Colorado's health care experiment gets go-ahead from Biden administration

Colorado is reviving a progressive health care goal with a new twist: creating a public health insurance option to expand affordable coverage as the state moves past the pandemic.

Why it matters: The state is trying to prove that a government-run health plan can attract more consumers and save money while avoiding the political pitfalls associated with single-payer systems, writes Axios' Arielle Dreher.

Driving the news: The state recently became the first to obtain a federal waiver to create such a plan, called the "Colorado Option." It will be offered on the state's Affordable Care Act exchange starting in 2023.

• The plan would compete with private options on the exchange, with premiums that would be 22.3% lower on average.
• Colorado would also expand a state subsidy program to lower costs for people who aren't eligible for federal subsidies.
• An estimated 32,000 residents could gain coverage through the option by 2027, when the waiver expires.

What they're saying: "This waiver is a vital component to Colorado's efforts to expand health coverage and make it more affordable for all people living in Colorado," said Adam Fox, deputy director of the Colorado Consumer Health Initiative, which lobbied for the plan.

The other side: Chris Brown at the Common Sense Institute, a business-backed group that opposes the policy, claimed the new option "will force difficult choices across the market, as providers choose to cut services or pass on costs to the remaining private insurance market, thereby increasing rates on everyone else."

The big picture: Currently Washington is the only state with a public option, but Nevada, Oregon and Connecticut are also weighing whether to follow suit.

Yes, but: Washington's plan, which dates to 2019, has run into snags, including hospitals that are unwilling to participate because of low payments and policies that tie reimbursements to Medicare rates.

• Private insurers have also balked at contracting with the state and participating in the plan, in part because hospitals were wary.

The intrigue: Colorado is trying to avoid some of the bigger problems that Washington has encountered.

• The biggest difference is that insurers that offer ACA exchange plans in particular counties will also have to offer a Colorado Option for both individual and small-group coverage at the outset.