- Colorado state agencies unveiled a draft proposal for a public option this week as more states weigh various options attempting to lower healthcare costs for residents.
- The government expects Coloradans would save a minimum of 9% to 15% on monthly premiums if the plans launch in 2022 compared to individual market rates estimated for that year. Those savings stem from cuts to hospital reimbursement to 175% to 225% of Medicare rates. Currently, insurers selling plans in the Colorado individual market pay providers roughly 289% of Medicare.
- Provider groups immediately slammed the proposal, which could dig significantly into their bottom lines, as akin to government rate-setting. "By opening this public option to all Coloradans, there is the potential to significantly damage the health insurance market in our state," Chris Tholen, EVP of the Colorado Hospital Association, said in a statement.
The Colorado Division of Insurance, part of the state's Department of Regulatory Agencies and the Department of Health Care Policy & Financing, released the draft report Tuesday, sparking industry concern over the lower provider facility reimbursement rates.
"The way the plan is drafted, patients could choose to leave their current coverage to choose the public option, which could destabilize the current health insurance market," Tholen said, noting the CHA is "also skeptical about what appears to be the first step toward price control or rate setting as well as an intent to make provider participation mandatory."
The draft stems from House Bill 19-1004, which first-term Colorado Gov. Jared Polis, a Democrat, signed into law in May. The law, which was opposed by state Republicans, directs state agencies to study and recommend a public option plan that Colorado's legislature can consider next year.
Private insurers will administer the public option plans and contract with providers, overseen by state agencies, according to the draft report. The plans will be sold on the Connect for Health Colorado exchange and the off-exchange individual market starting in 2022 for all Colorado residents.
An actuarial analysis from firm Wakely estimates enrollment in the individual market will increase by 4,600 to 9,200 in the first year if the proposal is enacted, assuming new members are previously uninsured and without employer coverage. The coverage will provide all essential health benefits under the ACA and many ancillary services as well before consumers meet their deductible, like preventive, primary and behavioral healthcare.
All insurers in the state above a certain to-be-determined market share will be required to participate in the state option in a bid to increase competition. The Colorado Association of Health Plans told Healthcare Dive it was still reviewing the proposal to make sure it doesn't jeopardize the state's employer-sponsored health insurance marketplace.
The public plan proposal would also lift the medical-loss ratio threshold from 80% to 85%, mandating insurers spend 85 cents per each premium dollar on the medical care of their beneficiaries. Additionally, all rebates received on prescription drugs, or other manufacturer compensation to participating insurers, has to be used to reduce the price of individual policies, which could also lower costs for beneficiaries.
Beyond the estimated premium savings, Coloradans could see additional savings on out-of-pocket costs if the state decides to apply for a 1332 waiver — a move the state agencies recommended. If approved, the so-called "Innovation Waiver" under the Affordable Care Act would allow Colorado to use premium tax credit pass-through funding to lower out-of-pocket costs for consumers enrolled in the public option: an additional $69 to $133 million.
A final proposal is due Nov. 15, following an additional comment period on the draft report.
The proposal comes as red and blue states alike scramble to find ways to lower sharply increasing healthcare costs putting strain on their budgets and emptying consumers' pockets.
In Washington state earlier this year, Gov. Jay Inslee, a Democrat, and a majority blue state Legislature enacted a plan to have the state contract with private payers to offer inexpensive, government-regulated individual market plans for 2021 reimbursing providers no more than an average of 160% of Medicare.
Connecticut, Delaware, Illinois, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico and Oregon have also all signaled interest or are exploring in a Medicaid buy-in option, according to Princeton University's State Health & Value Strategies program.
Colorado's draft also comes as many high-profile Democratic presidential hopefuls tout support for a public option or a Medicare or Medicaid buy-in. Such plans are often lanced by critics for raising taxes or reducing choices for consumers. However, Colorado's plan will not be paid for or subsidized by taxpayer dollars, and the draft report stresses it is just another choice for Coloradans, along with other options for sale on the market.