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Colorado state Sen. Bob Rankin, R-Carbondale, speaks on Feb. 1, 2019, at a town hall meeting in Frisco on the high cost of health care in Colorado's mountain communities. (John Ingold, The Colorado Sun)

Colorado lawmakers wrestled their top health care priority back from the brink Thursday but had to cut into a potential funding source that another bill has earmarked for affordable housing.

It was just the latest near-death experience for a bill to create a reinsurance program, which would help health insurers pay some of their highest-cost claims, resulting in lower premiums. Multiple times since taking office, Gov. Jared Polis and other lawmakers have touted a reinsurance program as something that will bring quick relief to consumers.

“We might view this bill as being in trouble, almost on life support,” said Sen. Bob Rankin, a Republican from Carbondale who is a sponsor of the bill. “But it is alive.”

That doesn’t mean it will stay that way. Though the bill passed out of the Senate health committee on a 4-1, bipartisan vote, it will likely continue to face skepticism, especially given how many major transformations it has undergone with so little time left to vet them.

“I promised not to use the term Dumpster fire,” said Sen. Jim Smallwood, a Parker Republican who was the lone no vote in committee. “But most people can’t make heads or tails of these numbers, so I would urge you to consider something different.”

Here’s a rundown of the latest changes and why they matter:

New money

The reinsurance program and its resulting premium decreases only apply to people in the individual health insurance market — the roughly 8% of Coloradans who buy coverage on their own instead of getting it from the government or through an employer.

To work, the program needs the state to seed it with money that can reimburse insurers. (The federal government, if it approves of Colorado’s plan, would also kick in money that comes from what it saves when insurance premiums drop and it doesn’t have to spend as much on subsidies to help people buy coverage.)

In the bill’s initial version this year, lawmakers tried to effectively create that seed money by limiting what hospitals can charge in certain situations. When that looked like it wouldn’t win federal approval, lawmakers switched to straight-up charging hospitals $500 million in fees over a 5-year period. When that looked like it would violate federal law and risk the state losing billions of dollars annually in revenue, it appeared the bill, House Bill 1168, might be toast.

MORE: Colorado lawmakers’ latest plan to slash health insurance prices could risk billions in federal funding

But at Thursday’s hearing, lawmakers amended the bill again to draw money from two sources. Hospitals still have to chip in some — about $40 million — but not so much that it breaks the law. The rest is dependent on the passage of a separate bill, House Bill 1245, which limits the discount that businesses can keep for collecting and paying sales tax on time.

The latter bill, though, isn’t a health care bill. Its title is, “Affordable Housing Funding From Vendor Fee Changes.” The money it would generate — estimated at $71 million over two years — is earmarked in the bill to pass through the state’s general fund and into a fund that gives grants to affordable housing projects. Before the affordable housing bill, Polis pointed to a vendor fee reduction as a possible way to pay for his promised income tax cut. But that idea died on arrival this session.

Rankin said there is an agreement with the bill’s sponsors to amend it and send most of that money to the reinsurance program. But Smallwood said there’s a legal question of whether that amendment can fly, given the bill’s limited title. If the amendment passes, there wouldn’t be much money left for affordable housing. The reinsurance program expects to take $55 million from the bill’s funding stream.

“We don’t view this as a diversion of money from affordable housing,” Rankin, who sits on the Joint Budget Committee, said, noting that the first stop for this money is the general fund. “We get hung up on trading off housing against this. In a $30 billion budget, these dollars are somewhat fungible.”

Lower ambitions

Even with this new funding source, the reinsurance program is left with a lot less money than it would have had under its two prior iterations. So lawmakers scaled back the scope.

Instead of a 5-year program, it’s now a 2-year program. Instead of aiming to drop health insurance rates by at least 15% everywhere in the state and by at least 30% in mountain communities, the program will shoot for a 20% reduction in the mountains and at least a 5% reduction everywhere else, said Sen. Kerry Donovan, a Vail Democrat who is another of the bill’s sponsors.

“What you’re seeing,” Donovan said in defending the changes, “is us doing everything we can to try to solve a problem until we can’t do it anymore.”

Denver Health medical center, photographed on Thursday, April 4, 2019. (Jesse Paul, The Colorado Sun)

Big hopes

Despite the bill’s bumpy ride, that’s been the mantra: This is a problem too big to do nothing about. People who have to buy their own health insurance but make too much money to qualify for government help — and especially people in Colorado’s rural and mountain communities — can pay tens of thousands of dollars a year for health care.

At the hearing, Rankin told of families in his district who are scared to go to the hospital for fear of the cost. State Insurance Commissioner Michael Conway, originally an appointee of former Gov. John Hickenlooper, said this bill is the reason he asked Polis to stay in his job, arguing that a reinsurance program would create “serious and substantial relief, immediate relief, in a way that no other bill would.”

“We run a lot of health care bills up here,” said Sen. Larry Crowder, an Alamosa Republican who voted in favor of the bill Thursday. “But this is the first one I’ve seen that would actually have some benefit for the people in my district.”

Fast timeline

Conway, who will have substantial authority under the bill to fill in the reinsurance program’s fine details, is moving so fast that he’s already held a public hearing on the program and has another scheduled for Monday.

He hopes to file the request for the federal government’s approval within weeks of the end of the legislative session. By August or September, he said, state officials should know how much the program will reduce premiums. And consumers in the individual market would be able to benefit from those reductions in their insurance plans for next year, he said.

“Over the summer, we’re going to be very busy,” he said. “We’re going to be very busy putting this all together.”

John Ingold is a co-founder of The Colorado Sun and a reporter currently specializing in health care coverage. Born and raised in Colorado Springs, John spent 18 years working at The Denver Post. Prior to that, he held internships at...