A plan that could make Colorado the second state to offer a public health insurance option was officially introduced Thursday, reviving an effort that was shelved last year because of COVID-19.
But bill sponsor Rep. Dylan Roberts said this version is a very different bill than last year’s attempt. Instead of offering the option through public-private partnerships in 2023, what the Democrat from Avon introduced Thursday has two phases with a public option delayed until at least 2025.
Recognizing the health care system needs some time to build out of the pandemic, the first phase will give “everybody who has an input into the price of an insurance plan” time to find ways to meet health care cost reduction goals, Roberts said, an approach the industry has advocated for.
“For a small business owner in Steamboat Springs, buying a health care plan for their employees is simply unrealistic because of the cost,” Roberts, who represents Routt County at the Capitol, said at a Thursday news conference announcing the bill. “Our number one priority of this bill, as it has been since we first introduced it last year, is to provide cheaper care for all Coloradans.”
Roberts said the bill takes the health care industry “at their word,” giving them an opportunity to lower costs with minimal government interference for the next two and a half years before a public option would be created.
“In phase one of this proposal, the only thing the state will do is set a standard for a standardized quality health insurance plan and give them a goal for premium reduction,” Roberts said. “No government mandates; no requirement to participate.”
If the health care industry fails to lower costs enough, Colorado would then offer the Colorado Health Insurance Option, which the bill’s backers said will be a more affordable and accessible option and provide more competition to the insurance market.
Roberts said the Colorado Option created in phase two will not raise taxes but instead be funded by a federal waiver allowing the state to repurpose funds achieved through health care cost saving measures as well as premiums paid for the insurance to fund the option.
Rep. Iman Jodeh of Aurora and Sen. Kerry Donovan of Vail, both Democrats, are two other sponsors of the bill.
The lack of options is particularly striking on the Western Slope of Colorado, where many counties lack competition in both their hospital and insurance markets, and costs are some of the highest in the country. Routt County is one of 13 counties in the state that a 2019 study from the Colorado Health Institute found to have low competition in both markets.
“There are people in our community who are spending way too much money on their health insurance,” said Routt County Commissioner Beth Melton. “When people lack access to health care, that is why we see populations that have high percentages of preexisting conditions and inequitable negative outcomes.”
This has only been made clearer by the pandemic, Melton said. A study from the nonpartisan consumer health care advocacy group Families USA found that as many as one in every three COVID-19 deaths, and as many as 40% of cases can be linked to health insurance gaps.
“We’ve seen with COVID-19 that folks with preexisting conditions are very susceptible, and that often comes in populations that are lower income or historically underserved by the health care system in this country,” Melton said.
Opponents of the bill said it won’t accomplish the goals it intends to, instead leading to higher premiums for people who get their health insurance through their job.
In an interview with Steamboat Pilot & Today last month, Sen. Bob Rankin, a Republican from Carbondale who represents Moffat County in Denver, said if instituted, the bill would lead to hospitals and other providers being paid less for serving patients with the Colorado Option, which would push more costs on the private insurance market.
“This is just going to make that worse,” Rankin said. “And the state will take credit for lowering their health care costs, but not really. They are just shifting the cost.”
Jesse Mallory, Colorado director for Americans for Prosperity, a conservative political advocacy group funded by the Koch brothers, echoed that position in an op-ed submitted to the Pilot & Today.
Citing a study from the Washington D.C.-based business analysis firm FTI Consulting, Mallory argues that 37 counties in Colorado, including Routt, would see an increase in premiums for employer-based health insurance, because of cost shifting with a public option on the market.
“State leaders should work to improve our existing health care system, for example by ending technology restrictions on telehealth, fully authorizing nurse practitioners to prescribe medication and eliminating barriers on telepharmacy,” Mallory writes.
But Roberts said cost sharing is a “scare tactic” heard from the health care industry on most health care bills. Not only is there already statutory provisions already in place to prevent any potential cost sharing, the bill also adds more protection against it, allowing the state’s Division of Insurance to reject rates affected by cost sharing.
The plan requires carriers to create a standardized plan with 10% lower premiums in 2023 from where they are at this year. In 2024, the plan would need to have 20% lower premiums from 2021 levels. In 2025, and each year after that, premium increases on that plan must by limited to the consumer price index plus 1% from the previous year, according to the bill’s language.
If carriers fail to meet those benchmarks, the bill would then allow the state to create a nonprofit public entity that would operate as a carrier in the market and provide the Colorado Option.
The bill would only affect the individual and small group health insurance markets, which is where about 15% of Coloradans get their insurance, Roberts said. If phase two of the bill was put into place, they anticipate about half of those people would purchase the public option.
“Less than 10% of the state’s population, which certainly means this is not a takeover of health care in Colorado, but it is a targeted approach to the people that are most impacted by high health insurance costs,” Roberts said.