Every player in the health care industry and the vast majority of Coloradans agree that their health care costs are too high. That’s according to individuals who testified for an array of interest groups on HB20-1349, the Colorado Affordable Health Care Option.
That agreement doesn’t get us very far. Here’s a review of the seven hours of testimony on March 11 with an attempt to give an objective presentation of the various interests’ reasons for supporting or opposing the legislation.
First, the sponsors. House Democrats Dylan Roberts, of Avon, and Chris Kennedy, of Lakewood, sponsor the bill. Roberts and individual citizens who testified cited the impact of high health insurance premiums on the individual market. Some individuals pay $2,000 to $3,000/month in premiums, not including deductibles and co-pays.
Kennedy cited the $2.2 billion in profits reported by the state’s Department of Health Care Financing and Policy, mostly to the state’s five largest hospital groups. According to Kennedy, for-profit hospitals reached $1 billion and non-profits reached $1.2 billion in profits, with those dollars funding executive salaries, capital construction of new facilities including free-standing ER’s, and an increase in hospital system investments in other states.
The Colorado Cost Shift Analysis report examined why Colorado’s hospitals reached $2.2 billion in profits. Two drivers are in play: the hospital provider fee set up in 2009 to offset the financial burden of uncompensated hospital care, and cost shifting that sends the expense of uncompensated or undercompensated care to businesses and individuals who pay full freight for their insurance premiums. The analysis says that hospitals received more provider fees than expected and continued to cost shift to employers and individuals on insurance plans.
The Colorado Affordable Health Care Option will address insurance for the 7 percent of Coloradans currently uninsured and offer more choice for the approximately 300,000 individuals paying for private insurance through Colorado’s health care exchange. If the bill passes, small businesses will also be able to access the option in 2024.
Hospitals, rural, public and private, object to the bill as written. The bill sets a fee cap for hospital bills at a base of 155% of Medicare levels with add-ons. The bill does not clarify the exact Medicare fee that establishes the base. If a hospital exceeds the state’s average in serving Medicare and Medicaid patients, it will receive a 30 percent reimbursement increase. If a hospital is independent or a critical care facility, it will receive a 20 percent increase. If it’s both, it will receive a 40% increase. If a hospital is efficient in managing the underlying costs of health care, it can get a 40% increase.
The state’s insurance division, with its insurance commissioner, will administer the bill. If hospitals decide not to participate in the Affordable Health Care Option, the commissioner may fine hospitals or suspend their licenses. Hospitals that cannot remain open on reimbursement fees must seek an exemption from the commissioner.
The Colorado Hospital Association, Colorado Rural Health Coalition, UC Health, Anthem, Children’s Hospital, Health One, SCL, and Denver General testified against the bill. Their principal concern is the uncertainty of the reimbursement fees described in the legislation. Denver General and Colorado Rural Health Coalition specifically cite their discomfort with adequacy of reimbursement fees.
Rural hospitals may not serve above the state average of Medicare and Medicaid patients and they are not generally critical care facilities. Denver General, along with UC Health and Children’s Hospital, serve many Medicaid patients and high-risk patients that tend to be expensive. These hospitals and their supporters don’t understand the math underlying reimbursement fees or how the reimbursement add-ons will apply to their service delivery.
The Colorado College of American Physicians and the Colorado Academy of Family Physicians support the bill because increased coverage will support preventative care. Lower insurance premiums with comprehensive coverage will enable individuals to pay for drugs and seek health care when they need it.
Some in the business community object to the bill on grounds it undermines free enterprise and over-regulates the health care industry. The Denver Chamber and South Metro Chamber of Commerce, Mesa and Weld County commissioners, along with Colorado Concern, an association of chief executives in the state, oppose the legislation.
Good Business Colorado, a coalition of small business owners, supports the bill as it removes health insurance as a barrier to self-employment and entrepreneurism. Colin MacIntosh of Sheets and Giggles, a small but growing start-up, says that small businesses are at a competitive disadvantage for hiring employees due to the high cost of health insurance.
While opponents agreed that Colorado needs to reduce health care costs, they didn’t offer much at the hearings as to how to accomplish that goal. They were asked. Some opponents may support the bill with amendments that clarify how reimbursements will work and how the Insurance Commissioner’s powers will be constrained.
Something will happen in the public health care arena in Colorado soon. The bill passed the House Health and Insurance Committee on a 7-4, partisan vote. It would be most helpful if interest groups and legislators could settle on a solid plan that will ensure that Coloradans can purchase maximum health care coverage at what one citizen called a “fair price.”
Paula Noonan owns Colorado Capitol Watch, the state’s premier legislature tracking platform.