Federal approval of Colorado Option Section 1332 Affordable Care Act Waiver will expand access and ensure affordable, quality health insurance

DENVER - Today, the Centers for Medicare & Medicaid Services (CMS) and Governor Jared Polis announced the approval of Colorado's Section 1332 Innovation Waiver Request for the Colorado Option. This waiver will allow Colorado to fully implement the Colorado Option and lower health insurance premiums even further than the current Reinsurance Program. The Colorado Option establishes a standardized plan that ensures quality coverage and lower premiums beginning in 2023 and will lower health insurance premiums for individuals, families, and small businesses by 15% by 2025.

Colorado Governor Jared Polis signed the Colorado Option into law in June 2021. Approval of the 1332 Waiver is estimated to provide up to $135M annually in federal funding to expand access to affordable, quality health insurance. This will amount to more than half a billion dollars between now and 2027. This includes new support for Coloradans ineligible to receive financial help provided by the Affordable Care Act (ACA), and expands subsidies for Coloradans  enrolled through Connect for Health Colorado. Initial actuarial estimates suggest that by 2027 the number of people signing up for insurance is expected to grow by 32,000 — an increase of up to 15% in the individual market compared to enrollment without approval of the waiver.

"I'm thrilled that Colorado's waiver has been approved — allowing us to move forward with this historic money-saving and forward-thinking program in Colorado," said Gov. Polis."Saving people money on health care couldn't come at a better moment."

"Colorado is pursuing innovative strategies to reduce the uninsured rate and improve affordability in the state," said CMS Administrator Chiquita Brooks-LaSure. "Everyone is entitled to quality health care, and I hope the Colorado Option will serve as a catalyst to advance health equity and a model for other states."

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"Our administration has been committed to saving people money on health care since day one. I am grateful to the Centers for Medicaid and Medicare Services for approving our waiver, ensuring we can provide all Coloradans access to high-quality and affordable care," said Lt. Governor Dianne Primavera and Director of the Office of Saving People Money on Health Care.

"This approval is recognition that Colorado is on the right path in building a health care system that works for all Coloradans. The Colorado Option and other efforts like the Reinsurance Program, are key building blocks in increasing access to quality health insurance and making that coverage more affordable through lower premiums," said Colorado Insurance Commissioner Michael Conway. "With the continued support of Administrator Brooks-LaSure, our Governor, and our Lieutenant Governor we can bring real, meaningful improvements in health outcomes for Coloradans."

Representative Dylan Roberts, Representative Iman Jodeh and Senator Kerry Donovan, who sponsored the bill that created the Colorado Option, also shared support for this important step.

"The Colorado Option will be an affordable and quality insurance plan in every county of the state. Coloradans – especially in rural and mountain communities like mine – have faced soaring health care costs for too long and that is why we worked so hard to make this plan a reality. This waiver means we can move forward with the Colorado Option and make quality, affordable health insurance plans for individuals and small businesses in every part of the state a reality," said Rep. Roberts.

"I want to thank CMS for their partnership in making the Colorado Option a reality. This groundbreaking idea will cut the cost of health care and increase access for all Coloradans and small businesses – relief we need in Colorado's high country and across the state," said Sen. Donovan.

"I am proud that the Colorado Option will bring more affordable and quality health plans to rural communities, people of color and small businesses across our state. CMS's approval of Colorado's waiver is an important step toward full implementation of the Colorado Option and cost savings for Coloradans," said Rep. Jodeh.

Section 1332 of the Affordable Care Act (ACA) allows states to develop innovative approaches to health insurance by waiving parts of the ACA. If a state can reduce the cost of health insurance for its residents, and by doing so, save the federal government money, the 1332 waiver allows that state to receive those federal savings in the form of "federal pass-through funding." To put these innovations into practice, a state must receive approval from the federal government to waive certain provisions of the ACA.

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Approval of the Colorado Option 1332 Waiver ensures that the money the Colorado Option saves the federal government can be used to provide state-based subsidies, particularly for Coloradans purchasing coverage through Connect for Health Colorado and for those ineligible for federal premium tax credits. The Colorado Option would expand access and improve equity for individual health insurance plans with $0 premiums, as well as expanding the availability of financial help for out-of-pocket costs such as co-pays, deductibles and coinsurance (collectively called "cost sharing"). Federal funds will also be used to offer additional assistance to people with household incomes below three times the Federal Poverty Level (300% of the FPL). The lower premiums and additional assistance that will be provided under the Colorado Option are expected to increase enrollment in individual health insurance plans.

Colorado currently has federal approval to operate a Reinsurance Program — approval that was granted through a 1332 waiver request. Colorado's Reinsurance Program reduces premiums and increases the affordability of health insurance in Colorado's individual health insurance market. The program has resulted in an average savings of over 20% in each year it's been in place, and in August 2021, the federal government approved the continuation of the program through 2026. This new 1332 waiver is an amendment to Colorado's existing federal waiver, and will combine Colorado's existing Reinsurance Program with the Colorado Option program under a single waiver.

Find more information at the Division's Colorado Option website and the Reinsurance Program website.

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