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What a difference a year makes in Colorado's case for a public option health care plan

Markian Hawryluk, Kaiser Health News on

Published in Health & Fitness

DENVER — Before the pandemic, Colorado looked set to become the second state to pass what’s known as a “public option” health insurance plan, which would have forced hospitals that lawmakers said were raking in obscene profits to accept lower payments. But when COVID-19 struck, legislators hit pause.

Now, after a year of much public lionizing of doctors and other health professionals on the front lines of the COVID-19 fight, it’s a lot harder to make the case hospitals are fleecing patients.

“It is much more difficult now that we have this narrative of the health care heroes,” said Sarah McAfee, director of communications for the Center for Health Progress, a Denver-based health advocacy organization that pushed for the public option. “Part of this is separating the two: The people who are providing the health care are not the same as the corporations who are focused on the bottom line.”

Colorado legislators had tried to walk a tightrope, targeting their criticism toward the business side of the industry while continuing to praise front-line health workers and trying to get buy-in from all sides. But this week, Democratic legislators said they’d made a deal with the health industry to scrap the public option and instead mandate lower premiums for those buying coverage on the individual or small-group markets. The bill still must be approved.

Colorado’s compromise highlights the political tap dance likely to play out across the country as the pandemic changes the political discussion on health care costs. With states including Connecticut, Nevada and Oregon also considering public option plans this year, Colorado’s example may be a sign that major health care upheavals will be delayed for at least another year as hospitals, providers and insurers unite and push back together.

“Nationally, there’s little appetite to pursue policies that would potentially cut revenues for hospitals and other providers,” said Sabrina Corlette, research professor and co-director of the Center on Health Insurance Reforms at Georgetown University. “It’s very hard to do when the public sees these providers as true heroes.”

 

At the start of this year’s legislative session, Colorado Democrats had proposed giving the health industry four years to reduce health insurance premiums by 20%. Failure to meet that target would have triggered a state-designed public option plan in 2025 that would likely undercut the cost of private insurance plans. Proponents argued that as a nonprofit-run plan without the need for hefty spending for administration, marketing and profit, it could pass on significant savings to consumers. To lower premiums, insurers would have to pressure providers into taking lower payments for their services.

Instead, under the deal reached with the health industry this week, insurance plans would commit to reducing premiums by 18% over three years. If they fail to do so, insurers would have to justify their premiums and state officials would get some say over provider payment rates. Those rates would not dip below 165% of Medicare rates for hospitals, or 135% for other health providers. Hospitals had been pushing for a floor of 200% of Medicare, and physician groups are still negotiating with the bill sponsors to increase their minimum rates.

The state would design a standardized benefit plan that would limit the insurance companies’ ability to skimp on benefits or increase cost sharing to make up for the drop in premiums.

Democratic Rep. Dylan Roberts, the legislation’s lead sponsor, said the compromise would offer significant cost reductions for Coloradans, a benefit that was ultimately more important to him than how those savings were achieved.

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