HHS Announces Historic, First-in-the-Nation Program that Seeks to Expand Coverage to Nearly 10,000 Coloradans

New “Colorado Option” will lower premiums and ensure greater access to health care for more residents, advancing health equity in the state.

[Last week], the U.S. Department of Health and Human Services (HHS) announced approval of Colorado’s Section 1332 State Innovation Waiver amendment request to create the “Colorado Option,” a state-specific health coverage plan that increases health coverage enrollment and lowers health care costs, making insurance more affordable and accessible for nearly 10,000 Coloradans starting in 2023. It is designed to reduce racial and ethnic health disparities by providing new coverage options for Coloradans, reflecting the Biden-Harris Administration’s commitment to advancing health equity. 

“We are thrilled to partner with Colorado in our shared commitment to lowering health care costs and ensuring greater access to quality, affordable care,” said HHS Secretary Xavier Becerra. “The Colorado Option will help thousands more families sign up for health coverage. I applaud Governor Jared Polis and encourage all states to pursue innovative ways to ensure health care is within reach for their residents.”

Section 1332 of the Affordable Care Act (ACA) allows states to apply for State Innovation Waivers to pursue innovative strategies for providing residents with access to high-quality, affordable coverage. Colorado is the first in the nation to adopt this waiver to introduce a new and more affordable state-based health insurance option, and leverage federal savings to support state subsidies to improve affordability and coverage initiatives. Colorado projects that approximately 32,000 Coloradans will gain health insurance under the amended waiver by 2027, which would be an increase of approximately 15% in the individual market.

This 1332 waiver amendment implements the Colorado Option, which lowers premiums and health care costs while making it easier for consumers to compare their coverage options and select the best plan that fits their needs. Starting in 2023, the Colorado Option will be available to all Coloradans who enroll in health insurance plans on the individual market (i.e., not through an employer) and small employers with less than 100 employees. Colorado Option plans will lower health insurance premiums for individuals, families, and small businesses by up to 15% by 2025.

The Colorado Option will operate in tandem with Colorado’s existing section 1332 waiver, a state-based reinsurance program, which is authorized to continue under the amended waiver. The amended waiver is expected to lower premiums by an average of approximately $132 per person per month (or 22%). This is even further than the state’s reinsurance waiver program alone, which has already resulted in statewide average premium reductions of approximately 20% since its implementation in 2020.

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Find more information about the Colorado Option here: Colorado Option website. 

View a fact sheet for additional information here: https://www.cms.gov/newsroom/fact-sheets/colorado-state-innovation-waiver-0