The bill that would create the standardized health plan known as the Colorado Option survived a seven-hour hearing in its first Senate committee test Monday.

However, the state Senate Health and Human Services Committee then postponed action on House Bill 21-1232.

The bill would allow the Commissioner of Insurance to create a plan with price caps on services that insurance companies would offer and that doctors and hospitals would be mandated to accept. That plan, in the version heard by the Senate committee, would be offered in the individual and small group market, about 15% of the total insured market in Colorado.

The bill requires health insurers, doctors and hospitals to reduce the cost of health care, as reflected in insurance premiums, by 18% over a three-year period, in an effort to address healthcare inequities and lack of access in rural Colorado and for people of color.

What’s left for the committee is to discuss amendments, and several were hinted at during the hearing. One would take doctors out of the bill; another would remove the small group market. A third proposed amendment would add an insurance ombudsman in the Department of Healthcare Policy and Financing, who would act as a consumer advocate in rulemaking conducted by the Division of Insurance.

Senate President Pro tem Kerry Donovan, D-Vail, the Senate sponsor of HB 1232, told the committee Monday at the start of the hearing that healthcare costs became an issue for her early on in her legislative career. 

An early town hall was surreal, Donovan said. People weren’t sharing stories of their grandchildren; they were sharing stories about how they had to pay for healthcare rather than send their kids to college.

“I thought I would come to the Capitol and work on agricultural issues, water issues and ski resort issues,” Donovan told the committee. But the people in her district had different ideas; every door she knocked on in the seven counties of Senate District 5 had someone asking about broadband and about healthcare.

Over the last few years, lawmakers have worked to reduce healthcare costs, but the work isn’t done yet, Donovan said.

More than 80 witnesses signed up to testify for and against HB 1232 in Monday’s hearing.

“We must do better” to address historic inequities in healthcare, said Karla Gonzalez Garcia of Colorado Organization for Latina Opportunity and Reproductive Rights. Gonzalez Garcia said those in the Latino/a community have faced historic disparities with access to high quality healthcare. Families are struggling to make ends meet as a result of systemic barriers, she said, as well as experiencing unintended pregnancy, pregnancy and maternal health complications. They also often forego medical services needed to address chronic health conditions.

A standard plan as proposed by HB 1232 will close the gap in healthcare services for people of color, she told the committee.

Adam Alleman, owner of the Game Lounge on East Colfax and representing Good Business Colorado, a coalition of small businesses that have historically backed Democratic initiatives, said he would love to offer health insurance to his employees.

The free market by itself is incapable of addressing health care, Alleman said, “so long as profit is the driver of the industry. I have little hope that they will be able to bring the premiums down on their own.”

Everyone, regardless of position, acknowledged that healthcare costs are out of control. Opponents, however, said HB 1232 is not the answer.

And as was the case with the hearing last month in the House Health & Insurance Committee, doctors opposed to HB 1232 did much of the talking in opposition to the bill.

Some carried a warning: should HB 1232 become law, services to low-income people will be cut because doctors and hospitals will look there first when they have to cut costs.

Michael Cancro, chief strategy officer for UC Health, warned that if there are changes to the risk pool, hospitals and health plans will have to reduce utilization to make the math work. What that looks like, according to Cancro, is that while the populations in need of access will increase, his facility and others like it will not be able to accommodate them, and that’s a reduction in services.

Dr. Daniel Moon, an orthopedic surgeon who teaches at the Anschutz Medical Campus, said HB 1232 “will make Colorado unappealing to our future physicians that we desperately need.”

Some medical students like the idea of a state-run plan, but this bill makes them question whether they want to come back to Colorado to practice, he said, despite some of them coming from the same rural counties that need better healthcare access.

Moon’s biggest objection is the bill’s requirement of mandatory participation in the standardized plan that comes with price caps on services. All the leverage would be in the hands of the insurance companies, Moon told the committee.

Michael Ramseier, president of Kaiser Permanente in Colorado, pointed out that HB 1232 “is designed around an outdated fee-for-service model that rewards providers” rather than based on health outcomes, which he said is Kaiser’s model. “It completely disregards value-based care,” Ramseier told the committee. It will also incentivize more utilization and more unnecessary procedures, he added.

“There’s an axiom in medicine,” said Dr. David Downs, representing the 7,000-member Colorado Medical Society: “first diagnose, then treat. It’s a way to be sure you get to the root of a problem. This bill doesn’t do that. It’s more like watering the leaves on a dying tree rather than the roots of the tree.”

Fee-for-service payments often encourage delivery of low-value care, which is what’s in HB 1232, he said.

John Conklin, legal counsel for the medical society, also pointed out that the fines contained in HB 1232 for providers who refuse to participate in the standardized plan are unenforceable under the Colorado Medical Practice Act, as well as unconstitutional.

The bill also doesn’t consider cost drivers such as drug and supply costs, including equipment technology, which carries some of the highest costs in healthcare, according to Ryan Simpson, CEO of the Medical Center of Aurora.

The Colorado Medical Society remains opposed to the bill; the Colorado Hospital Association is neutral and the Colorado Association of Health Plans is in an amend position.

Sen. Sonya Jaquez Lewis, D-Longmont, a pharmacist, questioned several witnesses about how much money they contributed to the million-dollar ad buy from Colorado Health Care Future in opposition to the bill. However, none of those questioned said they had contributed to that ad buy.

Those in support of HB 1232 point to the lack of affordable health insurance for their families and employees, including those with exorbitant medical bills and high-cost health insurance.

Laura Packard is a stage four cancer survivor, and that should be a happy ending, she said. But the stack of bills and the high cost of care forces her to make difficult decisions. Her oncologist left it up to her about whether to get a scan to see if her cancer has come back. She can’t afford it.

“We shouldn’t be forced into these choices because of the ridiculous level of costs pushed on us from our insurance companies in the extremely profitable Metro Denver health system,” Packard said, adding that the system is broken and it needs to be fixed, and providers must be included in the solution.

Several medical professionals also testified in favor of the bill, including Dr. Qaisar Khan, a Westminster cardiologist. He talked of one patient who couldn’t afford blood thinners, despite the risk of a stroke, and it eventually happened. The patient wound up spending a week in the intensive care unit, and that will be paid for by the taxpayers one way or the other, Khan said.

Nurse Alison Fischer described a patient who goes to Mexico every time they need a thyroid lab test. Another is unable to afford $400 per month for insulin, she said.

“If the Colorado option passes, more of our patients would be able to purchase health insurance. The standardized plan would make it so that they can understand what is covered and better manage their care,” she said.

The prospect that the small group market could be amended out of the bill concerned Angelique Good Business Colorado and her members. To lawmakers she didn’t name, Espinoza said “you serve the people of Colorado, not UC Health.”

Her members need affordable health care, and nobody else is dealing with it, she told the committee.

“We pay a hefty price for systemic racism,” said Beth, who didn’t give a last name and who said she has had breast cancer twice, a form of breast cancer that affects young women and Black women. While white women are more likely to get this type of breast cancer, she said, black women are 40% more likely to die from it, directly related to the treatment they get.

She recently talked with her son, who’s afraid she’ll die of cancer.

“They got all the bad cells,” she said, sobbing, but there are moms out there who won’t be able to tell their kids that they’ll survive because of the color of their skin.

“We have to challenge the status quo,” said Rayna Hetlage of the Center for Health Progress; it’s a status quo that she said puts profits over people. “If we do not make a change, our Black and brown people will continue to die prematurely as they have during the COVID pandemic.”

The premium reduction savings that will come from HB 1232 will provide financial assistance to low-income Coloradans, she said, and the Colorado option will begin to address health inequities created by systemic racism, which she called unjust and costly.

Commissioner of Insurance Mike Conway faced tough questions from committee lawmakers, including a question from Sen. Barbara Kirkmeyer, R-Brighton, on what qualifies him to design a standardized health insurance plan.

“There’s a fair number of folks who would agree that the Division of Insurance has the expertise to do this work,” Conway replied. 

Sen. Joann Ginal, D-Fort Collins, noted that no other states have ever included healthcare providers in their public option plans and asked why Colorado’s plan would force the participation of healthcare providers.

Proponents of the bill said the decision is based on equity concerns, to ensure there would be enough specialists in the plan, Conway replied. Ginal also noted that Washington state’s public option plan has resulted in a 15% increase in their premiums rather than premium reductions. Conway said the ability of the state to step in if the market isn’t working, an accountability component, is not a feature of the Washington plan.

“We’ve learned the lesson from Washington,” Conway said.

As to the $5,000 annual fine for doctors who refuse to participate, Conway said that’s up to the board that regulates physicians, although witnesses said the fine is unenforceable. Ginal pointed out that the fine would apply to far more than physicians; it would affect physical therapists, psychologists and other healthcare providers. 

Sen. Rhonda Fields, D-Aurora, also recounted an opinion column from former Denver Mayor Wellington Webb, published in several newspapers, who said that “such a system will only serve to increase the disparities facing some of Colorado’s most vulnerable communities while massively increasing costs and concentrating too much power in Colorado’s insurance commissioner’s office.”

The portion of the bill that addresses that point is that the authority only kicks in if the market doesn’t do what it says it will do, which is to reduce costs, Conway said.

Donovan asked that the bill be laid over, stating that there is more compromise to come, but it will take a lot of work on all sides. No date was set but it could still be sometime this week.