Colorado Health Insurance Fee Increase Dropped for Loan Funding Alternative

Colorado faces a funding challenge for key health insurance subsidy programs following recent federal cuts to premium tax credits and other subsidies. A proposed bill to raise fees on almost every health insurance policy by 0.75%, including a $36 annual fee on stop-loss policies for self-insured entities, was introduced to support the Health Insurance Affordability Enterprise (HIAE). This fee increase aimed to generate about $100 million to fund exchange subsidies and reinsurance programs designed to reduce premium costs for the individual market. However, bipartisan legislative feedback indicated strong resistance to increases in insurance-related fees amidst already rising premiums, with concerns that further costs could increase dropouts from coverage. Instead, Sen. Kyle Mullica proposed an alternative approach involving an interest-free $100 million loan from Colorado's Unclaimed Property Trust Fund. This fund accumulates interest on unclaimed assets and would provide temporary financial support without raising fees. The loan would be split evenly between reinsurance—which helps insurers manage high-cost claims and stabilizes premiums—and enhanced subsidies for lower-income residents. The HIAE board would provide increased transparency, including annual reports to the legislature on fee collections and their allocation. The legislation also addresses the future of the OmniSalud program that covers uninsured undocumented immigrants, prioritizing reinsurance and subsidies funding before this program due to reduced federal support. The bill’s enactment depends on Congress not extending enhanced premium tax credits, with ongoing federal lobbying efforts to secure extensions. Republican lawmakers have expressed concerns about some HIAE programs and pushed for further oversight. While the loan proposal avoids immediate fee hikes, the door remains open for future discussions about fee adjustments in 2026. This effort highlights the challenge states face in balancing funding mechanisms for healthcare subsidies without further burdening insured individuals. The legislation’s progress and debate during the upcoming special session will be closely watched as stakeholders consider sustainable financing for essential insurance affordability programs in Colorado.