Colorado's state-backed health insurance plan bill nears final approval

Senate votes 19-16 to pass measure; House needs to concur with amendments
colorado public option
Posted at 4:54 PM, May 26, 2021
and last updated 2021-05-26 20:53:34-04

DENVER – The Colorado Senate on Wednesday passed the bill that would create a state-backed health insurance plan after several amendments were made to the measure on Tuesday to try to placate insurance groups, doctors, and some Democrats who have reservations about the bill.

The Senate voted mostly on party lines, 19-16, to pass HB21-1232 back over to the House for concurrence with amendments made in the Senate, where it is expected to again pass and be sent to the governor’s desk.

Sen. Rachel Zenzinger, D-Arvada, was the lone Democrat to vote against the bill Wednesday. Sen. Rhonda Fields, D-Aurora, and Sen. Joann Ginal, D-Fort Collins, had shared concerns about the so-called “Colorado Option,” but voted in favor of its passage.

Fields said she felt the bill had become less about health equity and more of an insurance bill than it was in its initial iteration, when it included a true public option, before it was rewritten earlier this month. She and Ginal also previously expressed concerns the state would require providers to accept patients on the standardized plan when they do not have to accept Medicaid or Medicare, with Ginal saying she did not believe that was ethical.

Following the re-write, the bill has faced even more pressure from Republicans, some Democrats, and lobbyists for insurance groups and doctors, the latter two of whom have tried to get the measure’s sponsors to include protections for their industries surrounding punishments for doctors or insurers who do not want to accept the standardized plan, the power of the insurance commissioner, and around cost-reduction goals.

Eighteen amendments for the measure were introduced Tuesday during the bill’s second Senate hearing – only five of which were adopted, but which helped quell concerns from doctors and their representatives.

One amendment offered by prime sponsor Sen. Kerry Donovan, D-Vail, removed penalties for doctors that do not want to accept patients on the standardized plan offered through private insurers.

Another adopted amendment offered by Donovan removed the ability of the insurance commissioner to revoke a hospital’s license if they refuse to participate in the plan. The current version would still allow the commissioner to suspend a license or impose other penalties.

Previously, the measure would have allowed for $5,000 per year fines for doctors. The bill still allows for hospitals that refused to participate to be fined up to $10,000 per day for the first 30 days they refuse to participate in the program and up to $40,000 per day after that.

And the sponsors will now require the standardized plan to be at least 15% less costly by 2025 than premium rates offered this year – down from an 18% reduction.

In the latest version of the bill, private insurers would have to offer the standardized plan developed by the insurance commissioner that achieves those 15% rate reductions from 2021 premiums on the individual and small group marketplaces. Employer-based insurance would not be affected.

If private insurers don’t meet that 15% reduction over three years, the state can set some rates.

The changes to more of a private-public partnership brought some health care groups to change to a neutral position on the bill. Before, they had opposed it because of the state-run option that would have competed with the private insurers on the state’s marketplace.

Some Republicans have voiced concerns about the power of the insurance commissioner with respect to the creation of the standardized plan, and then the oversight of the program, and believe it, or the doctors themselves, could face court challenges if signed into law by Gov. Jared Polis, who has pushed for a state-backed or state-run plan.

“It could potentially open up a legal exposure or a lawsuit of some kind on that provider that says, ‘Hey, I understand there is no fine, but you are breaking the law,’” said Sen. Jim Smallwood, R-Parker, after the measure’s passage. “…I’m extremely concerned that patients are going to be the ones bringing lawsuits against their health care providers as retaliation for them not accepting the standardized plan.”

Smallwood said he is not confident that the bill will cause premium rates to go down. That has been a common concern among many, because a similar program in Washington state led only 1% of residents to opt-in and caused the average public option premiums to rise in costs, The Washington Post reported.

“I just thought it was unrealistic to promise our citizens any kind of rate reduction knowing that this number keeps getting reduced and there is still a provision that accounts for an inflation add-back,” he said.

The Colorado Association of Health Plans said they were opposed to the bill after the amendments. They said they believe that higher reimbursement rates will not lead to lower premiums, that premiums have fallen over the past two years and that insurers could stop offering certain plans on the marketplace because of the standardized option.

"CAHP and its members have continued to offer industry perspective and technical guidance to improve the bill's chances of success," the group said. "As this guidance was not accepted by the Legislature, we view HB21-1232 as unrealistic and potentially harmful to Colorado's well-regulated health care marketplace."

Donovan said the iteration of the measure on the verge of heading to Polis’s desk was the product of compromise with the doctors in removing the fines. She said she believes that taking out some of the potential penalties would lead insurers, providers, doctors and the state to reach a compromise for rate reductions in the coming years.

“If, at the end of the day, we can’t develop an adequate network that reduces costs, then we need to have something, but make sure that we can enforce those goals,” Donovan said.

She said lawmakers had “accomplished what once seemed impossible” by trying to get all the people affected by the measure to provide input that changed the bill several times throughout the session.

“Will this bill solve every systemic health equity problem that we have in the system? No. But today is the beginning of a commitment that we’re not just going to expect the status quo,” Donovan said.

The bill now heads back to the House for concurrence with the Senate amendments. It passed its third reading there in a 40-23 vote, and House sponsors have said they are likely to accept the Senate amendments and send the bill to Polis.