Colorado Democrats are struggling to devise a long-term plan to respond to higher health insurance costs after Republicans in Congress allowed federal subsidies to expire at the end of last year.
Individuals and families who buy their own health insurance on Affordable Care Act marketplaces, like Connect for Health Colorado, are facing increased monthly premiums in 2026 due to the loss of enhanced federal benefits for those plans.
Higher costs have hit rural and resort areas particularly hard, with mountain town residents reporting monthly premium increases as high as 400%. Still, state officials did not see the coverage losses that they had initially predicted after the benefits expired at the end of December.
Part of that is due to state-level aid that was passed during an August special session, in which Democrats approved $110 million in funding for health care subsidies to help mitigate the loss of federal benefits. But that money was just for this year, and without more funding, lawmakers say tens of thousands of people could be at risk of losing their coverage in 2027.
Enter Senate Bill 178, which was introduced in the final weeks of the 2026 legislative session that ends on May 13. The measure aims to raise an additional $140 million for health care benefits next year through a combination of bond funding and increased fees on insurance companies.
“If we don’t act to pass this legislation, people will lose coverage,” said bill sponsor Kyle Mullica, D-Thornton, during a Thursday, April 30, hearing before the Senate Finance Committee.
Mullica acknowledged that the measure is not a long-term solution but will provide another year of one-time funding for the state’s health insurance programs, which help lower premiums and provide access to plans for low-income immigrants.
Sen. Iman Jodeh, D-Aurora, also a sponsor of SB 178, said without the additional funding, average annual Affordable Care Act premiums could increase by $600 for those making below 400% of the federal poverty level. That translates to just under $64,000 a year for an individual and $132,000 for a family of four.
Jodeh said upwards of 40,000 people could be at risk of losing their health insurance next year as a result. That includes immigrants who use OmniSalud, a state program that provides insurance coverage for those who don’t qualify for Affordable Care Act tax credits and aren’t on Medicaid or Medicare due to their immigration status.
Enrollment for the program has already dropped from 12,000 in 2025 to 6,700 in 2026 due to a lack of funding.
“If we don’t pass this bill, that program will be cut almost in half again to 3,900 people,” Jodeh said.
To boost funding, the bill would allow the state to issue $100 million in bonds sold through the health insurance affordability enterprise fund, which could be paid back within 45 years. Bonds are often used by governments as a debt-financing tool to generate upfront cash.
The bill would also impose a one-time fee increase totaling $40 million on insurers that are already paying into the state’s reinsurance program, which helps lower premiums.
The bill would divide the fee amount equally across the state’s five largest insurers, those with 20,000 or more members. That includes Aetna, Anthem Blue Cross Blue Shield, Cigna, Kaiser Permanente and United Healthcare.
Mullica said he talked with insurance companies about a permanent fee increase as a way of generating sustainable revenue for health insurance programs, but insurers rejected that idea.
Republicans and insurers also raised concerns with the one-time fee hike, which they said would be passed on to customers, some of whom won’t be eligible for the benefit programs.
“What are we supposed to tell them?” said Sen. Barbara Kirkmeyer, R-Brighton. ” … We need to understand there’s a whole bunch of other people who are being impacted by an increased fee, and it matters to them too.”
Marc Reece, executive director of public policy for CVS Health, which owns the insurance company Aetna, said the proposed fee would mean raising monthly premiums by $40, or $480 annually. He added that the increase is an unfair burden for Aetna’s members, since they are not on the Affordable Care Act marketplace and aren’t eligible for the state benefits.
“I’m trying to figure out how to reconcile paying for important programs with telling our enrollees, ‘You are having to increase your insurance by nearly $500 a year to support a program that you can’t even enroll in,’” he said. “I don’t know how to do that.”
Mullica defended the fee, saying the amount of funding it will generate to keep overall premiums down far outweighs its costs. He said he hopes that passing the bill will give him and other lawmakers time to work out a more permanent solution to address rising health care costs.
Local leaders urged lawmakers during Tuesday’s Senate hearing to pass Mullica’s bill, including those on the Western Slope whose communities have long dealt with some of the highest health care costs in the state.
Summit County Commissioner Tamara Pogue said the state’s benefit programs have “made a measurable difference in our communities.”
“That stability matters especially in rural and mountain communities like mine, where options are already limited and costs are often higher,” Pogue said. “But that progress is fragile. With the loss of federal support and rising costs, we are at a tipping point. Without action, we’ll see premiums rise sharply, coverage decline and more pressure placed on local providers and safety-net systems.”
Pogue added that while counties “recognize concerns of any financing approach, doing nothing will cost our communities more.”
SB 178 passed the Senate Finance Committee on a party-line vote of 6-3, with Democrats in favor and Republicans opposed. It now heads to the Senate Appropriations Committee.
Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.