DENVER – Colorado Democrats on Thursday unveiled a bill aimed at reducing health care premium costs by 20% over the next few years on the individual and small-group markets, which carries the potential for a statewide public option if insurance carriers do not drive down those costs on their own.
The bill, which was obtained by Denver7 in its Wednesday-night draft form, but which was expected to be formally introduced on Thursday afternoon, piggybacks off of a public option bill that was introduced last year but withdrawn amid opposition from insurers and hospitals and as the COVID-19 pandemic hit in full force, forcing a pause at the General Assembly.
The Democratic sponsors of the bill who discussed it in a call with reporters Thursday morning said they had done outreach work with carriers, hospitals, providers and insurers over the past year to come to this year’s measure after that same group said they believed they could reduce costs on their own during last year’s bill discussions.
“The health care industry said, ‘We think we can do this on our own,’ in response to last year’s bill,” said one of the bill’s prime sponsors, Sen. Kerry Donovan, D-Eagle County. “So, we want to take them at their word. A cost reduction is a cost reduction.”
But just as the measure was unveiled, several of those some groups said they had concerns with the bill, and there has already been significant money spent in advertisements opposing a public option by a nonprofit. Colorado Republicans also signaled Thursday that they would oppose the bill in its current form.
What does the bill do in its current form?
The measure boils down to two phases. In Phase 1, insurance providers would be encouraged to offer a standardized health insurance plan developed by the state for individual and small group plans in places where the insurers are already offering plans.
In 2023, that plan would have to be 10% less costly than premiums they offered on each market in 2021. And in 2024, it would have to be 20% less than a premium offered in 2021 unless purchasing alliances have already met those savings goals, according to the draft bill.
In 2025 and the years that follow, insurance providers would not be allowed to increase those premiums by any more than 1% on top of yearly inflation.
The state insurance commissioner would create the “standardized” plan, and insurance providers, pharmaceutical companies and hospitals would have to work to come to an agreement on how to meet the benchmarks set forth in the measure.
Rep. Dylan Roberts, D-Avon, said the 10% per year reduction goal comes from an analysis stemming from a 2019 bill which said that insurance prices could be reduced by 9% to 18% ever year without people’s quality of care suffering and without putting health care providers out of business.
If the consortium cannot meet the goals laid out by lawmakers on their own, should the measure pass with the same benchmarks, then Phase 2 would kick in, in which the state would implement its own public option plan, the Colorado Health Insurance Option, to compete with other insurers on the individual and small-group markets and which would be 20% cheaper than current average premiums on a county-by-county basis.
The bill would create a nonprofit, the Colorado Option Authority, under Phase 2, which would offer the public option on its own and not through the insurance providers.
The governor would appoint nine people to a board to oversee the nonprofit, which would include at least five consumers, representatives of consumers or small business owners, a hospital representative and a provider representative. People employed by carriers or managed care organizations would not be eligible, and all board members would have to be confirmed by the Senate. The bill says the board would have to reflect the diversity of the state with respect to race, geographic location, income and more.
The state insurance commissioner would have to come up with a fee schedule for the plan to reflect what health care providers would need to get paid for their services in accordance with what consumers need to pay for care.
The bill currently says the commissioner can exempt certain providers from those fee schedules if they can show it would reduce their ability to provide care for people who are uninsured or on federally-backed health care programs like Medicaid, Medicare or CHP+.
It also says that the fee schedules can be changed “so that reimbursement rates reflect the cost of adequate wages, benefits, staffing and training for these employees to provide quality care” – something small providers and rural providers have voiced concerns over, with slim operating margins.
The bill also says that providers will have to accept anyone enrolled in the public option plan and the fee associated with that person in the fee schedule so that the people with the public option cannot be turned down for care, and it contains several proposed licensing changes that could expose providers who do not accept patients on the public option or standardized plan to discipline, including the removal of their license.
The public option and startup costs would also rely on the Biden administration approving a 1332 waiver before it could be launched. The money from the federal government would be used to supplement the program along with contributions from individuals paying into the nonprofit that funds the program, the sponsors said.
The public option and much of the bill could be repealed if Congress passes, and the president signs, a measure implementing a national public option that meets or exceeds Colorado's premium reduction goals and covers the same population, according to the proposal.
Reaction from proponents, opponents
Roberts, Donovan and another sponsor of the proposal, Rep. Iman Jodeh, D-Aurora, said the proposal was aimed at rectifying health care costs faced in rural Colorado, some counties of which have only one option to choose from, and for people of color who are more likely to be uninsured or under-insured because of high health care costs and lower wages.
“These outcomes have haunted communities like my own,” said Jodeh. “…No one should have to go to the emergency room because they don’t have insurance, or have care delayed to the point where it does become an emergency.”
“[The bill is] not about imposing government mandates on the industry or forcing anyone to give up their heath care,” Donovan said. “It’s asking hospital systems and insurance companies to join us at the table. Right now, like so many times before, Colorado has an opportunity to lead the way for the country and prove affordable health care for all can be a reality.”
Teacher Noel Emerson said during the press call that she had put off other expenses for health insurance’s sake and said she supported the public option push.
“I have also decided not to invest in my future with wanting to buy a house, with wanting to save for my future or even take care of my student loans,” she said. “I can’t afford that as an educator because my deductible is so extremely high.”
Roberts said that he believed the benchmarks in the current form of the bill were reasonable but said the sponsors would continue talking with providers, insurers and others if they provided other alternatives. He said the current measure “may look differently” by the time it reaches the governor’s desk, if that happens.
Roberts said that about 15% of the insured population currently gets their insurance from the individual or small-group marketplaces and that the sponsors believe maybe around half of them would go with a public option, along with an unknown number of people who are currently uninsured.
But along with the TV ad blitz already underway, Republicans and hospital and business groups were already voicing opposition to the measure Thursday.
Katherine Mulready, the senior vice president and chief strategy officer for the Colorado Hospital Association, said the organization would “not take a position until the bill is introduced,” but said in statements and an interview that there were provisions already causing them concern.
Mulready said that Phase 1 “will set us up for failure” because of the benchmarks and that Phase 2 “simply goes too far” and “provides too much authority to the state.”
“We have tried to be collaborative partners who bring solutions, offer alternatives, and engage in community-based affordability efforts that are truly working to lower health care costs,” Mulready said in a statement. “Unfortunately, it feels like some want a fight over this issue instead of working together to find an actual solution that will work for all sides. Especially this past year, Colorado hospitals have proven that they are willing and able to step up to any challenge and find productive solutions. We hope that the proponents will work with us to find a solution here that will work for Colorado.”
Sage Naumann, a spokesperson for Colorado Senate Republicans, said Republicans would likely oppose the bill because of the threats of discipline with providers’ licenses and worries over profit margins and operating costs for hospitals – especially those in rural Colorado.
“These hospitals can’t make money on these procedures and they’re force to lose money,” he said. “Businesses can’t operate on a loss for very long.”
Denver Metro Chamber of Commerce President Kelly Brough said the organization was opposing the legislation because of the timelines and benchmarks in the bill, saying they “are intended to guarantee that the private sector isn’t going to be given the time or the opportunity to meet the goals of the bill, which means a public option is a foregone conclusion.”
“While the introduced bill is not something we can support, we are hopeful that we can find common ground with sponsors and advocates to advance a more reasonable, truly market-based and stepwise approach,” Brough added.
But the governor’s office supports the proposal as part of its efforts to drive down health care costs, and the lieutenant governor said she believed the health care industry could meet the goals.
“By offering insurance carriers the opportunity to negotiate to meet premium reduction targets, the Colorado Option allows for private-sector innovation and holds the unique potential to add competition to the market to deliver meaningful results. The industry itself has advocated for this approach for many years, and we are confident in their ability to come together and find market-based solutions for Colorado,” said Lt. Gov. Dianne Primavera.
“But there is some accountability built into the bill, too. Because while we’re confident that the industry can come together to lower costs, we can’t just rely on promises,” Primavera added. “If the health care industry is not able to find a way to bring costs down, while maintaining quality and access, the state will offer the Colorado Health Insurance Option that is more affordable, is more accessible, and adds competition to the market.”
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