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DENVER -- Surrounded by supporters, Democratic lawmakers unveiled a bill Thursday to create a public health insurance option for consumers.
The bill, co-sponsored by Sen. Kerry Donovan and Rep. Dylan Robert, calls for the creation of the Colorado Affordable Health Insurance Option, also known as the Colorado Option.
If passed, the state would form a public-private partnership with insurance companies to offer the option to consumers through the state’s individual marketplace.
Supporters of the bill say it will help patients save money while opponents believe it could have unintended consequences.
How the public option would work
The proposed public option is years in the making; in 2019, lawmakers passed a bill that required the Department of Health Care Policy and Financing and the Division of Insurance to submit a proposal that contemplates the design, costs, benefits and implementation of a state-backed insurance option.
During his annual State of the State address, Governor Jared Polis announced his support for the idea.
If passed, the commissioner of insurance would be required to develop and implement the Colorado Option plan that would be offered to people who purchase health insurance through the individual market.
It would not apply to people who get their health insurance through their employers. Approximately 300,000 people in the state get their health insurance through the state-run exchange program Connect for Health Colorado.
Consumers who buy their insurance through the individual market would not be required to buy into the public option.
The bill calls for the public option to be available for consumers in time for the Fall 2021 open enrollment. Consumers would then be able to start using the state-run plan in 2022.
However, the state would not run the public option. Instead, private insurers who are monitored by the state would oversee the option.
The case for the public option
Supporters of the new bill say that for too long, consumers have been asked to pay too much for their health care coverage and this fixes a gap in Colorado’s current system.
Part of the idea behind the bill is to create competition between insurance companies to help drive down costs. Currently, there is only one insurance option in 22 counties across the state. With the creation of the public option, each county would have at least two options.
“The days of being forced to pay outrageous premiums because it’s the only option will be over,” Rep. Dylan Roberts said. “Every single Coloradoan will have competition in the market regardless of where they live when this bill passes.”
More of the savings would come from the hospitals since the bill sets a reimbursement rate through a public formula. That means hospitals would be paid less for their services overall.
Despite this, Rep. Roberts insists the hospitals will not only be able to cover their costs but receive fair profits for their services as well.
Beyond that, he believes one of the biggest benefits to the bill is that the state would not be responsible for running the insurance system
“This is financially responsible way for the state to go forward because we’re not putting the state on the hook for insurance liability, and it will not take a large general fund appropriation year after year to keep this plan going,” Rep. Roberts said.
Sen. Donovan believes this bill could lower insurance premiums by up to 20 percent. During the press conference, Sen. Donovan said the cost of health care is one of the main complaints she hears from her constituents and she is committed to finding a way to help.
“This is the change we need, this is the change we promised,” Sen. Donovan said.
The bill also creates a nine-member advisory board that will oversee the public option. Four of those members will be appointed by the governor, four others would be appointed by House and Senate leadership from both parties and the final board member would be the executive director of the exchange.
“The checks and balances are so powerful, in fact, that the board can override decisions by the department of insurance,” Rep. Roberts said.
In the end, supporters say this option is the best way for the state to address the rising cost of health care by increasing competition, bringing hospitals to the table and saving consumers money.
The patient perspective
Small business owner Laura Packard has gotten her health insurance coverage through the Affordable Care Act and individual marketplace for years. Currently, she has a high-deductible plan, meaning she pays more out of pocket before her insurance company helps out.
Three years ago, Packard was diagnosed with stage four cancer. After spending six months going through chemotherapy, she is finally in remission but says she has thousands of dollars of health care bills just from her post-cancer check-ups.
“The hard part should have been over, but the hard part happens every year as I get more bills,” Packard said.
Packard is supportive of the public option because she believes the competition could pressure insurance companies to lower her rates.
“I want the ability to choose so that this fall when I’m looking through all of my choices, I will have this option and then I can choose a policy that’s best for me,” she said.
The case against the public option
Already, the public option bill is facing opposition. The Colorado Hospital Association says that while it understands and supports the intentions behind the bill, it does not support the public option.
“Unfortunately, we think a lot of what was promised today and a lot of the aspirations that they hope for this bill won’t come to fruition,” said Katherine Mulready, the senior vice president and chief strategy officer for the Colorado Hospital Association.
Mulready believes the bill unfairly targets hospitals without bringing other stakeholders to the table to help.
Beyond that, she says the bill could threaten the financial stability of hospitals if the reimbursement formula doesn’t work out the way the bill’s authors hope.
“We have 36 hospitals that have a negative margin today and more than half of hospitals fail to achieve the margins needed for long-term sustainability,” Mulready said.
In worst case scenarios, she believes the bill could lead to job cuts and restrictions of service in certain areas.
“They have developed this untested theoretical model for how hospital reimbursement will work that we just can’t trust,” she said. “We don’t know what the consequences will be.”
The CEO of Lincoln Community Hospital in Hugo, Kevin Stansbury, is also worried about the unintended consequences of the bill.
Stansbury says even after his conversations with the bill’s cosponsors, there are too many unanswered questions. One of his biggest questions was which Medicare rate the state formula would be based off of.
“It’s confusing in terms of what the rates are, it potentially increases, the insurance rates for the people I serve in my community, and potentially drives care out of my community,” Stansbury said.
More importantly, he believes the bill is only a partial solution to a much larger problem, so he opposes it.
A slippery slope
House minority leader Rep. Patrick Neville is also worried about what the public option could mean for his constituents.
He believes that this could eventually lead the state into a single-payer system. In 2016, Colorado voters overwhelmingly struck down Amendment 69, which would have created a single-payer, universal health care system.
“This is basically a new, sneaky way to do it. So essentially, what’s going to happen is they’re going to have this public option on the exchange and they’re going to say, ‘Oh it’s just another thing that’s going to compete with private insurers,’ but the problem is a price fix with the public option,” he said.
He believes the state formula for the reimbursement rate will result in more costs being passed down to private insurance plans.
“Their costs are going to go up and eventually it’s going to put them out of business and the only game in town that’s going to be left is the public option,” Rep. Neville said.
Rep. Neville believes the state could start to lose some of its best specialty doctors as a result since they won’t be able to afford to recover their costs at those rates.
A big battle ahead
The Colorado Affordable Health Insurance Option still has a long way to go through the state legislature. The bill is poised to be one of the most controversial and hotly debated bills of the session.
Supporters believe the public option is long overdue while opponents say it could have serious consequences for hospitals and patients.
Denver7 will be keeping track of the bill as it makes its way through the legislative process.