing the proposed plan may also mean you have to change doctors. Connect for Health uses an algorithm to connect each Bright and Oscar user to a new plan. In Connect for Health parlance, this is called ‘mapping’ or creating a ‘walkway’.

The algorithm took into account the carrier’s service area, resulting in a broad geographic analysis of the country. Smart customers in the Denver metro area, for example, were matched with Colorado Option plans offered by Kaiser Permanente.

But Kaiser has its own network of doctors and clinics, while Bright uses Centura’s network. If a Bright customer chooses Kaiser Permanente’s proposed plan in the Denver metro area, they almost certainly won’t be able to keep their doctor, Fearing said.

The proposed plan’s algorithm also doesn’t take into account the specific prescription drugs a person might need or the specific hospitals they might want to use.

“With this mapping, in my strong opinion, we are doing a disservice to Connect for Health Colorado’s customers,” Niederman, the broker, said at the Connect for Health board meeting.

Insurance company representatives said they were also confused by the process.

“We just found it really confusing and we didn’t understand how the crosswalk was designated,” Amanda Massey, executive director of the Colorado Health Plan Association, an insurer trade group, said during the board meeting.

Massey declined to comment further.

The state says better communication is needed

Fearing is not on Connect for Health’s board, but she serves on an advisory group to the board. She said the issue of preferring the Colorado Option plans was never brought to that group’s attention, calling the lack of communication a travesty.

“We should have talked about this much earlier,” she said.

Conway, the insurance commissioner, agreed and apologized during the Connect for Health board meeting.

“That’s up to me. It’s my fault for not sharing that we discussed some of these things,” he said.

Part of the issue is timing, state officials said. While the state had more information that Oscar would be stepping down, Bright’s announcement of his departure came just weeks before open enrollment began.

“We were just trying to literally figure out who was going to stay on the exchange and who was going to leave,” Kevin Patterson, CEO of Connect for Health, said in an interview.

Connect for Health has previously offered suggested plans, but that usually happens when an insurer discontinues a particular plan – think of a car company deciding to discontinue a particular model. In these cases, the proposed plan offers another choice within the same insurer, resulting in little disruption.

But Oscar and Bright’s departure marks the first time in seven years that a carrier has exited the individual market entirely in Colorado. That meant Connect for Health’s methods of offering a new plan from a different carrier were rusty.

Patterson called the mapping system “one of the most imperfect processes we have” and said officials and other stakeholders need to have more of a say in how it should work.

“We have to think about it from a trade-off point of view — do we want to be in a position where we’re picking winners and losers?” he said.

Previous attempt to increase the Colorado option

It’s not the only case of the insurance department and Connect for Health seeking to improve Colorado’s option plans this year. There was also previous experience involving how the plans were sorted on the exchange.

There are 166 health insurance plans being sold on the exchange this year, divided into multiple insurance carriers, counties, and bronze, silver, and gold tiers. This leads to a sometimes confusing forest of options in the stock market.

To better organize the chaos, Connect for Health created a sorting system called “preferential display.” In most years, preferential display favors lower premium prices, so the cheapest plans are what people looking for coverage will see first — although the exchange has other options for sorting plans. Think of it as the results that appear on the first page of a Google search.

But when open enrollment began this year, Connect for Health, at the insurance department’s request, gave Colorado Option plans top billing in the preferential display.

Conway, the insurance commissioner, said the goal in prioritizing Colorado’s option plans is to help people better compare coverage. Because Option Colorado is built on a standardized benefit design — meaning what people get from their coverage must be the same across all Option Colorado plans — Conway said it makes it easier for people to shop around because everything that must consider is the price and plan network of providers of doctors and hospitals.

“We want consumers to know when they’re looking at Colorado option plans that this is an apples-to-apples comparison,” Conway said in an interview.

The decision to highlight the Colorado Option plans in the preferential display also provided the rationale for the Colorado Option plans to be offered plans to Bright and Oscar customers, Conway said.

But after criticism, the state backed away from preferred billing for Colorado’s option plans, instead returning to sorting plans by premium price. By then it was too late to change the proposed plans.

“We’re off track to change anything from a technology standpoint,” Patterson said.

Colorado Insurance Commissioner Michael Conway speaks at a public forum in Frisco on February 21, 2020. (John Ingold, The Colorado Sun)

However, Conway said he hopes to push for a preferential display for Colorado Option plans again next year, reiterating that he believes the plans provide the clearest opportunity to compare coverage. Sorting plans by premium price alone gives carriers an incentive to lower their plan prices in hopes of getting more people to sign up, Conway said. This could lead to unsustainability that will cause more carriers to shut down.

Highlighting options plans in Colorado will give consumers a broader view of all insurers, he said.

“I think it’s good for both the market and the sustainability of the market,” he said during Connect for Health’s board meeting last month.

Encouraging users to shop

The controversy left lingering questions and frustrations. But people on all sides of the issue agree that the complexity of the situation shows why consumers looking for insurance in the individual market need to be proactive shoppers this year.

Fearing, the president of the state’s brokerage group, said people should consider using a broker to help them navigate the system and make sure they get a plan that fits their needs.

“Don’t just click the path of least resistance,” she said.

Patterson also emphasized the importance of shopping.

“This year it’s more important than last year to make sure you’re shopping,” Patterson said. “There are so many big things going around.”

But at last month’s Connect for Health board meeting, some members questioned how this promotion of shopping plazas with the idea of ​​offering proposed plans.

“If you’re a member and you see something show up in your inbox that says (Connect for Health) has a plan that’s offered to match your other plan, that carries weight,” said board Vice Chairman Mark Rees , who also serves as Senior Director of Government Affairs for the Etna West Region. “If we’re making an offer knowing it carries weight, how do we balance that against the message to make sure we buy?”

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