In a Friday hearing, state lawmakers on the House Health and Insurance Committee heard nearly 10 hours of passionate testimony on perhaps the most controversial bill of the legislative session: a public option for health insurance.
House Bill 21-1232 — sponsored by Reps. Dylan Roberts of Avon and Iman Jodeh of Aurora, along with Sen. Kerry Donovan of Vail — represents the latest iteration of a key policy priority for Democrats in the Colorado General Assembly and governor’s office.
Just after 10 p.m., the committee voted to delay a vote on the bill until Tuesday to allow for more negotiations on possible amendments.
“The plan was to go ahead and vote on it (Friday), but there was significant progress made during the hearing,” said Rep. Susan Lontine, the Denver Democrat who chairs the House committee. She referred to conversations that took place Friday between the sponsors and some organizations representing health care providers.
The two-phase legislation would establish a possible path to the Colorado Option, envisioned as a lower-cost, nonprofit-managed health insurance plan sold on Colorado’s individual and small group markets. The Colorado Option would only become available starting in 2025 if private insurance carriers failed to meet voluntary targets in phase one of HB-1232.
Those targets would include reducing average premiums by 20% over two years for standardized individual and small group plans sold on the state’s exchange, Connect for Health Colorado. In 2024 and 2025, at least two carriers in each zip code would have to offer a standardized insurance plan on the exchange.
If carriers failed to meet those targets, which the bill’s opponents say are impossible to achieve, then phase two — the Colorado Option — would kick in starting in 2025. Three tiers of a public health insurance option would be carried by a new, quasi-governmental nonprofit entity called the Colorado Option Authority, which would be set up by the state and managed by a board of directors. Individual and small group plans carried by the authority would have to achieve a 20% cut in premiums as compared with 2021 rates.
Phase two of the bill would be contingent on the approval of a waiver from the U.S. Department of Health and Human Services, which would provide funding for the program by capturing federal government savings.
“It is important to note that the Authority is not a state entity, and the state is not responsible for paying for it,” Roberts said at Friday’s hearing. “The bill explicitly says that if we do not receive a federal waiver, then we cannot create this entity.”
Currently, Colorado residents can purchase individual and small-group coverage plans from private insurance carriers through Connect for Health Colorado, the state’s health insurance marketplace. Approximately 7% of Coloradans had an individual health insurance plan purchased through Connect for Health in 2019, while slightly more than half of Coloradans had insurance provided by their employer, according to a 2019 survey by the Colorado Health Institute.
Meanwhile, 6.5% of Coloradans did not have any health insurance.
People who get health insurance through a mid-sized or large employer would not be directly affected by the public option legislation. They could keep their private insurance, as would individuals and small employers that did not want to sign up for a Colorado Option plan.
Partisan divide over public option
Along with some groups representing hospitals and insurance companies, Republican lawmakers have come out in strong opposition to HB-1232. They say it would put hospitals out of business and raise costs for people who don’t buy plans on the exchange.
But Colorado Gov. Jared Polis, a Democrat who made reducing health care costs a key campaign priority, and Democratic lawmakers in the House and Senate seem united in support of HB-1232. They argue it would help more people access health care and improve outcomes for people of color, who are disproportionately uninsured.
“This plan will be required to include benefits that increase health equity and reduce health disparities,” such as prenatal care, Jodeh said at the committee hearing Friday. She referred to the standardized plan that would be offered on the state’s exchange in both phases of the legislation.
The partisan divide was apparent during the hearing.
Republicans on the Health and Insurance Committee fired off a warning shot Thursday by requesting that state Insurance Commissioner Michael Conway and other agency representatives only testify on HB-1232 under oath.
“This bill, as drafted, will have a far-reaching impact on Colorado’s healthcare system while potentially creating unintended consequences for both healthcare providers and patients who seek care,” the lawmakers wrote in a letter to Lontine, the Denver Democrat who chairs the committee. “By having sworn testimony provided to our committee, our members would be better positioned to discover the full truth of the bill’s implications should it become law.”
Lontine told Newsline she refused the request because neither she nor the Legislature’s legal staff was aware of any precedent for having witnesses provide testimony on a bill under oath.
The request from House Republicans, she said, “begs the question: Are they insinuating everyone who comes before us is untruthful?”
During the hearing, Republicans expressed skepticism that the public option would improve access to care and lower costs without costing the state more taxpayer money than the savings that could be captured with the federal waiver.
And they emphasized the challenge for hospitals, saying they’d be the ones burdened by having to cut premium costs.
“I understand that there’s this proving period … there’s a forcing of the — or a challenge at the least — of the industry now to prove out the theory that they could operate at high quality, high availability and pricing 20% lower or more,” said Rep. Mark Baisley, a Roxborough Park Republican. “That’s a tall order to ask of an industry that’s been around for a long time that’s already struggling through a mountain of government regulations.”
Amendments aim to placate providers in private practice
The introduced version of HB-1232 would require all providers to accept Colorado Option plans — that is, if private carriers had not met the reduction targets in the first two years, and the Colorado Option had gone into effect.
But some mental health providers who serve Medicaid patients were concerned about that provision of the bill, which would have essentially made it an administrative crime for them to deny people on the Colorado Option plan. During the hearing, Roberts said he planned to introduce an amendment that would require only hospitals and not individual providers to accept the Colorado Option.
Andrew Rose, a licensed professional counselor and director of Boulder Emotional Wellness, had been worried about the unamended bill’s mandate for providers to accept Colorado Option patients. He said it would force Medicaid providers like himself to take on new patients at a time when they’re already stretched thin.
Rose — who serves as advocacy director for the Colorado Medicaid Behavioral Health Network — also told Newsline he was concerned the Colorado Option would not pay well enough for mental health and substance use providers.
Currently, the bill does not include any language about minimum reimbursement rates. The Colorado Option fee schedule would have to achieve a 20% cut in monthly premiums as compared with 2021 premiums, and providers would have to accept the fee schedule as established by the state’s insurance commissioner.
Given changes to Medicaid reimbursement rates for behavioral health, the lack of specifics worries Rose.
“Providers were convinced to work for Medicaid in 2018 when reimbursement rates were 100% of the Medicaid fee schedule,” Rose said in a March 30 interview. “After a year, the rate was dropped to 80%. So providers took a 20% cut, and many providers left the system at the time.”
Rose described that as a “bait and switch” that makes him wary of what could happen with Colorado Option reimbursement rates. Mental health providers — which are reimbursed differently from primary care providers in Colorado’s Medicaid system — can’t support the bill without specific language describing the rate-setting process, he told Newsline.
Colorado would be second state with public option
One other state, Washington, currently offers a public option health insurance plan, according to a demographic analysis of HB-1232 written by nonpartisan Legislative Council Staff and released April 8.
Under a measure passed in 2019, Washington state established a process for the Washington Health Care Authority to contract with private health insurance carriers to offer plans on the state’s exchange starting this year.
Providers giving care to people with Washington’s public-option insurance plans can be reimbursed at up to 160% of Medicare rates, which are generally higher than Medicaid rates. The Washington public option also includes minimum reimbursement rates for primary care providers and critical access hospitals in rural areas.
“Reimbursement caps may be waived if carriers are unable to form a provider network to meet access standards or if carriers are able to reduce premiums by 10 percent from the previous plan year by other means,” legislative staff wrote of Washington’s system.
The demographic analysis noted that HB-1232 could help reduce health disparities for certain groups. It may do that by reducing premium costs for people who purchase plans on the individual market, who are disproportionately women, people living in rural areas and low-income Coloradans. Additionally, the legislation could make it easier for uninsured Coloradans — who are disproportionately Hispanic, non-white, rural and low-income — to purchase insurance plans.
However, legislative staff also pointed out that if health care providers responded to the legislation by reducing health care services or closing hospitals, this “may increase existing disparities depending on the demographic make-up of a provider’s service region.”
“Potential impacts depend on how the bill is implemented and cannot be determined at this time,” the analysis continued.
Karla Gonzales Garcia, policy director for the Colorado Organization for Latina Opportunity and Reproductive Rights, noted that the bill would improve access to health insurance for undocumented people.
“We can and we must do better, and this is a big step forward,” she testified at the hearing, adding that “no one should be forced to choose between rent and groceries, and getting services.”