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The emergency room entrance to Saint Joseph Hospital in Denver, photographed on Oct. 22, 2019. (John Ingold, The Colorado Sun)

In what is shaping up to be the major health care battle at the state Capitol this coming legislative session, Colorado hospitals and insurance companies both have raised concerns about a proposal to dictate hospital prices for a slice of people with private health coverage.

The idea, unprecedented across the country in its precise details, is part of an ambitious plan to create what Colorado health officials are calling a “state option” insurance program. The program would aim to lower insurance costs for people who buy coverage on their own.

It would largely achieve those lower rates by limiting how much hospitals can charge people covered by state option plans, which would be sold and administered by private insurance companies. Both hospitals and insurance companies would likely be required to participate in the program, though state officials have been vague on whether they have the authority to compel participation or whether they would need to ask the legislature for that authority.

Either way, the state-option proposal has found hospitals and insurance companies — frequent foes in the battle over health costs — sharing unusual common ground.

The emergency room entrance to Saint Joseph Hospital in Denver, photographed on Oct. 22, 2019. (John Ingold, The Colorado Sun)

The hospitals’ opposition is fairly simple to understand. They don’t want government telling them what their prices can be.

“Fundamentally, we as an organization are opposed to rate-setting,” said Katherine Mulready, the chief strategy officer for the Colorado Hospital Association. She said the proposal “misses the mark” and that its architects should return to the drawing board.

But the Colorado Association of Health Plans, the organization that represents health insurance companies in the state, also has raised concerns about the proposal, echoing two of the hospitals’ objections, though it supports the push to bring down the underlying costs of health care.

First, insurers and hospitals say the program could make health insurance provided by employers more expensive. Why? Because hospitals might make up for the money they’re not getting for patients with state-option coverage by charging people with employer-sponsored coverage more.

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The hospital association says this “cost shift” could be $1.5 billion over five years. (State officials argue that hospitals have already — and needlessly — shifted billions in costs onto the privately insured even as they have reaped record profits.)

“This one-size-fits-all approach would have the effect of increasing costs for employers,” Amanda Massey, the executive director of the Colorado Association of Health Plans, wrote in an emailed statement.

Second, both hospitals and insurers say patients could suffer by not having access to doctors. Hospitals warn that cuts to their bottom lines could lead to cuts in staffing. Insurers say private doctors’ offices, which wouldn’t be forced to accept the coverage, might choose not to see patients with state-option insurance.

“The result will be reduced patient access to adequate networks and quality care,” Massey said.

Gov. Jared Polis speaks at a news conference at Denver Health medical center on April 4, 2019, to reissue his health care roadmap from the campaign. (Jesse Paul, The Colorado Sun)

The goal behind the state option — sometimes called the public option, even though the government wouldn’t administer the plans in Colorado’s proposal — is to ensure more choices and better prices for people who don’t get health coverage through their jobs. That group currently makes up about 7% of Coloradans.

Gov. Jared Polis has frequently touted the state option and reducing hospital prices as part of his “road map” for saving Coloradans money on health care.

The two state officials putting the plan together — Kim Bimestefer, the executive director of the state’s Department of Health Care Policy and Financing, and Michael Conway, Colorado’s insurance commissioner — have in recent weeks held meetings across the state seeking input on their plan. They have also received more than 200 written comments.

The final proposal is due to the legislature by Nov. 15.

John Ingold

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 the Rocky Ford Daily Gazette, the Colorado Springs...