State lawmakers seeking to rein in health care costs are facing formidable pushback from hospitals, foreshadowing the obstacles a Democratic president and Congress would also face if they try to follow through on bold promises for health reform.
As Democratic presidential candidates argue about the merits of “Medicare for All” versus a public option, states are pursuing the latter and getting hammered by hospitals and insurance companies that would stand to lose money under those changes.
The next battle will occur in Colorado, where the state’s Democratic governor and legislature are hoping to pass a public health plan that would demand lower rates from hospitals and eat into insurers’ profits.
“Needless to say, the hospital industry within the state has reacted fairly aggressively and hostilely to the proposal,” said Billy Wynne, a lobbyist who has worked with Colorado on developing a public option.
“I think that the political dynamics here are similar to Washington in the sense that you’re going to have very, very vehement and well-resourced industry opposition to anything that includes a government role in what are otherwise private commercial negotiations,” he added.
Colorado’s public option would be managed by private insurers, but the government would determine how much hospitals and providers get paid for their services.
Those rates would likely be less than what they receive now from commercial plans, like those offered by employers.
Colorado estimates the proposal would save patients as much as 15 percent on premiums, prompting opposition from insurers and hospitals that call the public option a form of government price setting.
The fight has attracted groups on both sides of the issue who are now descending on Colorado before the legislature convenes in January.
The Partnership for America’s Health Care Future — a coalition of hospital, provider and insurer trade groups formed last year to oppose Medicare for All and public option efforts in Congress — created an offshoot in Colorado this month, a sign of how intent the industry is on preventing the public option, even at the state level.
The offshoot — Colorado’s Health Care Future — has spent at least $130,000 on 558 TV and radio spots in the state railing against the proposal, according to Federal Communications Commission filings reviewed by The Hill.
When reached for comment, the group pointed to a recent press release arguing the public option would “increase costs” for Coloradans, hurt the state’s economy, destabilize the employer insurance market and force rural hospitals to close.
State Rep. Dylan Roberts (D), who is drafting a public option bill based off of the state’s framework, said the goal of his bill isn’t to shut down hospitals or eliminate private insurers but to cut down on excessive profits to reduce the costs of care. His plan also would carve out protections for small, rural hospitals.
While local hospitals and insurers have tried working with state lawmakers on the public option, national groups are the ones blasting it, Roberts said, adding that he’s already heard directly from the industry coalition about his proposal.
“It’s disappointing, but I’m not surprised that the multi-billion dollar hospital industry and insurance industry is lobbying against this because they don’t want any change,” Roberts said. “The status quo in health care is very powerful and even with this modest proposal for a public option in Colorado, we’re seeing what it is like to take on the status quo.”
The Partnership for America’s Health Care Future is a who’s who of the health care industry, with members like the American Hospital Association, the Federation of American Hospitals, PhRMA, America’s Health Insurance Plans and Blue Cross Blue Shield.
“I think there’s obviously a lot of weight from the health care industry that is going to be thrown against this, and that means it’s always an uphill battle to get something like this across the finish line,” said Adam Fox, director of strategic engagement for the Colorado Consumer Health Initiative, a consumer advocacy group that supports the public option.
“But I think the realization at the state level is that we need to do more.”
The escalating costs of health care have also put the issue front and center in the Democratic presidential primary.
While the passage of ObamaCare dropped uninsured rates to record lows, 27 million people are still uninsured and many more can’t afford the coverage they have.
Sen. Bernie Sanders (I-Vt.) popularized Medicare for All — a national health system proposal that would replace private insurance — in his 2016 presidential bid, but it has also brought the public option to the forefront as moderate Democrats look for an alternative.
Industry lobbyists were successful in gutting the public option from the original version of the Affordable Care Act that passed the House in 2009. And they are trying to make sure it doesn’t make a return.
If states start enacting public options, that would increase pressure on Congress to do the same, experts say.
“There’s a long history of the states demonstrating and testing ideas for the Congress to consider,” said Trish Riley, executive director of the National Academy for State Health Policy.
Several states passed laws similar to the Affordable Care Act before it became federal law in 2010, she noted.
So far, the industry has been mostly successful in stifling public option efforts in state legislatures. Connecticut lawmakers backed off a public option proposal in 2018 after Cigna — a major health insurance company — threatened to leave the state if it passed.
Washington state passed a public option this year, but it was watered down from its original form, satisfying industry requests to reimburse hospitals at higher rates and make their participation optional. As a result, premiums won’t drop as much as initially anticipated.
“From a legislating perspective, you’re sort of between a rock and a hard place. You either have to be willing to spend finite state resources to subsidize a public plan, or you have to upset politically powerful stakeholders like your hospital system, and neither of those options are particularly palatable to a lot of state legislators,” said Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University’s Health Policy Institute.
“In a lot of communities, they are the economic engine and the source of a lot of employment. I think you’d be hard-pressed to find a single state that doesn’t have a community that’s utterly and totally dependent on a local hospital for a majority of its jobs. That’s a challenge.”