With major bills making their way through the state Capitol this year, Colorado could be on the verge of dramatically altering its health care system in favor of more liberal policies.
Or maybe not.
That’s because several of the bills share one thing in common: They need the approval of President Donald Trump’s administration in order to work as intended.
Winning approval from a conservative administration for ideas like creating a government-run insurance plan or setting hospital prices would be a tall order at any time. But it could be especially difficult now, given that last month the Trump administration asked a court to strike down the entire Affordable Care Act, the overarching federal health law that provides the necessary structure for several of the Colorado proposals.
If the ACA falls, so do the programs and funding that some of the Colorado bills depend on.
“It leaves us in a weird place,” said state Rep. Dylan Roberts, a Democrat from Avon who is sponsoring several health bills.
And the pressure to pass bills that can win federal favor appears to be having an impact on policymaking at the state Capitol.
Earlier this week, state Rep. Julie McCluskie, a Dillon Democrat who is sponsoring one bill that would need a federal OK, said she will likely make significant changes to her plan in the hopes of winning that approval. As it’s now written, McCluskie’s bill would lower insurance premiums for some through a “reinsurance” program that — in a nationwide first — would seek to pay for itself partly by allowing the state to set hospital rates.
“In the last week, we’ve also come to realize that getting that federal waiver, which is key to implementing the reinsurance program, will be difficult with a rate-setting approach,” she said.
So, what would these bills do and why do they need federal approval? Here are some answers to those and other questions.
What bills are we talking about here?
While there are several bills that could interact with federal health policy, we’re primarily talking about three bills that need federal approval — and they’re some of the session’s biggies.
Importing prescription drugs from Canada. Creating a state government-run health insurance plan. And that reinsurance program, with, currently at least, its authority for the state to tell hospitals what they can charge some people.
The federal government has never said yes to any of those ideas, though seven states have received approval to set up reinsurance programs in different ways.
Why do they need a federal OK?
The need for federal approval to import prescription drugs is pretty straight-forward, and Brian Eason has explained the ins and outs in this piece.
So let’s focus on the other two. Both of them are expected to need what is known in the health world as a “1332 waiver,” so named for the section of the Affordable Care Act that allows states to try out innovative health policy ideas with the federal government’s blessing.
States that get their 1332 waivers approved can then use federal dollars for their new programs that would ordinarily go to helping people pay their health insurance premiums.
The reinsurance program definitely needs a waiver because that money is key to the whole thing. The state-run health plan idea — what’s known as a “public option” — may or may not need one, depending on the many details of that idea still to be put into place.
Has the state ever filed a 1332 waiver before?
Nope, but there’s at least one other already in the works.
Last session, lawmakers passed a bill asking state regulators to study allowing greater access to bare-bones catastrophic health plans and — if everything looks good in the study — to submit a waiver request to the federal government asking it to loosen some of its rules for such plans.
Nationwide, the feds have approved eight 1332 waivers. All but one of them set up reinsurance programs like what Colorado is trying to do. (Reinsurance programs get together a pool of money to help insurers cover their most expensive claims, allowing insurers to spend less and reduce premiums for everybody.)
But those states also implemented reinsurance differently than the Colorado bill currently proposes — usually through taxes or fees on insurers.
What are the requirements for a 1332 waiver?
The federal government has four guiding principles — or what Colorado Insurance Commissioner Michael Conway calls “guardrails” — for 1332 waivers.
They have to cover at least as many people as the current system; they have to have coverage that is at least as affordable as what is currently available; they have to provide coverage that is at least as comprehensive as what is currently offered; and they can’t increase the federal deficit.
Just based on those, Conway is confident about Colorado’s plans.
“We’re going to blow out of the water the four guardrails,” he said.
How do Trump policies play into this?
Yep, here’s the wildcard. In addition to asking for the entire Affordable Care Act to be dismantled, the Trump administration has also created some new policies around those guardrails that could throw Colorado’s proposals into question.
So, for instance, the Trump administration will now allow states to offer much skimpier coverage so long as there is at least one more comprehensive option available. The general sense among at least liberal health policy folks is that the administration wants to favor programs that undermine the protections of the Affordable Care Act. That’s not what these Colorado proposals would do.
Johnson, from the Colorado Health Institute, said that technically the administration’s review of Colorado 1332 waivers wouldn’t dive into the politics of the plans. But, she said, the administration has broad authority to deny waiver requests. For the reinsurance proposal, for instance, she said the administration might argue that mandated price cuts to hospitals would lead to less access to care.
“It’s not asking the federal government for any more or less money” than what the feds send the state now, Johnson said. “But it does come with this rider that I could see a free-market-oriented (administration) not liking.”
For that reason, Johnson said a reinsurance program funded in the way that other states have funded theirs would be much more likely to win approval. All seven of those state reinsurance programs were OK’d by the Trump administration.
Conway, the insurance commissioner, said he does not believe politics will derail the Colorado plans. The state has been in frequent contact with federal authorities about the plans, though he wouldn’t say what their input has been.
“They know us,” he said at a hearing for the reinsurance bill. “They know us well.”
Lawmakers who back these plans see the federal unknowns as just part of the process.
“There is uncertainty,” said state Sen. Kerry Donovan, a Vail Democrat, “because I think there is uncertainty around anything in Washington, D.C.”
What happens if the bills don’t get the waivers?
Without a federal waiver, the reinsurance program is toast.
“We could still do reinsurance in the state, but we would be footing the entire bill,” Johnson said.
But, during a hearing, Conway basically said it’s waiver or bust.
“Without that, the program doesn’t really work,” he said.
Because there are so many more unknowns about how the public option would be set up, it’s possible it could work without a waiver — but not likely. Roberts said he knows it looks like a longshot for Colorado Democrats to be asking the Trump administration to approve their proposals. But, he asked, what are the other options?
“We have to keep pushing forward,” Roberts said. “Obviously I have no control over what is going on in Washington, D.C. I just have constituents who are tired of paying too much money for insurance.”
Staff writer John Frank contributed to this report.
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