Colorado lawmakers are considering a funding measure to prevent sharp premium hikes and coverage losses if enhanced Affordable Care Act subsidies end this year.
A bill introduced on Aug. 21 during a special session would allow a $100 million interest-free loan from the state's unclaimed property trust fund to the health insurance affordability fund. The transfer would only occur if Congress does not extend the tax credits by Dec. 31. The affordability fund would repay the loan by January 2045.
According to a Best Wire report, the money would support the state's reinsurance program, direct payments to carriers to offset the loss of federal tax credits, and other programs under the Colorado health insurance affordability enterprise. The enterprise, created in 2020, is funded by federal dollars and insurer fees. It runs the reinsurance program, exchange subsidies and OmniSalud, which helps low-income residents not eligible for federal credits or state insurance.
The bill comes as enterprise reserves have been stretched by rising medical and pharmacy costs along with growing enrollment. A fiscal note said the fund will be fully spent in fiscal year 2025–2026 and rely only on incoming revenue starting in 2026–2027, the report said.
The Division of Insurance has already directed carriers to provide enhanced subsidies for the 2026 coverage year, with reimbursements scheduled to begin in June 2027. Commissioner Michael Conway (pictured) said action is urgent, warning that, without state intervention, about 100,000 Coloradans could lose coverage and many individual market buyers would face rate increases of more than 100%.
Other states are exploring similar measures to blunt the impact of federal inaction. Washington state has relied on its own subsidies to supplement federal credits, while California’s budget includes contingency funding to stabilize its marketplace. States with reinsurance programs, including Maryland and New Jersey, are also assessing whether additional state-level contributions will be needed if federal tax credits expire.
Colorado’s challenge is compounded by recent carrier exits. Rocky Mountain HMO and HMO Colorado have filed to discontinue several individual market plans, affecting nearly 96,000 policyholders. Regulators said this, combined with the potential loss of subsidies, could further destabilize the market.
The proposal is designed to give the state a temporary backstop, ensuring insurers and consumers avoid immediate disruptions while longer-term solutions are debated at the federal level.
