Last month the Colorado Department of Health Care Policy and Financing submitted to lawmakers a final proposal for a public option insurance program run by the state. Unfortunately, the report leaves significant questions unanswered that are critical to know the full impact of the plan. Legislators should slow down and get all the facts before going any further down a potentially disruptive road.
The public option proposal was initiated this spring by House Bill 1004, which tasked several agencies with evaluating the potential costs and impact to consumers of creating a state-operated plan.
While the legislation was well-intentioned, the final proposal relies on requirements that are likely to have damaging consequences. Those include having state bureaucrats set rates for providers while also mandating participation from insurance carriers and hospitals — which could exacerbate a shortage of doctors and nurses, force hospital closures and push out other insurers from the market.
Because the public option proposal has received minimal review or analysis, it is impossible to determine the full impact on access to care, employer-sponsored coverage and whether it will truly reduce costs. However, evidence suggests the unintended outcomes could be far-reaching and costly.
The Colorado Hospital Association notes that rate-setting reimbursements — the amount a hospital or care provider can charge for services — could produce $1.5 billion of cuts within five years. Those costs, it adds, are likely to be shifted to other insurance pools, like employer-sponsored plans, which cover more than half of Coloradans. As a result, many residents could be forced to pay more just to maintain the coverage they have now. A REMI Partnership study found the cost shift from rate-setting could kill 8,320 jobs and reduce state GDP by as much as $919 million. Those consequences would fall particularly hard on rural communities.
The report also fails to consider how other programs being implemented concurrently could affect the outcomes of a Colorado public option. Instead, the public option proposal relies on an actuarial analysis that the report’s authors acknowledge omits many important issues. Health care leaders have pointed out that the analysis depends on several faulty assumptions, which may overstate savings and gloss over consequences elsewhere in the market. The final report explains adding a public option may “ultimately require reliance on a variety of new funding sources such as federal waiver dollars, state funds, or other levers to realize cost savings for consumers.”
Health care affordability is not a new challenge. During our time in public office, we grappled with many of the same issues arising today. We fought then for solutions that got to the root of the problem — that addressed underlying costs of care and expanded access to care — and it’s equally imperative now that lawmakers continue to look for comprehensive, sustainable answers.
There is too much on the line with this Colorado public option proposal for policymakers to build the ship as they sail. We need to slow down and honestly weigh all the potential outcomes and long-term funding needs. We urge state lawmakers to ask for a full accounting to ensure adding a public option will not hurt most Coloradans to benefit only a few.
Rob Hernandez is a former Democratic state Senator from Denver County. He served in the Colorado State Legislature from 1991 – 2002. He earned his Master’s in Healthcare Leadership from the University of Denver. Scott McInnis is a former Republican U.S. Representative from Colorado’s 3rd District. He served in the U.S. Congress from 1993 – 2005.
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