The Polis administration Monday unveiled Colorado’s next big step in reducing the cost of health care, a proposal that would require private insurers to offer a state-run plan for those who pay for their own health insurance.
Dubbed the “State Option plan,” it stems from legislation passed by the 2019 General Assembly. The draft report released Monday is a collaboration between the Division of Insurance and the Department of Health Care Policy and Financing.
The draft report will be discussed Tuesday morning in the first of several public meetings, to be held at the Colorado History Center, 1200 N. Broadway, beginning at 8:30 a.m. A second meeting will take place at 1:30 p.m. Tuesday at the George Williams Pavilion, 801 Goodnight Avenue in Pueblo.
The state will now gather comments on the proposal, then deliver a final report to the legislature by Nov. 15.
The 196-page report says anyone could enroll in the state option plan, although those who currently qualify for Medicare, Medicaid, Tricare, VA and employer-sponsored coverage “may be better served by staying in those programs.”
The plan would be available both outside and through the state's public exchange for individual health coverage, which connects health insurers with those on the individual market who need insurance (and many of whom receive a federal subsidy to pay for it).
Insurers who offer plans in a major market and of a membership size yet to be determined would be required to offer the State Option, which the draft report says “will increase competition between plans and provide greater choice to more Coloradans.”
Insurers would be required to carry the financial risk and contract with health care providers.
The cost? The draft report claims the State Option will be between 9% and 18% cheaper than what will be offered in 2022.
The draft already raising concern among the state’s hospitals. The Colorado Hospital Association said in a statement Monday that the State Option could “significantly damage the health insurance market” in Colorado.
Chris Tholen, the CHA’s executive vice president, said the damage would stem from allowing anyone to leave their existing coverage to enroll in the State Option, which he said could destabilize the health insurance market.
The CHA also claimed the State Option may be the first step toward price control or rate setting, and they disagree with making provider participation mandatory.
The CHA supported House Bill 1004 during the legislative process last spring.
Grand Junction Chamber of Commerce President Diane Schwenke also had objections, but it’s because the public comment sessions for the plan won't include the Western Slope. She also said that releasing the plan on Monday with its first public comments due the following day is intended “to limit comment and review,” she said.
“It is ... galling that these hearings will once again take place on the Front Range with zero chance for Western Slope residents and businesses to be heard," she said. "Our communities have some of the highest health insurance costs in the state and any public option plan will no doubt affect those costs going forward Obviously our voices don’t matter. There is simply no other explanation."
The draft plan did win kudos from the Colorado Consumer Health Initiative, which represents 40 health organizations*. Executive Director Adela -Flores-Brennan said in a statement Monday that the State Option is intended to create “more robust competition in the insurance market, especially in those areas of the state where only one or two insurers are offering plans in the individual market.” The draft plan notes that some parts of the state have only one insurer available.
”The structure proposed in this initial plan will make use of a familiar infrastructure and add new insurance options that have additional affordability, transparency and accountability components," Flores-Brennan said. “We are pleased to see measures in the plan that will help the Public Option control underlying health care costs by limiting rates paid to certain providers.”
The plan also proposes offering a set of services pre-deductible, which would give consumers more certainty about costs, she noted.
“Colorado needs to do more to control the enormous costs consumers are paying for health care when hospitals, drug corporations, and insurers are raking in profits and excess revenues. This plan is a starting point to do just that," she added.
Public comments on the plan are due to the Division of Insurance or the Department of Health Care Policy and Financing by Oct. 25, although only HCPF's website currently provides a link to provide that public comment.
The State Option is the followup to the “reinsurance” plan that lawmakers and Gov. Jared Polis set up earlier this year. Under the plan, the state will help health insurers cover high cost claims.
The Polis administration claims such a plan will reduce health insurance premiums for those in the individual insurance market by an average of 18%, with greater reductions in premiums for those in rural Colorado. The reinsurance plan has already received federal approval.
The reinsurance program sunsets in 2021; the State Option plan would roll out in 2022, assuming the federal government grants a “state innovation waiver” to Colorado for the next step.
Correction: an earlier version misidentified the Colorado Consumer Health Initiative.