State begins public-option draft

DENVER — Colorado is close to unveiling its proposed public option for health care in the next couple of weeks. The bill that started this whole process, passed in 2019, was bipartisan in both chambers of the state Legislature.

“We all were hearing from our constituents about the high cost of health care in Colorado. We have unique challenges in Colorado that make us one of the most expensive states,” said Rep. Dylan Roberts, D-Eagle and Routt counties, one of the sponsors of the bill. “Both parties realize we need to do something on this front.”

Last year’s bill directed the Colorado Division of Insurance and Colorado Department of Health Care Policy and Financing to come up with a proposal for a public option to provide for insurance and to lower costs for services including prescription drugs. They conducted a statewide listening tour to gain public input and conducted research and an actuarial analysis to come up with a proposal that was released in November 2019.

SPONSORED CONTENT

Exploring & expressing grief

Support groups and events, as well as creative therapies and professional counseling, are all ways in which Pathways supports individuals dealing with grief and loss.

“Now we are working off that proposal to craft that bill,” he said. So far, the bill includes some of what was in that initial proposal and other points that were brought up by stakeholders. The sponsors are hoping to have a Colorado health insurance option available in the next couple of years. Such an option would provide rural areas that often have just one insurer with another choice of insurance. It could also result, proponents said, with moderating the rates charged by private insurance carriers.

According to the bill’s sponsors, the public option will change hospital reimbursement formulas to help individual consumers save money on health care while at the same time still allowing hospitals to make a profit …. Just not as big of a profit as they have been making. They believe that individuals participating in the public option will save 10 percent or more on premiums and more than 15 percent in higher cost areas of the state such as the Western Slope.

One of the stipulations in the final report said that all insurance carriers operating in the state would have to offer a plan on the state’s system, which has some constituencies concerned about the ramifications of that, particularly in rural areas.

The Colorado Association of Health Plans has been actively engaged in the stakeholder process. The trade association for the health insurance industry submitted comments in June and after the draft proposal came out.

“Based on the final report in November, we are opposed. What we don’t know is whether the bill reflects that final report or whether it will change from the final report,” said Amanda Massey, executive director of the Colorado Association of Health Plans.

“We have significant concerns about the public option, including mandating participation [from insurers] and raising the medical loss ratio. We are also concerned that the public option won’t actually lower health-care costs and will increase costs for people with employer-sponsored health insurance,” she said.

In the final report, the administration suggested it would cap hospital reimbursements between 175 percent and 225 percent of Medicare-reimbursed rates across the board.

“What we saw with those numbers is that it would actually increase costs because some carriers have contracts that pay below 175 percent of Medicare. It would create a floor and would increase costs for those getting a better deal such as highly competitive areas like Denver and Boulder.”

She added that what her organization has heard from hospitals is that “they assume that the formula [for reimbursement] will underpay them on the public option so they are likely to increase costs to those getting insurance through their employers.”

The public option’s mandate for carriers to participate will be difficult, especially in the 22 areas of the state where there is only one critical access hospital and a small provider pool to choose from.

“How do you reduce their reimbursement and still keep them open?” Massey asked.

The CAHP’s other concern is that under the public option, hospitals and carriers are mandated to participate but physicians are not.

“What that means, because of network adequacy laws, they have to have a certain number of providers offering services. This means that doctors know for us to stand up a plan, because we were forced to by the government, it gives them considerable leverage in those negotiations,” she said.

The CAHP is also concerned that the actuarial analysis published with the final report didn’t dig into how the public option, which is targeted at individuals, would impact the small group, large group or employer-sponsored plan market.

Rep. Roberts said there has been a lot of pushback from hospitals reacting to the proposal released in November.

“What I told everybody is that it is a proposal. It is not the bill. We are using the proposal as a source of ideas but not accepting the proposal as a whole,” he said. “We are putting our own legislative spin on it.”

Roberts and his co-sponsor, state Sen. Kerry Donovan, a Democrat representing Chaffee, Delta, Eagle, Gunnison, Hinsdale, Lake and Pitkin counties, believe that a public option is necessary because “Colorado hospital profits are the second highest in the nation. They are significantly higher than the median so that’s the biggest cost driver for health care,” he said.

Hospitals can break even with a 142 percent of Medicare reimbursement rate, so the initial public option proposal has recommended higher reimbursement rates than that, he said.

Roberts believes a lot of the negative response to the public option has been overblown.

“When they actually see the bill, they aren’t going to be worse off and may be better off because more people have insurance and more people are coming into their doors,” he said.

Many rural areas will see higher reimbursement rates than they are seeing currently. He added that he believes the proposal as it stands is reasonable and financially responsible in trying to solve the state’s health-care problems, but “hospitals and insurance companies will fight hard to protect their profits.”

The Colorado Hospital Association is opposed to the proposal as it stands.

Chris Tholen, president and CEO of the Colorado Hospital Association, said he has heard from others in the industry that the final public option bill doesn’t look like the final report. In an October letter addressed to the Department of Health Care Policy & Financing and the Division of Insurance, Tholen said that the proposal “misses the mark because it prioritizes lower premiums at the expense of patient access and choice.”

It also doesn’t prioritize coverage and affordability for Colorado’s 375,000 uninsured people, doesn’t protect patient choice by “undermining competition among insurers and health-care providers” and “fails to defend access to care by cutting hospital payments up to 40 percent.”

The CHA believes it has an alternative solution to Colorado’s health-care woes. It believes the Total Cost of Care plan in place in Massachusetts, Delaware, Rhode Island and Oregon is the best solution for the state.

“That plan is built on a shared goal, a goal of reducing health-care costs for everyone. It crosses all payers and providers and would benefit all Coloradans,” he said.

“It creates a target, a health-care spending target for providers and insurance, an agreed upon target everyone believes in because all had a voice in what that target is,” Tholen said.

The Total Cost of Care program would welcome collaboration from all stakeholders; examine total health-care expenditures across the system, their rates of increase over time and the factors driving costs; examine the impact of existing initiatives and continue what’s working to improve affordability; and establish an agreed-upon, sustainable rate of growth that is tied to the Colorado economy, according to the CHA.

“We agree that health care is too expensive, and no one can dispute that there is a unifying sentiment across Colorado that real solutions are needed to make care more affordable, accessible and transparent. That said, we see the proposed public option from a different perspective,” said Peter Banko, president and CEO of Centura Health, which has hospitals in Longmont and Louisville in the Boulder Valley. “We believe a sustainable solution is attainable, and there are four elements that we would like to see in any bill that moves forward — state-initiated ‘fixes’ to the current exchange, off-exchange only for expanded coverage, consumer savings protections (or premium reduction targets) and narrow exclusive health plan/provider networks.”

Dan Weaver, a spokesman for UCHealth, said that his organization “does have concerns about the public option final proposal presented by HCPF and DOI late last year, and we shared these concerns in a letter to the administration. However, an actual bill to create the public option has not been introduced during this legislative session, so many of the details are still unknown. Until hospitals see the bill and exactly how the public option might impact employers, patients and hospitals in our state, we really can’t discuss the plan itself.”

He added that UCHealth does support the Total Cost of Care program being promoted by the Colorado Hospital Association.