Hybrid public option unveiled

The long-awaited Colorado bill to create a variation of a public health insurance option — an effort that has garnered national attention and the ire of hospitals — was introduced Thursday afternoon, just before the midway point of the legislative session.

Although Democrats are preparing for a contentious fight about the proposal they’re calling the Colorado Option, they say they can pass it.

The bill would provide Coloradans who purchase insurance on the individual market another choice by the state through private insurance. It targets counties that have only one option, aiming to create competition and lower premiums. Hospitals would be required to participate, and it would begin by Jan. 1, 2022.

If everyone on the individual market opts to use the plan, that’s

about 8% of Coloradans, bill sponsors have said, with room for expansion. In some rural parts of the state, participation is expected to be higher.

The public-private insurance plan has drawn staunch opposition from local trade groups and national dark money campaigns since before the 2020 session began, with hundreds of thousands of dollars pouring into TV and print ads to fight against it. Sponsors, however, note public support for the proposal and say the plan is optional for Coloradans.

“What we’re introducing in the bill (Thursday) is much more reasonable than anything in a TV commercial,” said Democratic Rep. Dylan Roberts of Avon, a sponsor. “And it’s significantly pared down from the proposal that was put forward by the executive branch in November.”

Those revisions include creating an advisory board that will make decisions and has veto power, providing more flexibility for insurance provider participation — such as not requiring companies to offer the plan in places they don’t already serve — and providing extra protections for rural and independent hospitals.

Still, Senate Majority Leader Steve Fenberg, a Boulder Democrat, said: “We’re not doing this bill to please insurance companies or hospitals. We’re doing it to provide relief for everyday people.”

And he expects most, if not all, of Colorado’s Democratic lawmakers to be on board.

“This is clearly something that falls under the broad mainstream agenda,” said Fenberg, a co-sponsor on the bill. “This is not radical.”

The bill’s success or failure will hinge on lawmakers such as Rep. Brianna Titone, D-Arvada, who represent areas that are not strictly blue or red, and Titone wants to read it before taking a position.

“It’s really the rural areas that are in the most need of this,” she said. “I don’t know if it’s something we need around the whole state if it doesn’t lower costs.”

Titone said that although she thinks federal buy-in would be more effective, she recognizes Colorado isn’t the place to try to implement a single-payer model to reduce costs. The proposal is more of a hybrid public option because it doesn’t create a new plan run by the state.

The bill is likely to be amended further as lawmakers work toward a compromise and ensure that unintended consequences are avoided, Roberts said. And though the governor has been known to oppose bills that have not met his vision, Roberts said lawmakers have been working with the governor’s office on the proposal.

“I’m not going to make any amendments that would make it so that our two main goals of increasing competition and lowering costs were compromised,” he said. “And so, I think, if we deliver a bill to the governor’s desk that does those two things, that there’s no reason he wouldn’t sign it.”

Democratic lawmakers and the governor have made the problem of ballooning hospital costs a major focus this year, and the plan is one element of their mission to reduce those costs. The bill allows the state to issue a warning, impose a fine of up to $50,000 per day, or suspend, revoke, or impose conditions on the license of a hospital that doesn’t participate in the Colorado Option. The Colorado Hospital Association has been among the most vocal groups opposing the effort, particularly because the plan will set limits on reimbursement rates for services for those on the plan. The association says it would force them to reduce the quality of services or even shut down hospitals that can’t take the loss.

“Health care affordability is an issue that needs to be addressed,” Katherine Mulready, senior vice president and chief strategy officer of the association, said Thursday. “We don’t think this proposal is the solution.”

The Colorado Hospital Association instead put forward its own bill to address costs, sponsored by Republican Sen. Bob Rankin of Carbondale.

Angelina Salazar, CEO of the Western Healthcare Alliance, said the 30 rural Colorado organizations the alliance represents think lawmakers should instead focus on “coordinated care” to drive down costs and create a more healthy population of people.

Roberts and co-prime sponsor Sen. Kerry Donovan, D-Vail, said they wanted to make sure hospitals would get above their breakeven points, averaged at about 143% of Medicare rates, so they set the starting point for reimbursement at 155%. In some cases, hospitals would likely receive more than they were before, Roberts said.

He recognizes that it will be difficult to get the hospital association and some other trade groups on board.

“I think philosophically, they are going to be opposed to anything that changes the status quo,” Roberts said. “However, individual conversations with hospitals over the last week or so since the formula was released have been incredibly fruitful. And I think we might see throughout this process, individual hospitals peel off from their trade group and be more collaborative about the bill and some, I believe, will even get to the position of supporting this bill.”

The Small Business Majority supported the plan, and several small business owners shared stories at a news conference about rising costs of care and piling medical bills. The Colorado Chamber of Commerce hasn’t taken an official position but the chamber’s Loren Furman said “the proposal runs the risk of driving hospitals and insurers out of the state and increasing premiums for the majority of Coloradans on employer-sponsored health plans.”

Roberts said he hopes Republican lawmakers who have signed onto other bills to reduce health care costs, particularly in rural Colorado, will support the proposal.

Based on the bill draft he has seen, though, Sen. Jim Smallwood, R-Parker, said he is doubtful.

“It certainly makes people like me really nervous when that side of the aisle says, ‘Trust us, we’re going to work to lower (costs),’ when historically that hasn’t worked,” he said.

Some Republicans whose rural districts benefited from the reinsurance program passed last year supported it, but others who represent larger, more populated areas saw rate increases, Smallwood said.

Fenberg said much of the opposition is ideological and based on a fear that other states will follow Colorado’s path to reducing costs.

Executive director Jake Williams of Healthier Colorado said he believes the bill can pass this year. He said hospital and insurance costs have been “studied to death” and residents continue to struggle to pay for health care.

“Coloradans want action now, and I think we have the political support to do it,” he said.