ICYMI: Colorado’s State Government Option Could ‘Harm Access to Health Care’

Jan 8, 2020

COLORADO – As Colorado lawmakers weigh a proposal to implement a state government insurance option, new evidence finds the plan would have “sweeping negative consequences” on Coloradans’ access to health care, including “cost shifting, elimination of services and, in some cases, hospital closures.” Joey Bunch reports for Colorado Politics that the proposal’s “price caps and other measures could harm access to health care and cost jobs in the industry,” yet the plan “does little to reduce the number of uninsured people in Colorado.

“The day before the General Assembly convenes, a study by a consulting firm for an advocacy organization indicates a public option insurance program might not be good solution… The study released Tuesday by FTI Consulting Inc. and Colorado’s Health Care Future claims the proposal would have ‘sweeping negative consequences,’ including putting up to 23 rural hospitals at risk and 83% of Colorado hospitals would see a reduction in reimbursements.

The study, which was conducted by FTI Consulting for Colorado’s Health Care Future, concludes that the proposed public option “could ultimately harm the very population the Colorado state option proposal aims to assist.” The findings add to a mounting body of evidence that show the adverse impacts of a state government option would far outweigh the marginal benefits. The report finds:

  • Within the first years of implementation, Colorado’s public option would cut reimbursements to health care providers by $100 million annually. Over ten years, “hospital losses would exceed $1 billion.
  • 83% of Colorado hospitals would see a reduction in payments under the Colorado state government option. The effect would be “especially pronounced” in areas “where marketplace enrollment is high and hospital access is already limited,” leading “hospitals to cut services, lay off staff or close facilities.
  • One-third of Colorado’s rural hospitals operate at a loss. Up to 23 rural hospitals, serving thousands of Coloradans, could be at increased risk of closure under the proposal as a result of reduced reimbursements.
  • The public option would reduce the state’s uninsured rate by just 0.1 percentage points. In contrast, enrolling all those eligible for Medicaid under current law could reduce the number of uninsured in Colorado by 25%. Addressing the “subsidy cliff” would more than triple the projected increase under the state government option.
  • By lowering the state’s subsidy benchmark the public option would effectively increase the cost of private coverage for 80% of Colorado marketplace enrollees eligible for Advance Premium Tax Credits.
  • The public option would incite an “exodus from the private market,” causing “most private carriers to exit the state’s individual market entirely while failing to achieve a meaningful reduction in the state’s uninsured rate.

The study reaffirms concerns from leaders across the state, including elected officials from both sides of the political aisle who voiced apprehension when the final state government option proposal was presented to the Joint Budget Committee last month. During the pre-session briefing, State Senator Rachel Zenzinger (D-SD19), acknowledged the onerous impact on providers:

“It seems to me like the proposal is more focused on hospitals, carrying really the burden here of making sure that this plan can get off the ground… I would be interested in hearing, are there ways that we are trying to balance that a little bit with other ideas so that it’s not all landing on that one to make the plan go?”

The Colorado Hospital Association previously predicted that the state government option would “increase health insurance costs for more than half of Coloradans” as a result of cost-shifting to offset an estimated $1.5 billion of provider rate cuts. An analysis by the REMI Partnership found the proposed system would “exacerbate” a shortage of health care workers and could result in a loss of more than 8,300 jobs and $919 in state GDP as a result of higher costs on employer-sponsored insurance plans.

“Multiple studies have shown the public option would be a disaster, costing thousands of healthcare jobs here in Colorado and pushing some hospitals — especially those in rural areas — to shutter,” Kevin Ross, Mayor of Eaton, wrote in November.

Kristen Strohm, president and CEO of the Common Sense Policy Roundtable, was equally blunt in her assessment of the proposal: “The public option falls into the category of bad policy. It’s guided by good intentions, but it is not… The public option will wreck [Colorado’s] health insurance industry.”

As lawmakers start into the legislative session, the Colorado Springs Gazette offers this word of advice: “Before imposing [the state government option] on Colorado, legislators should consider whether most consumers want or trust it… A whopping 73%, including 61% of Democrats, prefer improving the system we have instead of creating a state option. Only 34% say they trust the state government to design an effective plan. Nearly 80% are ‘unwilling’ to pay extra for their health care to help fund a government plan.”