Andrew Kenney and Bente Birkeland, Colorado Public Radio
After years of deliberation and months of legislative drama, Democratic lawmakers are making a final push to reduce health insurance premiums by giving the state government new power to tell insurance companies and hospitals how much they can charge consumers.
The “Colorado Option,” also known as the state’s “public option” bill, faces one of its most important tests in the state Senate, starting as soon as Tuesday. The reform legislation is a top priority for Gov. Jared Polis, and his office has pressed relentlessly to get it approved this year, but the bill’s fate has at times felt uncertain amid countless delays and rewrites.
“This has been multiple years in the works. So if this bill passes, it will be really a moment of elation,” said Adam Fox, deputy director of the Colorado Consumer Health Initiative, which has been involved in negotiations over the bill.
Colorado would be only the second state to create this specific new kind of state-regulated health insurance plan, after Washington. It would grant the state the power to regulate the cost of care at hospitals and doctor’s offices.
Passage has been far from guaranteed. The legislation — which is still being formulated, with a possible deal to exempt physicians from mandatory participation in the works — has made some Democrats nervous. That has led to sharp questions in hearings and in the halls of the Capitol. And the sponsors can only afford to lose two Democratic votes in the Senate, where they hold a narrower margin than in the House.
“I believe that we should make healthcare more accessible to people. I just don’t think it should be on the backs of doctors,” state Sen. Rhonda Fields, a Democrat, told CPR in an interview on Friday. She chairs the Senate’s Health and Human Services Committee.
“And I don’t think this is the right time or the right message to be sending to doctors and nurses and our front line healthcare professionals in the midst of COVID 19,” she added.
Democratic state Sen. Rachel Zenzinger expressed similar concerns, saying that she was especially worried about how the proposed law would force individual doctors to participate.
“I do have significant concerns, and so I’m hoping that perhaps there’s some more work to be done,” she said.
Monday evening, that work was still underway. Democratic state Sen. Kerry Donovan, who is sponsoring the bill, said she plans to introduce an amendment on the Senate floor that would effectively eliminate the mandate that physicians accept patients under the plan. It would remove enforcement, fines and reporting to regulatory boards for health care providers. The Colorado Medical Society said that if her amendment passes, their organization would move to neutral on the bill.
“You’re always going to be more successful when you can do it with folks, rather than to folks,” said Donovan of policy making. The compromises “should ultimately result in someone being able to go online and find a cheaper health care product that they can afford, that gives them good access.”
However, the last-minute negotiations produced a new complication, too: Insurers now oppose the bill. The Colorado Association of Health Plans said this week that the cost-reduction goals would be unrealistic, especially if doctors are exempted from the plan.
“This change will further decrease the probability that health plans are able to meet the arbitrary target (cost) reductions,” wrote CAHP executive director Amanda Massey in an email to CPR News.
Disarming the opposition from the health care industry
Over the last few months, the sponsors have disarmed some of the health care industry’s original opposition by making a series of dramatic changes, leading the influential Colorado Hospital Association to take a “neutral” position on the bill.
“I think this is untested policy, and that can be good or bad,” said Katherine Mulready, chief strategy officer for the hospital group. “Certainly we have some anxiety about the policy as it gets implemented but we will continue to maintain some hope.”
But the health industry also had to weigh the fact that Polis and Democrats hold power throughout state government. Facing a first-term governor and a party with a growing base of power, industry groups decided to stay at the table for hours-long negotiating sessions that stretched throughout this year.
A deal in Colorado could have national implications, according to Sabrina Corlette, founder of the Center on Health Insurance Reforms at Georgetown University.
“Although the public option conversation has largely died out in D.C., Colorado’s ability to strike a deal on this issue could breathe life into ongoing efforts in other states,” Corlette wrote in an email to CPR on Monday.
Washington state’s “public option” plan debuted during the pandemic to mixed reviews, and has delivered little impact so far, but the sponsors in Colorado say they’ve adjusted their bill to avoid those results.
Compromise after compromise turned a public option into a hybrid option
The bill originally proposed a true “public” insurance option that would be sold by the state government. Instead, the latest version would have private insurance companies selling a product that is heavily regulated by the state government.
The revised bill is far friendlier to the existing health care industry. It maintains the same essential structure of the market, instead of creating new competition for insurance companies. The change disappointed some progressives.
Rep. Dylan Roberts, a co-sponsor, said that states simply don’t have the resources to create new health insurance options on their own. He defended the hybrid model, saying that it would still get results.
“This is a huge step forward for our state. We’re going to be the first state in the country that’s going to have a standardized plan like this available in every county in the state,” he said. “Is it a complete overhaul of Colorado’s medical landscape? Of course not. But for the thousands of Coloradans who will now have a choice and have access to the security of health insurance, it’s going to mean a world of difference.”
The bill would force private insurance companies to sell a new plan across the state starting in 2023, and it would push them to reduce premiums 18 percent by 2025. In areas where the plan isn’t reaching those goals, the state’s insurance division could regulate the prices that doctors and hospitals in specific areas can charge under the plan — a controversial power that only two other states have embraced.
The new insurance option would be sold to individuals on the insurance exchange and to small businesses and other groups. About 15 percent of Coloradans are in that market or uninsured right now, according to CCHI.
It’s a relatively small group, but it’s one that faces some of the worst costs and frustrations. Besides lowering costs, the new insurance option would also try to lower consumers’ costs by setting certain requirements about deductibles and other out-of-pocket payments.
The need for a more affordable insurance option, explained
Bianey Bermudez of Sheridan said that a more affordable individual plan would be crucial for her. She had health benefits from her employer, the American Civil Liberties Union, only to lose them during the pandemic as she was switched to a contract position.
Plans on the exchange were $300 or more per month, which she couldn’t afford on a shaky income that could barely cover her basic needs. She then had to sacrifice freelance contracts in order to lower her income enough to qualify for Medicaid, she said.
“This is a real conversation that people are having in their homes, because they can’t afford health insurance and their employers aren’t giving health insurance coverage out. It created a lot of anger inside of me, and just really made me more passionate for bills like this one,” she said.
Fox, of CCHI, said that the plan’s approach to the individual market could help close health disparities, including on racial lines. The idea of equity has been central to the sponsors’ pitch.
“What we were really focused on in this legislation is ensuring that we are lowering health care costs, and bringing more affordable insurance premiums to Coloradans, but also insurance plans that are better quality and provide better access to care,” he said.
A research note by legislative staff found that the bill, if it works as intended, would reduce racial and geographical disparities by “increasing health insurance coverage and therefore reducing exposure to health-related financial risk for affected populations.”
At the same time, opponents of the plan have argued that the bill could hurt communities of color. Colorado’s Health Care Future, the opposition group, rallied some of the state’s major Black, Latino and Asian business groups for a press conference. They warned that new regulations would take away money from doctors and hospitals, making it harder to operate in rural and low-income areas, where facilities often have tight budgets or even lose money.
“Lawmakers must consider the larger implications that would further impair the most vulnerable population already traumatized by the impact of the world-wide pandemic,” said Pastor Del Phillips, chairman of the Colorado Black Leadership Coalition, in a press release.
The sponsors say they’ve made special considerations for those safety-net hospitals, including allowing higher payment rates for certain facilities. The law also does not guarantee that any hospital will face rate-setting regulations. Instead, it creates a public process that allows state administrators to set rates in areas where the Colorado option isn’t hitting its goals for costs and availability.
The proposal also faces widespread opposition among Republicans, who warn that it’s one more step toward socialized medicine and a destabilized health care market.
A make-or-break moment for doctors
More than any other factor, though, the most common reason for skepticism among Democrats is currently the opposition of doctors and other medical professionals. As initially drafted, the bill could force individual doctors and their physician groups to accept the insurance plan, and it could leave them with lower reimbursement rates than hospitals.
Donovan’s planned amendment as the legislative session winds down would change that, but for now, those details remain in flux and doctors remain wary.
“I may have to commute to other places to pay off my loans and cover my mortgage costs,” said Dr. Ricky Dahliwal, an emergency medicine and internal medicine physician and the Colorado chapter president of the American College of Emergency Physicians. “I know that I’m still making a good living, but all of these things add up.”
He worried that hospitals facing cost-reduction mandates would take it out of their staff’s checks, and that the bill would add new financial stress for physicians in general. He wanted the bill to include more guidelines for cost reductions, focusing on efficiency instead of raw savings.
Physicians, he said, had seemed to have the least leverage in the long negotiations over the bills. When they seemed to make progress with any lawmaker, he said, the governor’s office would push back in the opposite direction. But there were signs of progress as the bill’s final votes approached, with the governor’s team leading another round of negotiations, Dhaliwal added later.
They’ve been working feverishly on yet another deal that could be introduced just as the bill reaches its final test.