A new measure pushed by Republicans to cut taxes and reduce spending is expected to reach the Senate floor next week, and it may bring significant changes for Coloradans who rely on health insurance subsidies.
The bill, which targets Medicaid and the expiration of tax credits for those on the state health exchange, could lead to an increase in premiums for many families, especially in rural and mountain communities.
Potential Premium Hikes for Colorado Residents
The expiration of the expanded tax credits, which were introduced under the American Rescue Plan, would cause premiums for individuals on the state health exchange to rise significantly.
Connect for Health Colorado, the state’s health insurance marketplace, warns that some Coloradans could face premium increases of up to $3,000 a year if the tax credits expire.
Around 80% of those on the state exchange currently receive federal subsidies. The expanded tax credits, which apply regardless of income, have helped many Coloradans afford health insurance.
In rural areas where premiums can cost families upwards of $30,000 a year, these subsidies have been crucial for making health insurance affordable.
The Wilsons’ Struggle with Rising Costs
Ryan and Robin Wilson, a couple from Fraser, Colorado, are one example of how these credits have supported middle-class families. Both work for nonprofits, with Ryan managing a community radio station and Robin overseeing an affordable housing community.
Together, they make just enough to make ends meet, which had previously made them eligible for tax credits under the Affordable Care Act.
However, their income now places them just above the eligibility threshold—402% of the federal poverty level—meaning they no longer qualify for the subsidies under the original rules.
The couple was considering lowering their income by reducing hours or quitting jobs to requalify, but the advanced premium tax credits that were created during the pandemic, which cap premiums at 8.5% of household earnings, allowed them to maintain affordable health insurance.
With premiums averaging just $115 a month, the Wilsons could afford coverage. But with the potential expiration of these credits in December, Connect for Health CEO Kevin Patterson warns that premiums could increase by 50%, potentially jumping to between $235 and $279 per month.
For the 80% of people who rely on financial assistance, premiums could double.
The Bigger Impact on Colorado
The expiration of these tax credits would not only affect families like the Wilsons but would also lead to broader consequences for Colorado’s healthcare system. The state’s Reinsurance program, which has helped lower premiums by about $2 billion over the last five years, would face a setback.
This program has been supported by savings from federal tax credits. If the credits expire, Colorado would lose around $100 million in annual savings, potentially resulting in higher premiums for everyone.
Governor Jared Polis is actively lobbying Colorado’s congressional delegation to preserve the credits and prevent the planned expiration. He argues that without these subsidies, many Coloradans will see a sharp rise in healthcare costs, impacting middle-class families and those with low incomes.
As Republicans’ proposed tax cuts and spending reductions move through the Senate, the fate of expanded health insurance subsidies hangs in the balance. If the tax credits expire in December, families across Colorado, especially those in rural areas, could face skyrocketing premiums.
The Wilsons’ story highlights how these subsidies have been a lifeline for many, allowing them to afford health coverage while doing meaningful work in their community. Colorado’s lawmakers will need to decide whether to protect these crucial credits or risk making healthcare less affordable for thousands of residents.