At first blush, a government insurance option seems harmless enough, perhaps even smart. But, in practice, the mechanics of the plan could prove costly — both in economic burdens and impacts on Colorado’s health care system.
Governor Polis and state lawmakers are gearing up to reintroduce a Colorado insurance option bill again this session. While the bill sponsors have been adamant that there will be “notable changes” from last session’s bill, it’s likely we will see much of the same.
The “new” bill will most likely impose rate setting on hospitals. Many providers operate on thin or even negative margins, and any further cuts could set them over the edge. Colorado’s interconnected health care system is already projected to lose billions due to battling the COVID-19 crisis.
For insurers, the state-prescribed terms are likely to be financially untenable. The only recourse would be to exit the market, which would mean fewer choices for consumers.
Those outcomes carry significant consequences for residents. Asking doctors, nurses and hospitals to earn less for their services will make it harder to attract and retain qualified health care workers. It will force many care centers to cut services or, worse, close altogether. More than 40% of Colorado hospitals run at a loss.
Likewise, if insurers exit the market, residents will have fewer coverage options. That would create fewer personalized plans, and many individuals or families could be forced out of their coverage if their carrier determines it is not economically feasible to operate under the State’s rigid mandates.
Insurers will be forced to shift costs to other insurance pools to effectively self-subsidize the state-operated program. A study found conditions comparable to those offered by the proposal could create a 5% cost increase in the employer-sponsored market, which could kill up to 8,320 jobs and cut GDP by nearly $920 million.
That does not bode well for residents, who are asked to accept the plan without getting under the hood and simply hope for the best. In fact, the proposal for a public option’s chief architects, Kim Bimestefer and Michael Conway, have said that their plan for filling in many of the missing pieces is to trust that health care providers and insurers will come up with solutions.
Their hope-for-the-best approach is not very comforting, especially considering the poor track record of state-operated insurance programs.
Many Coloradans will remember HealthOP, the public insurance co-op that was established here under the Affordable Care Act. After only a few years the initiative failed because it could not keep up with costs. When it was shut down, about 83,000 residents were forced to look for new plans, and the state was left with a $72 million IOU to the federal government.
Real solutions, however, will require a comprehensive and collaborative approach that brings all parties to the table — not unilateral government controls that simply create appearances of savings.
Colorado lawmakers need to evaluate what is already working to drive down the costs and expand access to care.
For instance, Coloradans are saving almost 21% on premiums when buying individual health insurance through the state’s exchange. Additionally, our current programs are increasing access and offering more plan choice for counties that previously only had one health insurance option. In only one year, the number of counties that had one insurance option that now have at least two or more went from 22 to only 10 in mainly rural areas on Colorado.
While there’s always room to improve, it is important we acknowledge the current system is making progress and a new government option will only impede on the work already being done.
— Kevin Ross is a former Weld County Commissioner and mayor of Eaton who owns and operates an insurance agency
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January 27, 2021 at 09:32PM
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