Colorado wants to lower health care costs. But not everyone agrees the state should get involved.

FruitaDr. Korrey Klein wanted to make sure the final dose of 8,000 COVID-19 vaccines at his Fruita hospital’s last mass vaccination clinic didn’t go to waste. After some asking around, it went to a visitor at Colorado Canyons Hospital and Medical Center.

Eighty percent of patients at this small rural critical-access hospital, about 20 miles from Grand Junction and a service of the nonprofit Family Health West, are on Medicare and Medicaid. Because of COVID, the hospital lost money in 2020, said Klein, who is also the president and CEO of Family Health West. The year before, it made a 4% profit.

Already, insurance carriers don’t seem to have an incentive to negotiate better rates with rural hospitals, Klein said, because they have fewer patients. Plus, many don’t even carry their insurance products in rural areas.

But the public option bill in front of the Colorado Legislature makes Klein more worried that his hospital and other rural hospitals, which communities depend on and are already struggling, may not make it if insurance carriers shift the burden of their costs to hospitals by cutting back on reimbursements.

“(W)e, as Mesa County, have had some higher costs, on average, over the last five years,” he said. “We have really great Medicare utilization and really high costs.”

The push-pull between costs and access to quality care is something lawmakers are also dealing with as they try to balance cheaper insurance and better coverage for Coloradans against negotiations with hospitals, insurers and others in the health industry over the details of the legislation, which in this year’s iteration is a two-pronged approach.

Democrats also hope it will increase competition in rural counties; in 2020, 10 of Colorado’s 64 counties had just one insurance option on the Connect for Health Colorado marketplace.

The first phase of HB 21-1232 would create a standardized health plan for the individual and small-group market — making clear what will be covered and how much the deductibles cost — that insurers will be encouraged to offer on individuals and small-group marketplaces starting in 2023. The goal is to reduce premiums by 20% from this year’s costs by 2025. If that doesn’t happen, it triggers Phase Two: Colorado offering its own health insurance option.

But health care industry leaders say a lot has to change in the bill if the Democratic sponsors want them to get on board. They argue that they’ve already made efforts to reduce premiums, and that cutting them more would end up leading to lower quality of care and fewer providers.

National groups have spent thousands of dollars airing TV commercials against the bill and local groups have lobbied lawmakers throughout the process. And while Democrats run the statehouse, committee hearings have been delayed several times as sponsors want to get industry groups to “neutral” instead of opposed — even if that means making more compromises and potentially dropping the actual public option part.

“If I get to a place where I think the compromise would still lower insurance prices and make sure that everybody, no matter where they live, has access to this lower cost and higher quality product, then I would be willing to entertain eliminating Phase Two,” said bill sponsor Rep. Dylan Roberts, an Avon Democrat.

Republican House Minority Leader Hugh McKean of Loveland said “this is our hill to die on” in 2021. And GOP Rep. Mark Baisley of Roxborough Park, a ranking member of the House Health and Insurance Committee that is expected to hear the bill again next week, believes that no matter the changes, Republicans will still vote against it.

Baisley opposes the entire concept of government getting this involved in health care, especially becoming a provider. And he thinks the targets for reducing premiums are impossible.

“You can’t have low price and high quality and high access. … It’s a dream, and it’s inappropriate in a free-enterprise market that’s trying to do its best to deliver good service and product,” he said.

Affordability concerns

The Commonwealth Fund, which supports research and gives grants for health care issues, ranked Colorado 24th in the nation for health care access and affordability in 2020.

Colorado’s hospital profits rose faster than the national average, according to a Colorado Department of Health Care and Policy Financing report released last year. Hospital operating expenses in 2018 were also 14% higher than the national average, though the Colorado Hospital Association countered the data didn’t take into account things like more Medicare patients in an aging population. Now, the group says, COVID has increased the burden on hospitals.

About 15% of Coloradans buy insurance through the individual and small group marketplace — though bill sponsors say that number could increase if more uninsured Coloradans can afford to buy insurance. Rates on the individual market alone rose 80% between 2015 and 2019, according to the report.

Backers believe the public option could be most beneficial in rural, far-flung areas of the state, including the Western Slope, which has some of the steepest health care costs. The state’s reinsurance program, which limits how much insurance companies lose on high-cost claims, has led some premiums to drop, including on the Western Slope, but proponents of the public option bill say it’s not enough. And they want to increase compteition

Two small business owners in Carbondale say it’s time for lawmakers to take action.

Marble Distilling Co. co-owner Carey Shanks considers himself a “mission-driven capitalist.” He wants to make money — what business owner doesn’t? — but he’s also “hypersensitive to community in the balance,” focusing on sustainability efforts and employee well-being.

He and co-founder Connie Baker, his wife, pay above minimum wage for the industry, but Carbondale is not cheap. Assistant distiller Jeff Porterfield said he lives with five people and his share of rent is $900. He buys a high-deductible plan from the individual marketplace but wishes had had something better.

“I’d much rather have (insurance) than a raise in a job,” he said. “If I don’t have to pay the whole thing, that is almost like getting a raise.”

Eliot Poirier, the general manager of Marble Distilling, has worked in the restaurant industry for 22 years. In all that time, he said only one employer offered him health insurance — and he might have stayed longer at his other jobs if it were more widespread.

Shanks wants to offer his employees affordable health insurance, but can’t right now. He and Baker purchase health insurance on the exchange, paying about $1,200 a month.

The service industry in Carbondale is an employer’s market. You see it all along Main Street — “help wanted” signs hanging inside restaurant and bar windows as they reopen or expand capacity post-pandemic lockdown.

“There’s a lot of opportunity for us to grow our business,” Shanks said, “but you want to get the right people in the door, and then (get them to) stick around because that’s really hard to find.”

MountainFLOW eco-wax is a plant-based ski wax business, which has been around for about five years in Carbondale. Founder Peter Arlein said he offered both of his full-time employees health insurance coverage, but it was so expensive that neither of them signed up.

The cheapest plan for a single employee was about $400 to $500 a month, he said, and the company would have had to pay a share, increasing its costs during COVID when money was already tight.

“We were developing a new product, no one was really buying our existing products (because of ski resort shutdowns),” he said, “and so we were just kind of floating by on the money that we had in the bank.”

The arguments against

Good Business Colorado, an organization that represents “values-driven business owners” like Shanks and Arlein, is backing the bill, but larger business groups say it’s not the way to lower costs.

The Denver Metro Chamber of Commerce has 3,000 member businesses under its wing, and said in a statement that health care premiums are already decreasing in the individual market (overall 1.4% decrease in 2021, according to the Colorado Division of Insurance).

“Now is not the time to introduce sweeping and risky legislation that would increase costs for most Coloradans, reduce competition and consumer choice, and transfer power to an appointed member of the executive branch without appropriate legislative oversight,” the chamber wrote.

It’s a variation on the arguments against the bill coming from the Colorado Hospital Association and the Colorado Association of Health Plans, the latter of which represents insurance companies. They are still negotiating with the bill sponsors.

CAHP Executive Director Amanda Massey said it’s hard to pinpoint exactly what it would take for the group to support or be neutral on the bill.

“The industry needs to be able to compete,” she said. “We need to be able to have a level playing field in order to continue operating in Colorado.”

She acknowledged the higher costs of health care in rural areas, attributing that to fewer people and fewer providers. But she doesn’t believe this bill would help address that. Plus, she argued, if Phase Two comes to fruition, it would be difficult for a private insurance carrier to compete against a government-run option that “doesn’t play by the same rules.”

Not to mention, she said, the state can force providers and hospitals to take certain reimbursement rates or lose their licenses.

Joshua Ewing, the CHA’s vice president for legislative affairs, said there might not be anything that bill sponsors can do to get their full support, especially with the rate-reduction requirements that he said don’t take into account the total cost of care.

“The goal of improving affordability for consumers is laudable and one that we share, but how you impose the cuts and how significant the cuts matter,” especially as the system is still dealing with a global pandemic, Ewing said.

Both organizations believe forcing carriers and providers to accept a standardized health plan, as put forth in the first phase of the bill, would ultimately end up with the loss of some providers because they won’t be able to cover costs. Not all insurance carriers would be able to afford the hit that’ll come along with cutting rates, Massey said.

“Health insurance carriers in Colorado would have to make very difficult decisions about their viability and either the individual, individual or small group market here in Colorado,” Massey said.

The Colorado Hospital Association has warned of the potential of hospitals having to shut down or reduce their quality of care.

Costs vs. outcomes

Pitkin County resident Rachel Bechhoefer buys her health insurance in Denver because it’s too expensive where she lives. She’s had Type 1 diabetes since she was 7 years old, and understands just how much rising health care costs affects Coloradans.

“The public option bill is a start,” she said, but she wants lawmakers to go further. “We need to look at all of the coverages going up, not just premiums.”

Klein at the Fruita hospital recognizes something needs to be done, though the public option bill isn’t it, he said. Rather, he supports community-specific partnerships to reduce costs. In Summit County, the Peak Health Alliance, which hopes to expand, was created to help reduce premium costs.

But he wants to make sure that a reduction in costs doesn’t end up being a reduction in quality.

“I’m worried that if it all becomes about the last dollar that we’ll forget who’s important, and that’s the patient,” he said. “And we’ve shown in comprehensive primary care, that if you actually focus efforts in primary care, you actually lower hospital costs …

“I’m just really afraid for rural hospitals,” he added, “that if all we do is focus on the dollar, and they don’t care about outcomes in rural areas, then all they’ll do is starve rural Coloradans out of the market. They’ll starve hospitals out.”

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