Democratic lawmakers have a new message for the health care industry: bring down patient costs by 2024, or face competition from a government-controlled plan.
That's the gist of a "public option" bill some lawmakers plan to introduce in this year's legislative session.
“I think it’s important to bring back the public option this year, and to continue to work on lowering the cost of health care, no matter how we can do that, because it’s still one of the top issues I hear from the people that I represent,” said state Sen. Kerry Donovan, who will sponsor the bill alongside Rep. Dylan Roberts.
The proposal was set to be a top priority for Democrats last year, only to be derailed by the pandemic. This year, a new version will include some changes intended to ease opposition from the health care industry.
“We’ve gone back to the drawing board,” Roberts said. “I think we’ve focused on a solution that will allow for time to get our health care industry beyond the pandemic.”
Instead of imposing new mandates on hospital costs and insurance plans starting in 2022, as lawmakers envisioned last year, the new bill would assign voluntary goals to the industry in 2023 and 2024. If those targets aren't met, the state would create a new government-affiliated health plan in 2025.
Gov. Jared Polis made health care costs a central part of his message before the pandemic, explicitly calling out hospitals last year for their profits, and he’s signaled his early support for the new bill
“We know the pandemic and the associated economic challenges have worsened this reality for Colorado families. We have to save people money on health care and we will continue fighting to do so,” read a statement from the governor’s office.
The proposal gives the industry a chance to work collaboratively on health care affordability, the statement said. But it continued: “If they can't meet the challenge, the state will. We continue to support the passage of a meaningful proposal that lowers costs for Coloradans.”
So far, the revisions have met with a relatively warm reception from the Colorado Hospital Association.
“I think there’s a pivot from last year’s proposal, really, into a market-based solution,” said Katherine Mulready, vice president for legislative policy at CHA. It’s a “better starting point,” she said, though the details are still sketchy and the bill’s not yet been introduced.
Another major player, the Colorado Association of Health Plans, said in a statement that it was concerned about how the bill would work based on the short description we have received.”
The previous proposal would have required insurers to offer a state-regulated plan across Colorado, including limits on what hospitals can charge for care, starting in 2022.
The new bill gives insurers, care providers and others several years to find a way to reduce costs for customers. Insurers would be asked — but not required — to introduce a “Colorado health insurance option” with certain targets for costs and benefits, starting in 2023.
In the first two years, “we're going to give them a goal, but there’s no enforcement, no mandate,” Roberts said. “We’re open to how they think they can achieve this.”
But if the industry doesn’t bring costs down enough, the bill would have the state create a new quasi-governmental entity to provide insurance directly, starting in 2025, with funding from federal waivers.
“It’s a threat that you are actually going to hit their revenue,” said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University’s McCourt School of Public Policy.
Efforts underway across the U.S.
Colorado is one of a few states where lawmakers are trying to tame health costs with new government programs, and that effort is gaining steam again this year, according to Corlette.
“In many states, policymakers and advocates are energized by the opportunity to work more collaboratively with the Biden administration to build on the framework of the Affordable Care Act,” she said.
A few other states have tried ideas similar to what the Colorado lawmakers are proposing. Massachusetts, Rhode Island and Delaware have set annual targets for containing the growth of costs, she said. But it’s too early to measure the results of those efforts, Corlette said, and Massachusetts’ version may be too hard to enforce.
Washington state has gone further with its own “public option,” which is offered through private companies. The initial results have been disappointing, with the public option only available in about half the state’s counties, Corlette said.
Premiums for the public option have also come in higher than similar plans — but it’s too early to say whether that was the result of other state regulations or market conditions, Corlette said.
Fight or compromise?
In Colorado, the public option was set to become a costly legislative battle last year, with a dark-money nonprofit pouring more than $100,000 into advertisements against the proposal.
It’s not clear yet whether the fight will be so intense this year.
The same group, Colorado’s Health Care Future, released a report on Monday claiming that a state health option would “financially impact 78 percent of all Colorado hospitals,” arguing that the effect would most significantly impact access to care for Black, Latino and Native American patients.
But the Colorado Hospital Association appears to be holding its options open. “I wouldn’t say it’s something we’re enthusiastic about, but I think that we still have a lot of fact finding to do about what that would really look like,” Mulready said.
Roberts acknowledged that the delayed approach might draw criticism from those who want faster, stronger action, but he and Donovan argued that it was time for a compromise.
“I think everyone is in agreement that we need some time to get out of COVID, get out of this pandemic, both on a health front and on an economic front,” he said.
In a separate interview, Donovan said that she has been asking the industry for years to work collaboratively.
“This bill should be seen as an authentic attempt at compromise. I will be incredibly disappointed if once again, the health care industry can’t step up to the problem,” she said.
The legislature resumes its session next week, but the bill likely won’t be introduced until March, Roberts said.