With the looming expiration of a tax on health care plans that was part of the Affordable Care Act and helped individuals cover the cost of insurance on the private market, Colorado lawmakers are considering legislation that will levy new fees on insurers and hospitals to help fund a reinsurance program that currently assists about 1 million Coloradans with heath insurance coverage.

The legislation would place a 1% fee on premiums collected by nonprofit health insurers and 2.5% fee on for-profit carriers. It would also require hospital to pay about $20 million over the course of two years, a substantial decrease in the $80 million Colorado hospitals are due to pay under the state's current reinsurance plan.

Colorado's reinsurance plan reduces the cost of more expensive procedures by helping pay for them, in return for which insurers agree to reduce their premiums. According to a January study by the Colorado Health Institute, the reinsurance program was expected to lower premiums on the individual market by more than 20% in 2020.

But that was before the pandemic rattled insurers and upended health care providers nationwide.

Senate Bill 20-215, filed June 6 and sponsored by Democratic state Senators Dominick Moreno and Kerry Donovan and Representatives Chris Kennedy and Julie McCluskie, also establishes a new nine-member oversight authority, the Health Insurance Affordability Enterprise.

According to Colorado's Office of Legislative Counsel, the fees are expected to raise about $105 million in 2021, the first year it will be in effect.

That's about as much as Colorado insurers currently pay under the ACA's Health Insurance Tax, which will expire at the end of the year.

According to a synopsis of the legislation, the bill will fund the state's 2019 reinsurance program and pay insurers to reduce premiums for for purchasers of individual policies. It will also subsidize individual insurance plans purchased by qualified low-income individuals who are not eligible for premium tax credits or public assistance health care programs, and pay for consumer outreach and education about the reinsurance program.

The legislation has already drawn fire from Colorado insurance interests, who predict it may actually raise rates for some insureds.

In comments to The Colorado Sun news outlet, Colorado Association of Health Plans executive director Amanda Massey said her members are "very concerned about taxing health care and making it more expensive in order to make it more affordable."

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Colorado lawmakers consider premium fee to cover reinsurance plan

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