Group pushes idea of health-care co-op

Even as the new health-care insurance marketplace is implemented in Colorado, one group is working toward a completely different program for delivering medical services.
The Colorado Foundation for Universal Health Care wants to put a measure on the 2015 state ballot that would create the Colorado Health Care Cooperative, a statewide co-op paid into by every resident of Colorado that would then pay health-care providers in lieu of private insurance in most cases.
The co-op is based on an idea brought to the Colorado Legislature in the 2013 session by Sen. Irene Aguilar, D-Denver. Aguilar proposed creating a universal, state-run health-care system using payroll taxes.
Aguilar plans to bring the referendum to the Legislature again in the 2014 session. In the meantime, backers of the universal health-care initiative are raising awareness and money to give the idea a chance with Colorado voters in two years.
The co-op would be funded by mandatory contributions from every Coloradan, according to Colorado Health Care Cooperative spokesman Dave Beckwith. The total contribution would be a 9 percent payroll tax, Beckwith said.
Employers would be required to pay at least 6 percent of the tax, leaving the remaining 3 percent for employees. Employers also could choose to pay the full 9 percent themselves, Beckwith said. The self-employed would have to pay their 9 percent in full.
The Department of Revenue would handle the money, Beckwith said, but the co-op would be a non-government entity governed by a 17-person board elected separately from the rest of the state and local government in Colorado.
“One of the things we want very strongly to avoid is government-run health care,” Beckwith said. Board members would come from all over the state so that rural areas would be equally represented, he said.
After being elected, the board would establish the organization’s structure, including hiring staff members to manage the co-op. It is estimated that getting the co-op up and running would take about two years.
Money from the co-op would be disbursed to providers differently than with private insurance companies, Beckwith said. Instead of paying for services rendered, as in the current model, providers would be paid based on the health of their patients.
“The healthier patients are, the better providers will be reimbursed,” Beckwith said.
This idea also is being promoted by parts of the federal Patient Protection and Affordable Care Act, especially in Medicaid, the federal program for low-income residents.
The co-op would replace much of what has been implemented in Colorado under the Affordable Care Act, including last month’s launch of Connect for Health Colorado, the health-care exchange where Coloradans can shop for insurance and find out if they qualify for subsidies under ACA.
With the co-op, Colorado residents will have the option to purchase private insurance in addition to their contribution to the co-op, Beckwith said. Co-op funds would then serve as secondary coverage.
A provision of ACA makes the co-op possible, Beckwith said. The law says that if states can come up with their own, better system than the federally mandated one, they can implement it under the law.
Exactly what might happen to the exchange and other parts of ACA in the wake of the co-op’s approval by voters is unclear, but co-op organizers are banking on Americans’ mixed feelings regarding the Affordable Care Act to help get their measure approved.
“We’re expecting for (the Affordable Care Act) not to be received as a godsend by everybody,” Beckwith said.
The initial plan was to get the co-op on the ballot in 2014, but those working on Colorado Health Care Cooperative predict that the health-care world in 2014 will be overtaken by concerns about implementing the new insurance exchange, so their chances at getting the co-op approved by voters will be better in 2015.
If the co-op were implemented, health-care costs for 80 percent of Coloradans making less than $100,000 annually would decrease, while costs for those making more than $100,000 would increase, according to a financial study commissioned by Colorado Foundation for Universal Health Care.
“Businesses will benefit on the average, with the greatest benefit going to the businesses that have been paying the highest health-insurance premiums,” according to the study, which was executed by Gerald Friedman from the department of economics at the University of Massachusetts-Amherst.
On average, employers in Colorado have been paying 11.8 percent of payroll for health insurance, but the co-op would bring that down to 9 percent.
Health-insurance companies likely would lose a significant amount of business if a co-op model were adopted. Insurers such as UnitedHealthcare and Humana did not respond to requests for comment.
While the need for health-care reform is great, said Sen. Kevin Lundberg, R-Berthoud, the cooperative is not the way to go.
The cooperative is “unbelievably expensive,” Lundberg said, because it would raise taxes for some Colorado residents and increase the amount of money that has to be handled by the state Department of Revenue.
Lundberg also disputes the claim that the co-op would not be a government-run system, calling it a “complete takeover of the medical system by government.”
“We do need to rethink how health care is paid for, but this would put government completely in the middle,” said Lundberg, who sits on the Senate’s Health and Human Services Committee.

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Molly Armbrister covers real estate, banking and health care for the Northern Colorado Business Report. She can be reached at 970-232-3139, marmbrister@ncbr.com or twitter.com/MArmbristerNCBR
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