Reflections on Colorado's Public Option Proposal

The goal of Health Care for All Colorado (HCAC) is to achieve universal, affordable, accessible, undeniable and portable health care for all Coloradans.  HCAC supported HB19-1004, A Proposal for Implementing a Competitive State Option for More Affordable Health Care Coverage.  HB19-1004 requires the Colorado Department of Health Care Policy & Financing (HCPF) and the Division of Insurance (DOI) to develop and submit a proposal concerning the design, costs, benefits, and implementation of a state option for health care coverage to Colorado’s General Assembly by November 15, 2019.

HCAC appreciates attempts to increase affordability, but, after review of the final report and recommendations, has concluded that the proposal is flawed in many ways as it...

1. Forces insurance companies to offer policies they don’t design in places they don’t want to do business.

2. Fails to significantly reduce drug prices.

3. Allows insurance companies, if pinched for profits, to deploy very narrow provider networks (their usual recourse if otherwise constrained).

4. Benefits, however, favorably, only a small number of Coloradans – those currently in the private insurance “market” (7% of the population).

5. Anticipates that everybody currently on Medicare, Medicaid, CHIP, TRICARE, or insured through their employer will stay where they are, and therefore be unaffected by the Public Option.

6. Assumes that competition will lower prices. This never happens in health care.  Health economics upends classical economic theory.

7. Requires buy-in from both insurance companies and the federal government, neither of which may be forthcoming.

8. Counts on saving money by regulating drug company rebates. But this provision can be circumvented by insurance companies, PBMs, and drug companies figuring out other ways to pass money around among themselves that do involve rebates. 

9. Exempts Long Term Acute Care Hospitals (LTACHs) from formulae that determine hospital reimbursements. This can be manipulated by both hospitals and insurance companies. 

10. Proposes to reform how hospitals are paid. This measure, the Plan’s most ambitious, is not spelled out in any detail, and is admitted being still “under development.”

11. Permits hospitals who do not like their proposed reimbursement (think University of Colorado Hospital, Children’s Hospital) to decline to accept patients with the Public Option, depriving patients of some services unique to them.

12. Estimates administrative costs of one million dollars a year. Will it save patients that much?

13. Lauds the “public-private partnership” ideal. The biggest “PPP” in health care – Medicare Advantage - is widely regarded as a rip-off of the public by the private “partners.”

14. Requires significant additional state legislation, which may or may not be forthcoming.

HCAC thanks the sponsors of HB19-2019 for bringing this bill forward with the objective of providing more affordable health care coverage.  HCAC also appreciates the work of the HCPF and DOI in including stakeholders from across the state in developing the implementation proposal. 

However, the Colorado Public Option Plan, like every other proposal other than Medicare-For-All, revolves around premiums, profits, and markets, the very factors that make our current system so expensive and incomplete.  If it does not fail entirely (like the vaunted co-ops of Obamacare) it will make only a small dent in the expense, complexity, and cruelty of our current system.