At first glance, a government insurance option seems quite harmless, perhaps even smart. But in practice, the mechanics of the plan can be expensive – both in economic burdens and in impacts on Colorado’s health care system.
Governor Polis and state legislators are preparing to reintroduce a Colorado insurance option bill again in this session. While the bill’s sponsors were adamant that there will be “notable changes” in the bill from the last session, we are likely to see much of it.
The “new” bill is likely to impose a fee on hospitals. Many providers operate with narrow or even negative margins, and any further cuts can put them on edge. Colorado’s interconnected healthcare system is already projected to lose billions due to fighting the COVID-19 crisis.
For insurers, the terms prescribed by the state are likely to be financially unsustainable. The only recourse would be to exit the market, which would mean fewer options for consumers.
These results have significant consequences for residents. Asking doctors, nurses and hospitals to earn less for their services will make it more difficult to attract and retain qualified health professionals. This will force many health centers to cut services or, worse, to close completely. Over 40% of Colorado hospitals operate at a loss.
Likewise, if insurers leave the market, residents will have less coverage options. This would create fewer personalized plans and many individuals or families could be forced out of coverage if their operator determines that it is not economically viable to operate under strict state mandates.
Insurers will be forced to transfer costs to other insurance pools to effectively self-subsidize the state-operated program. One study found that 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 almost $ 920 million.
This does not bode well for residents, who are invited to accept the plan without intruding and simply hope for the best. In fact, the proposal by the chief architects of a public option, Kim Bimestefer and Michael Conway, said their plan to fill many of the missing pieces is to trust that healthcare providers and insurers will come up with solutions.
His approach to hoping for the best is not very comforting, especially considering the poor track record of state-operated insurance programs.
Many Colorado residents will remember HealthOP, the public insurance cooperative that was established here under the Affordable Care Act. After just a few years, the initiative failed because it was unable to keep up with costs. When it closed, some 83,000 residents were forced to look for new plans, and the state was left with $ 72 million IOU for 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 the appearance of an economy.
Colorado lawmakers need to assess what is already working to reduce costs and expand access to care.
For example, Colorado residents are saving almost 21% in premiums by purchasing individual health insurance through the state’s grant. In addition, our current programs are increasing access and offering more plan options to municipalities that previously had only one health insurance option. In just one year, the number of counties that had an insurance option and now have at least two or more has gone from 22 to just 10 mainly in rural Colorado.
While there is always room for improvement, it is important to recognize that the current system is progressing and a new government option will only hinder the work that is already being done.
– Kevin Ross is a former Weld County Commissioner and Mayor of Eaton, who owns and operates an insurance agency