Proposed insurance fee hikes spark fears of worsening affordability crisis

By Ed Sealover | The Sum & Substance

In an effort to try and stop a massive exodus of individuals from the private insurance market, Colorado legislators are looking again at raising fees on all health-insurance policies in order to subsidize the premiums of state residents who face the highest costs.

Rep. Kyle Brown, D-Louisville, said Friday that he is considering bringing a bill during the upcoming special session that would allow the Health Insurance Affordability Enterprise to raise fees on all plans sold in the state by as much as 0.75%. The bill also would seek to impose a new $3 per-member-per-month fee on all stop-loss insurance policies that are purchased by self-insured employers to guard against catastrophic claims.

The two fees could together raise about $100 million for the HIAE, which oversees the reinsurance and OmniSalud programs and offers subsidies that lower the costs of individuals buying policies through the state’s health-insurance exchange, Brown said. The HIAE now charges fees of 1.15% of every health-insurance premium sold in the state by a nonprofit insurer and 2.1% of every premium sold by a for-profit company.

During the regular legislative session this year, House Bill 1297, which would have allowed the HIAE board to increase fees by as much as 1%, died. Legislators from both parties worried at the time that such an increase in costs paid by Coloradans could exacerbate the rising cost of living statewide.

Could changing conditions lead to change in fortunes for fees idea?

However, just two months later in July, President Donald Trump signed the “One Big Beautiful Bill” that reduced subsidies going to lower-income buyers on the individual insurance market and failed to extend tax credits for all individual buyers. State insurers submitted individual-market plans with average premium increases of 28% for next year, and Colorado Insurance Commissioner Michael Conway estimated that the end of enhanced premium tax credits could lead to some consumers paying twice as much in 2025 as they did in 2026.

The combination of those subsidy reductions led Conway to estimate as well that 110,000 Coloradans will choose to disenroll from the individual market rather than pay the higher costs, leaving them uninsured and vulnerable to huge medical bills. And that led Brown, a primary cosponsor of HB 1297, to decide to take another swing at boosting the HIAE — with a new way of funding the enterprise.

“We’re trying to figure out ways to raise additional revenue, lower the fee on any individual payer and broaden the base so everyone is in this together,” Brown told The Sum & Substance in an interview. “(The) 28% (increase) is ridiculous. People, families, working families cannot afford that.”

Why the fees idea resounds with proponents

The effort is paradoxical in some ways, as it seeks to address the rising cost of health insurance by adding a fee on insurers that will be passed along to purchasers, resulting in them paying more than they otherwise would. But Brown and other proponents say that by asking everyone to give a little bit more, they can keep people insured — about 20,000 individuals who otherwise would choose to disenroll, he estimated — by helping to offset the highest increases Coloradans are expected to face.

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