Affordability trade-offs following a public option: learning from the Colorado Option

In 2023, Colorado implemented a public option, called the Colorado Option, and required all insurers in its Affordable Care Act (ACA) Marketplace to offer plans following a uniform benefit design. While the Colorado Option aimed to lower the cost of Marketplace coverage, it is unclear whether the policy has had its intended effect. In this study, I examine how the affordability of Marketplace coverage changed after the Colorado Option for both subsidized and unsubsidized enrollees.

This descriptive analysis used the HIX Compare Individual Market datasets from 2020 to 2025 to measure changes in benchmark Silver plan premiums and premium spreads (the difference in premium between the benchmark Silver plan and lowest-premium plan) in Colorado following the Colorado Option.

Between 2020 and 2025, benchmark Silver plan premiums in Colorado increased by $295.84 while premium spread increased by $79.53. These increases were greater than in comparison states.

In the years following the Colorado Option, Marketplace coverage in Colorado became more affordable for subsidized enrollees but less affordable for unsubsidized ones. States considering public options should weigh this potential trade-off as they design and implement them to make sure the public option aligns with their policy goals.