Hospitals present a major roadblock to 'Medicare for All' push

The word “concession” was uttered more than a few times on Tuesday, when the House Health & Insurance Committee approved, on an 8-5 party-line vote, a substantially changed House Bill 1232, once known as the public option bill. The result is a state-designed health insurance plan with more governmental oversight.

But even with major concessions, the bill's road to the governor's desk doesn't promise to be easy.

A public option implies a government-run program, and up until Monday, that was the bill facing the committee for its Tuesday meeting. But sponsors Reps. Dylan Roberts, D-Eagle and Iman Jodeh, D-Aurora, rolled out a strike-below amendment that rewrote the bill, that allows the Commissioner of Insurance to set up a standardized health plan — to be known as the Colorado Option — that private market insurance carriers would offer and hospitals and doctors would accept.

Under the bill as amended, the healthcare industry is required to reduce premium costs by 6% per year, starting in 2023 and for three years, for a total of 18%. That takes into account medical inflation, Roberts said, so that reduction will actually be less than 6% per year. He pointed to the change from the original bill's 20% over two years to 18% over three years as a major concession.

The original bill’s second phase, which would be a quasi-governmental-run standardized plan, complete with price caps for hospital and doctor-provided services set by the Commissioner of Insurance, is gone. That was another concession identified by Roberts, although the standardized plan is now the bill's most prominent feature. 

The standardized plan would set rates for reimbursement of health services beginning at 155% of Medicare reimbursements and going up from there. Even that got more generous in Tuesday’s hearing, increasing the reimbursement rate for hospitals to 165%, with even higher rates for rural and essential access hospitals that are not part of hospital chains.

Tuesday’s hearing was for action only on the bill, meaning the 10-hour hearing that took place on April 9 wouldn’t be repeated. But committee Republicans were ready with more than an hour of questions on what the strike-below would do. That was led by House Minority Leader Hugh McKean, R-Loveland, who isn’t a regular member of the committee. But he wanted to take the lead on opposition to the bill, so he replaced Rep. Tonya Van Beber, R-Eaton, on Tuesday.

The strike-below changed some of the opposition to the bill but not from the majority of doctors, including those represented by the Colorado Medical Society; and specialty doctor organizations, such as those representing radiologists and anesthesiologists.

The amended bill still raises concerns for Democrats in the House who are also medical professionals. 

Rep. Yadira Caraveo, D-Thornton, a pediatrician, pointed out that Medicare reimbursement rates don’t cover pediatric services, so that still has to be figured out. She also had concerns about a $5,000 fine in the bill for anyone who refuses to accept the reimbursement rate or to participate in the standardized plan. Such a fine — perhaps for 15 days, or $75,000 — could put her practice out of business, she told the sponsors. 

Rep. Kyle Mullica, D-Northglenn, a registered nurse, also had misgivings although he voted to send the bill to its next step, the House Appropriations Committee. His concerns are tied to witness testimony, including from healthcare workers, that the bill’s requirement to reduce costs could lead to staff reductions.

“We need to get away from the idea that this is the first place to cut,” Mullica told the sponsors.

The strike-below gained ground with health insurers and hospitals. Roberts claimed during the hearing that the Colorado Association of Health Plans took a “monitor” position, meaning they'd keep an eye on it. However, CAHP told Colorado Politics later in the day they are still in an "amend" position. The Colorado Hospital Association moved from opposition to neutral with the amendments adopted Tuesday.

The bill as amended now allows carriers and providers to negotiate over the premium reduction targets and on an “adequate network,” defined as a “culturally responsive” network that reflects the diversity of enrollees on race, ethnicity, gender identity and sexual orientation.

If a carrier cannot achieve the premium reduction targets, they’ll be allowed to present evidence as to why in a hearing with the Division of Insurance.

McKean’s first questions touched on where the 155% reimbursement rate came from, and whether that was determined by an actuarial analysis. Roberts pointed to a 2019 law on more affordable health insurance, which paid for a study on appropriate reimbursement rates.

“It will be in statute” that the reimbursements rates in HB 1232 are actuarially sound. “I don’t know how more committed I could be to that,” he told McKean.

But that didn’t assuage McKean’s concerns, who said a 2019 study doesn’t take into account what happened to the healthcare industry during the pandemic.

“Nothing has changed in the medical world since 2019?” he asked, tongue in cheek. He also raised the concern around what happens to workers when those price reductions go into effect.

Roberts noted the later start time for the bill, now 2023, one more year than the original bill called for. The price reduction enforcement doesn’t start until 2024,” he said, adding that this would take into account the effect the pandemic has had on the industry.

The amended bill also calls for a third-party jobs report that would determine the bill’s impact on wages and hours of healthcare workers.

“More Coloradans will go to doctors and hospitals” and that higher demand will result in more jobs, he claimed.

Jodeh raised eyebrows when she added that Colorado hospitals “are the highest profiteers in the nation ... . It’s hard for me to find sympathy when bureaucrats and CEOs are making multi-million dollar paychecks. We need to prioritize who’s saving lives on front lines of pandemic and threatening the jobs of the people who have trained for decades to do this. This bill is not the place to do that."

McKean took umbrage at describing hospitals as “profiteers,” which he said is defined as someone who makes an unreasonable profit, especially during a time of emergency. “Caution in language would be extremely appropriate,” he told Jodeh, asking for proof of her claims.

Jodeh pointed to a January 2020 article in Colorado Politics  on hospital profits, and added that hospitals have been making record profits during the two years, especially during the pandemic.

Roberts explained that the bill's intent is to create a health insurance plan for the individual and group market that would cover those falling through the cracks, like Rep. Karen McCormick, D-Longmont, who told the sponsors about her struggles to find health insurance for herself, her husband and her employees.

“A lot of people will stay where they are” and can buy what’s already on the market, Roberts said. “This is for people who don’t have an affordable choice ... a narrowly tailored bill to solve an acute problem” for thousands, not hundreds of thousands, of Coloradans who don’t have insurance.

“It’s never been our intent to completely disrupt the health insurance market or the healthcare industry in Colorado,” he added. "We’re coming to this, from people whether in rural parts of Colorado or Aurora ... that have trouble accessing affordable health insurance.

"We certainly could have written a more expansive bill, but we didn’t because we wanted to target where this is a problem, and let the parts of the market working well or at least affordable stay where they are.”

Bill supporters outside the Capitol cheered its passage. 

Adam Fox, deputy director of the Colorado Consumer Health Initiative, said the bill  "makes fundamental advances to address racial health disparities that persist" and that have been worsened by the pandemic.

"We are controlling the underlying costs of care and holding the healthcare industry accountable to deliver lower costs and better access for the Coloradans who need it most," he said.

Colorado's Health Care Future, an industry-backed group, said in a statement Tuesday that the proposed “Standard Plan” will be offered as a qualified health plan and offers no new benefits beyond the other qualified health plans in the market, and also claimed the plan would make it harder to recruit and retain health care workers, aggravating an already existing staff shortage, especially in rural health care settings.

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