Colorado Option Approved by CMS

The Centers for Medicare and Medicaid Services (CMS) has approved Colorado’s plan to create a public insurance option through a Section 1332 innovation waiver. The “Colorado Option” will be offered in the Colorado Affordable Care Act Health Insurance Exchange beginning in 2023.

According to Healthcare Dive, the Colorado Option is the first to receive approval for a 1332 waiver. The state of Washington enacted a public option health insurance program in 2019 but did not apply for a waiver due to negotiations with insurance companies and fear of substandard hospital participation.

The Colorado Option will compete with private plans with premiums that are 22.3% lower than the average plan offer, which is projected to save the federal government $214 million in premium tax credit subsidies in the first year. Axios reports that Colorado will also expand a state subsidy program to lower costs for individuals who are not eligible for ACA subsidies and 32,000 residents will immediately become eligible to gain coverage by 2027.

State of Reform notes that the Colorado State Legislature passed House Bill 1232 last year, which designated the establishment of a standardized health plan. The approved waiver will also open the state to $135 million in federal funding for the Colorado Option.

In a fact sheet, CMS touted the plan’s promotion of health equity, which has been a goal championed and encouraged by the Biden administration’s Department of Health and Human Services (HHS) since the president took office. It also notes that 1332 waivers are highly encouraged for other states interested in participation:

These waivers provide states with the opportunity to develop strategies that best suit their individual needs. Through innovative thinking tailored to specific state circumstances, states can lower premiums for consumers, improve market stability, and increase consumer choice.