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Colorado's Public Option ACA Plan Approved by Federal Government

Analysis  |  By Jay Asser  
   June 23, 2022

The state becomes the first in the nation to have its request granted for section 1332 waivers to create the Colorado Option.

Colorado becomes the first state to gain approval for its public option Affordable Care Act plan, the Department of Health and Human Services (HHS) announced today.

HHS and CMS granted a section 1332 state innovation waiver for the Colorado Option, a state-specific health coverage plan that will strive to make insurance more affordable and accessible for residents starting in 2023.

"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."

The Colorado Option is expected to lower premiums by an average of approximately $132 per person per month, or 22%. By 2025, plans will lower premiums for all by up to 15%.

Colorado residents can enroll in the plans on the individual market, while small employers with less than 100 employees will also be eligible.

The savings generated by the federal government will be passed on to the state to use for providing subsidies to further increase access to care in the state.

"Through this new model, Colorado leverages federal savings to expand affordability and coverage in the state like no other state has done before," said CMS administrator Chiquita Brooks-LaSure. "The Colorado Option is groundbreaking and a step in the right direction to reduce the uninsured rate, while investing in health insurance coverage affordability and improvements, and advancing health equity. We encourage all states to consider innovative ways to use section 1332 waivers in the future to expand and improve coverage and lower costs for their residents."

The approval for the Colorado Option opens the door for more states to push their public option plan through.

Washington became the first state to offer a public option plan in 2019, but has struggled to gain traction without the cooperation of hospitals and backing of the federal government.

Jay Asser is the contributing editor for strategy at HealthLeaders. 

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