Colorado Has New Laws For Health Insurance And Drug Prices. What’s Next?

Gov. Jared Polis signed two potentially significant new health care laws on Wednesday, giving the state new powers to set prices for certain drugs and medical services. 

The laws will:

• Create a “Colorado Option” health insurance plan that will be sold by private companies
• Create a board that will set limits on the prices paid for certain drugs

Polis said that the two laws will do more than just “nibbling around the margins” of affordable health care. He argued that resistance from the industry to their passage showed that the laws will be effective. 

“You know when you’re really getting close to solving an issue, like the high cost of health care, (because) the temperature in this building starts to rise,” he said as he stood on the Capitol’s west steps for the signing ceremony.

Under the Colorado Option, insurance companies will be required to sell a new health plan for individuals and small groups at a lower premium than their current offerings. The law says that they must drive down average insurance costs by 15 percent over several years while offering better benefits and lower deductibles.

Lawmakers struck a deal with organizations representing hospitals and doctors, who took a “neutral” position on the insurance proposal — but those organizations weren’t exactly celebrating with Polis. 

Meanwhile, insurance companies opposed the final result, saying that the required decreases in premiums would be unworkable because the law is not strict enough in requiring doctors to participate. If insurers offer a lower reimbursement rate to keep costs down, some doctors may try to avoid treating patients under the plans.

The state and insurance companies will work out the details of the new plans over the year to come, with Colorado Option plans hitting the market for 2023. If insurance companies fail to meet the new targets for cost and availability, the state insurance commissioner may intervene — by requiring medical providers to accept lower payments.

“This bill will protect Coloradans regardless of their ZIP code, the color of their skin, or their residency status,” said state Rep. Iman Jodeh, an Aurora Democrat who cosponsored the bill along with state Rep. Dylan Roberts and state Sen. Kerry Donovan.

Separately, the state’s new prescription drug review board will be convened by October, and it will start reviewing drug costs and spending in 2022. 

“We did the work in order to make history in the state of Colorado,” said state Sen. Julie Gonzales, a sponsor of the prescription drug board bill, along with state Sen. Sonya Jaquez Lewis, state Rep. Yadira Caraveo and state Rep. Chris Kennedy, all Democrats.

The board will be allowed to set “upper payment limits” for as many as 12 prescription drugs per year. But the board only has that power when drugs exceed a certain price, or when their prices are increasing too fast.

Kennedy praised the innovation of the pharmaceutical industry, but said government intervention was necessary.

“Just because these drugs can save lives, doesn’t mean they should bankrupt a family,” he said. “This is not a competitive marketplace … They don’t drive down prices on their own.”

Democrats sponsored and supported both health care bills. Republicans generally opposed them, warning the state’s interference in the health care industry could have unintended consequences, including reducing access to care and medicine if cost controls make it impossible for companies to make a profit.

Polis signed both bills while the sponsors and a crowd of supporters looked over his shoulders, concluding years of legislative debate — and beginning a battle over the details and enforcement of both laws that will likely last for years to come.