Rep. Roberts braces for public-option insurance battle
AVON — With a pitched battle brewing in the state legislature over his signature “public option” health insurance bill (HB19-1004) from last session, state Rep. Dylan Roberts, D-Avon, is urging calm before the coming storm.
Sponsored in the state senate last session by Vail Democrat Kerry Donovan, the bill directed state insurance regulators to draft a proposal for a state option insurance plan — a proposal that was vetted in stakeholder meetings around the state before being presented to the legislature earlier this month. Roberts is now working on a bill based on some version of that plan.
“The governor’s proposal is just that — a proposal,” Roberts said. “Now it’s back in the legislature’s hands, and Sen. Donovan and I and others — hopefully Rep. Marc Catlin (R-Montrose), who was on 1004 last year — are going to be crafting a bill that works for as many people as possible.
“We’re not just going to accept the proposal carte blanche and put it in a bill,” he added. “We’re doing a lot of work.”
Focused on the individual market
The executive branch proposal landed on a public option insurance plan run by private insurance companies but regulated by the state. Initially, it’s focused on people who buy insurance on the individual market — about 8% of the state and 3,000 people locally — and aren’t insured through their employer. But eventually, the plan may expand to include small businesses.
Roberts, who hopes to introduce the latest public-option bill by early to mid-February, is waiting on an actuarial analysis on how to protect rural and critical-access hospitals that are operating on lower profit margins than hospitals in more populous or affluent areas.
Hurting or helping rural hospitals?
One of the biggest criticisms of the public option plan coming from groups that launched a negative ad campaign in December is that rate-setting, or a state formula dictating how much the plan will reimburse hospitals, could further squeeze rural hospitals that don’t have high patient volume and also see a lot of Medicaid patients. Some hospitals could be forced to close, they say.
“I actually see this could be a win for rural hospitals because they’re going to get reimbursed at a higher level than they’re currently being reimbursed for those that are on this plan,” said Roberts, explaining some rural hospitals are currently being reimbursed 120% of Medicare rates. At the low end of the public option, reimbursements will be closer to 175% of Medicare, he added.
Chris Brown with the Common Sense Policy Roundtable, a Denver-based, nonprofit public policy think tank representing four business organizations, said he thinks limiting the amount insurance companies can retain to administer plans could actually hurt rural hospitals.
“Some of the primary concerns here are a large portion of the state, primarily in rural parts of Colorado — in wealthier mountain communities, lower-income mountain towns, out east and down south — already have issues with medical shortages, and those have to do with a lot of the market dynamics,” Brown said. “You have smaller populations, higher fixed costs and fewer people to spread those costs across. And it also costs more to attract doctors and nurses.”
Roberts counters that rural hospitals will also benefit from more people insured in general and adds that the current bill will include protections for hospitals operating on lower profit margins. But Brown still has his doubts.
“It’s hard to see how paying less, giving insurers less incentive to retain and compete, is going to in some way improve the access or quality of services and doctors and physicians in rural Colorado,” Brown said. “There are a lot of questions that still remain.”
While the Colorado Hospital Association opposes the public option, Roberts said he meets regularly will rural hospitals in his district and that most are keeping an open mind and waiting on the bill. The heated anti-public-option campaign, he said, is mostly coming from outside, national for-profit hospital and insurance groups worried about a national precedent.
With huge profits being reaped by those industries in recent years, Roberts said they’re pulling out all the stops to keep the state from moving toward more insurance choice, competition and lower patient costs. He blasted the notion that larger employers will wind up shouldering the costs of the public option.
“Any sort of argument about cost shift is just a scare tactic at this point to try and get people to be opposed to something before it even begins,” Roberts said, pointing to rate setting in place in Maryland for many years without cost-shifting. Maryland does not offer a public option.
Washington state is also in the process of setting up a public option, which was one of the original concepts behind the Affordable Care Act before federal lawmakers gave up on the idea. Roberts said the Colorado version will include protections against cost-shifting. He also said a major misconception is that the public option will be state-run insurance.
“The way we’re proposing it is running it through an already existing private insurance industry,” Roberts said. “That’s the most fiscally responsible way to do it. The state will never be on the hook for any large insurance liability and it’ll take a really limited general fund appropriation just to administer the program every year.”
CSPR’s Brown said in fact the state is acknowledging the risk of being an insurer.
“So they said, ‘Well, this is better because the state doesn’t have that risk,’ but they’re transferring that risk or they’re putting that risk on insurance companies,” Brown said, adding that could lead to big companies being unwilling to take those risks and actually reducing choice.
The whole idea behind a public option is increasing insurance choice in places like Eagle County — one of 22 counties in the state with just one ACA plan (Anthem). The public option bill will require companies selling insurance anywhere in Colorado to participate in the public option.
“I think it’s absolutely a legitimate question,” Brown said. “It has not been appropriately explored in any of the modeling, so it remains a very important question — the extent to which this will actually drive traditional insurers out of markets.”
Asked for an official comment on the public option in November, Vail Health CEO Will Cook praised the efforts of Roberts and Donovan but did not state an actual position — instead pointing to the hospital’s efforts to lower costs and help create the Mountain Healthcare Coalition.
That upcoming nonprofit co-op is also a project of the valley-wide chamber of commerce, the Vail Valley Partnership, whose president and CEO, Chris Romer, is opposed to the public option plan.
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Editor’s Note: This is part 1 of a 2-part series. Part 2 outlines non-surgical and surgical treatment options for hip injuries.