It just wasn’t supposed to be this hard.
At the beginning of the legislative session, state Sen. Kerry Donovan, a Vail Democrat whose district is home to some of the highest health insurance prices in the country, introduced a bill with a simple, little pilot program included. The experiment would allow 100 people in Garfield and Eagle counties to buy into the medical coverage that state employees receive.
The idea was that, by allowing access to a larger insurance pool, people could find cheaper coverage. But there was also a bigger goal in mind. This would be a tentative first test of one of the holy grails of Democratic health policy going all the way back to the earliest debates over the Affordable Care Act: the “public option.”
In political terms, a public option sits on the spectrum halfway between the system we’ve got now and the single-payer plans being championed by liberals like U.S. Sen. Bernie Sanders of Vermont. It’s a government-run, government-backed health plan that competes in the free market against private insurance companies.
And so Donovan’s pilot program was an attempt to gather some data on what that might look like. Who might be most inclined to sign up? How much would it cost to insure them?
That data would come in handy in conjunction with another bill this session that instructs state regulators to draw up still-amorphous plans for a statewide public option.
But then the figures to make the test work came back. And, at a hearing last month, Donovan reluctantly pulled the pilot program from her bill.
To her, this shows just how screwed up the health care system is.
“It was an interesting commentary that we got some of the smartest people in the state in a room to figure out insurance for 100 people, and we couldn’t make the numbers pencil,” she said.
Why the pilot program was scrapped
The challenges facing the test were numerous.
First was the cost to the people buying into the state plans. Because the state government wouldn’t be subsidizing those rates — the way employers do for their employees’ coverage — people would have had to pay more than $1,000 a month for a plan covering just themselves or more than $2,000 a month for a plan covering a family of four, according to a fiscal analysis. That may be a little better than what folks in Eagle and Garfield counties get now but not by much.
But Donovan said there were concerns that the pilot program would be most likely to attract people with complex medical needs who were unhappy with their current insurance. Those individuals would be more costly to insure, meaning either insurers or doctors could end up losing money because of the pilot. Donovan said it would be important for the state to make up for those losses, but that hit its own roadblock because the current legislature can’t (metaphorically) write a post-dated check that a future legislature is required to pay.
So where does this leave the goal of a public option?
“It’s a hiccup, not a setback,” Donovan said.
The quest for a public option
To get a sense of the history behind this hiccup, let’s travel a decade back in time to when lawmakers in Washington, D.C., were furiously negotiating the details of the Affordable Care Act — a.k.a. Obamacare.
A version of the act that passed the U.S. House that year had a public option in it, and President Barack Obama said he was in support. But — rather infamously in progressive health policy circles — Democrats came up one vote short in the U.S. Senate. The only way to get Sen. Joseph Lieberman of Connecticut to vote for the ACA was to scrap the public option. So out it went.
Democrats have been trying to replace it almost ever since.
In recent years, there have been at least six proposals federally — including Colorado U.S. Sen. Michael Bennet’s Medicare-X — to create some sort of public option or program to buy into government insurance. Public option bills have set state capitols alight across the country this year following Democratic election wins.
Because of the way that exorbitant insurance premiums galvanize opinion in Colorado’s mountain communities, both public option bills at the statehouse this year — Donovan’s pilot program bill and the broader bill to eventually create a statewide public option — have bipartisan support.
But, now that the pilot program is dead, what the bills don’t have are specifics to understand exactly how a public option would work in Colorado or what its consequences would be.
Around the state Capitol, the bills are sometimes called “the fours.”
Donovan’s bill, Senate Bill 4, now just contains language creating a better legal framework for the kinds of health insurance alliances that communities, including those in Summit County, are looking to form.
The other bill, House Bill 1004, is where all the public option action is at. That bill, brought by Rep. Dylan Roberts, D-Avon, creates a process to put a bunch of people in a room and have them hash out a plan for a public option. Once the plan is in place, state regulators are instructed to start implementing it, with the goal of the public option being available by late 2020.
But, right now, it’s unknown how much the plan will cost, where it will be offered, who will be eligible, whether people will be able to get subsidies to afford coverage, what it will pay doctors and hospitals, how many doctors and hospitals will accept it, and who will administer it.
“We’re going to let the process be the process on that one and see where it takes us,” said Colorado Insurance Commissioner Michael Conway, one of the people charged with creating the plan.
Donovan said the demise of her pilot will put more importance on the actuarial projections developed during the process to make sure that the state’s plan will be sustainable.
But a representative for insurance companies in Colorado cautioned lawmakers early on that the analysis would likely turn up more roadblocks for a public option — namely, that it could be really hard to offer cheaper coverage than what is already out there.
The state Division of Insurance’s report on health insurance costs in 2017 showed that insurers in almost all segments of the market that year spent more in their major medical plans than they took in in premiums. Testifying at House Bill 1004’s first hearing in January and representing the Colorado Association of Health Plans, Marc Reece said the public option can’t work unless lawmakers address the underlying costs of medical services.
“Insurers are losing money,” Reece said. “I think that’s probably going to come up as one of the primary reasons there aren’t more options in the mountain communities.”
Donovan said other reforms at the Capitol this session — especially a bill that tries to reduce insurance prices by helping companies with their highest-cost claims — will create breathing room for insurers and allow them to compete with a public option, to the benefit of all consumers.
Roberts questioned how much insurers are really suffering and said a public option could run more efficiently because it wouldn’t need to turn a profit.
“They’re a private business,” he said of the state’s current insurers. “They wouldn’t be playing in that market if they didn’t see some benefit.”
So, overall, the two bill sponsors are still optimistic, despite the long history that precedes their efforts.
“We’re feeling really confident about it,” Roberts said. “We’re feeling confident about getting it all the way through.”