Colorado Is On The Verge Of Creating A Government-Backed Health Insurance Option. It Would Be The Nation’s Second

May 26, 2021
At least two Colorado state flags fly over the State Capitol on Friday, Aug. 14, 2020. At least two Colorado state flags fly over the State Capitol on Friday, Aug. 14, 2020. Kevin J. Beaty/Denverite
The Colorado State Capitol on Friday, Aug. 14, 2020.

A proposal to create a new government-backed insurance plan passed another significant hurdle as Democrats voted to advance the “Colorado Option” through the state Senate on Wednesday.

The approval means that the bill is nearly guaranteed to become law. Once it’s in effect, new health insurance plans would be offered on the individual and small-group markets. It would not directly affect employer-provided insurance.

The state House has already approved the legislation. But the latest milestone came after rapid-fire negotiations as the sponsors tried to balance the interests of patients, health insurers, hospitals and doctors. A new deal with one side, the doctors, prompted fresh outrage from the insurance companies — but it also may have cemented votes from wavering Democrats.

“One of the hallmarks of it has been constant compromise, and trying to achieve meaningful health care reform for our constituents, while making sure that the health care industry is at the table,” said state Sen. Kerry Donovan, a Democratic sponsor.

The bill passed the Senate on a 19-16 vote. It was largely along party lines, although Democratic state Sen. Rachel Zenzinger voted against the proposal. In a statement to CPR News, she said it was "structured in a way that it was likely to fail the very people it was designed to help." Two other Democrats who had expressed concerns, state Sens. Joann Ginal and Rhonda Fields, ultimately voted for the bill.

Throughout the week, lobbyists and lawmakers circled the halls of the building, trying to hammer out the final details of HB-1232. In the midst of the legislative drama, there was a delay: Democrats pushed one vote back by a couple hours because one of their members had to attend a preschool graduation.

Democrats claim that the bill could lower insurance premiums 15 percent by 2025, allowing more people to afford a new insurance plan that is also designed to lower out-of-pocket costs. The bill would force insurance companies to sell the Colorado plan across the state, and it would allow the state to regulate the price of medical services to achieve those savings. Instead of a true “public option,” it’s more like a public-private option.

The plan would be aimed at people buying insurance individually, and at small businesses. That's about 15 percent of the state’s population, including hundreds of thousands who don’t have insurance right now.

Republican critics warned that this might come with backlash, similar to the Affordable Care Act.

They argued that government regulation would only increase costs and disrupt the market — while opening the door for more extensive changes.

Expenses in health care are driven “because government is too involved in your health care decisions,” said state Sen. Chris Holbert, the Republican minority leader, in a speech on the chamber floor on Tuesday. He added a historical warning, referring to the backlash Democrats faced over the Affordable Care Act.

“It may take a year or two or three before people out there realize it, but eventually they will,” he said. (Reactions to the ACA helped Republicans regain power nationally in 2010; more recently, the federal law has become significantly more popular, polls show.)

State Sen. Bob Gardner said that the bill was handing undue authority to the state’s insurance commissioner. The bill would allow the commissioner to dictate the payment rates that hospitals and doctors receive under the insurance plan, in some cases.

Democrats had tried to placate some concerns by loosening the requirements that the bill puts on individual doctors. Amendments introduced on Tuesday would remove penalties for doctors who refuse to take patients on the Colorado option plan. That satisfied the state’s major doctors group, but Republicans said that the bill still included language that could require doctors to participate.

“It’s good for lawyers. It isn’t good for physicians,” Gardner said.

State Sen. Jim Smallwood, another Republican, said that the sponsors had worked with others on technical fixes to the bill, but he argued that there was a bigger philosophical question at stake.

“You will continue to hear, ‘We need more, we need more, we need more,’ until we have a system where the government controls everything and there are no direct premiums that are paid, and there is no cost sharing for services,” he said. That would ultimately mean worse quality and access to care, he argued.

The negotiations have produced a constantly shifting set of allies and opponents. 

The most recent change convinced the Colorado Medical Society to formally change their position on the legislation from wanting changes to being “neutral,” since the revisions eased the pressure for doctors to accept patients under the plan.

But the same changes pushed the Colorado Association of Health Plans to oppose the bill. CAHP, which represents insurance companies, said that giving more leeway to doctors would make it impossible to reduce premiums. 

Smallwood said that with no mandate for independent doctors and small groups to participate, the plan would struggle to get care for patients. The state of Washington has run into similar problems: Its “public option” is not widely available, in part because it doesn’t require providers to accept the plan.

All the while, Democrats knew they needed strong support from their caucus. If three of their senators decided to vote against the bill, it could fail.

Amid the last-minute negotiating, the sponsors agreed to reduce the savings target from 18 percent to 15 percent. Donovan said that the bill was meant to help the health care industry work better.

“Our folks that have chosen to work in the health care industry are important, critical and admirable members of our communities,” she said.

“But whether you’re a raft guide in Steamboat or you’re a farmer in Bennett, you’re a small-business owner in Denver — more access means that Coloradans can get the care they need, closer to where they live. Lower premiums means more dollars at the end of the month to put into a college savings account, or your retirement fund.”

After the final vote by the Senate, the bill heads back to the House, where lawmakers will consider the Senate’s amendment. Eventually, it will require a signature from Gov. Jared Polis, who has pushed for years for this type of legislation.

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