Colorado Proposes $100M Loan to Stabilize ACA Market Amid Federal Subsidy Uncertainty
Colorado lawmakers are advancing a funding initiative to mitigate premium increases and preserve coverage if the enhanced Affordable Care Act (ACA) subsidies expire this year. The proposed legislation authorizes a $100 million interest-free loan from Colorado's unclaimed property trust fund to the state's health insurance affordability fund, contingent on Congress not extending ACA tax credits by December 31.
Repayment of the loan is scheduled by January 2045. This financial support is aimed at maintaining Colorado's health insurance affordability enterprise programs, including its reinsurance program, which underpins market stability by offsetting carrier losses due to diminished federal tax credits. The affordability enterprise, which also manages exchange subsidies and programs serving low-income residents ineligible for federal assistance, is funded through federal contributions and insurer fees. Escalating medical and pharmacy expenses alongside rising enrollment have depleted the enterprise's reserves, with projections indicating full exhaustion by fiscal year 2025-2026 and funding reliant solely on incoming revenue thereafter. The Colorado Division of Insurance has preemptively directed carriers to continue providing enhanced subsidies for the 2026 coverage year, with reimbursements planned for mid-2027. Officials caution that without legislative action, approximately 100,000 residents could lose coverage and many could face substantial premium hikes exceeding 100%.
Other states such as Washington, California, Maryland, and New Jersey are exploring comparable measures to counterbalance the potential federal subsidy lapse, employing state-level funds and contingency planning to sustain their markets. Colorado's market stability is also threatened by insurer withdrawals, notably Rocky Mountain HMO and HMO Colorado discontinuing multiple individual plans affecting about 96,000 policyholders, intensifying concerns over market disruption. The proposed loan acts as a temporary buffer to safeguard insurers and consumers from abrupt market shocks while federal deliberations continue regarding subsidy extensions.