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A sign outside Saint Joseph Hospital in Denver, photographed on Oct. 22, 2019. (John Ingold, The Colorado Sun)

Colorado regulators last week unveiled their final proposal for a public health insurance option, a program that would, in theory, provide a more affordable choice for people who buy coverage on their own.

The final details of the proposal aren’t much different from what was originally offered. But make no mistake: This is a big deal.

In states across the country and on the presidential campaign trail, public options are getting a ton of attention as a way to reform how we receive health coverage and as an alternative to a Medicare-for-all-style single-payer system. Only one other state — Washington — has gone this far in actually creating one, though. Colorado officials used the word “transformative” when talking about a public option’s impact on the state’s health care system.

“The entire country is looking at what this does,” Kim Bimestefer, the head of the state’s Department of Health Care Policy and Financing, said last week when announcing the final proposal.

The final proposal, along with its appendices, weighs in at several hundred pages, but there are still a few big issues that need to be decided. It will be up to the state legislature to sketch in those details — meaning you can expect the coming legislative session to be filled with health-policy fisticuffs.

Here’s a look at some of the questions that are still TBD:

MORE: Need to get caught up? Scan this story for the details on the public option proposal when it was first released.

The state will set hospital prices … but how?

We’ll start with one of the big things that did change from the initial proposal. The state still plans to tell hospitals how much they can charge people who are covered by the public option. But, rather than just tying those payment rates to Medicare prices, the new plan is for state officials to come up with their own formula for setting prices.

And what is that formula?

Kim Bimestefer (Handout)

It would take into account whether a hospital is in a city or in a rural area, whether it is part of a larger system or independent, whether it serves a lot of lower-income people or higher-income people. But that’s pretty much all we know about it so far.

It will be up to regulators, lawmakers and the members of a to-be-formed advisory board to fill in the details (although the proposal says state officials have already “initiated work with experts at Johns Hopkins University” to develop the formula).

“While we’re going to make those initial recommendations, the advisory board will have a critical role going forward,” Bimestefer said.

A sign outside Saint Joseph Hospital in Denver, photographed on Oct. 22, 2019. (John Ingold, The Colorado Sun)

Hospitals have to participate … but what if they don’t?

As with the initial proposal, hospitals will be required to participate in this program. But there’s nothing in the final proposal that says what happens if they don’t.

“I think it would be left to the legislature as to how they want to structure those carrots and sticks,” said Colorado Insurance Commissioner Michael Conway, who worked with Bimestefer to build the proposal. “We don’t want to get out in front of our legislative partners.”

Michael Conway (Handout)

Both Conway and Bimestefer said the goal is to avoid using this new authority that the legislature would give them. Bimestefer repeatedly talked about trying to collaborate with hospitals to bring them on board voluntarily, and she suggested that some hospitals have indicated they might be supportive.

“I think our hospitals are going to step up,” she said. “We just have to give them a little bit of time and a little bit of maneuverability.”

But Katherine Mulready, the Colorado Hospital Association’s chief strategy officer, said she knows of no hospital that is “wholeheartedly supportive of this approach.” And she said her association is fundamentally opposed to dictating hospital prices.

“The proposal, in its current state, is not acceptable,” she said.

The website for Connect for Health Colorado, the state’s health insurance exchange, shown in October 2018. (Eric Lubbers, The Colorado Sun)

Insurance companies have to participate … but which ones and where?

Insurance companies will be required to participate — but fewer than in the original plan. In the final proposal, any company wanting to sell insurance in the individual market would also have to offer plans through the public option. (The original proposal also put this requirement on insurers in other segments of the market.)

But there’s a new wrinkle: If there’s a county where only one carrier is offering plans in the individual market, Conway wants the authority to require at least one other insurer to step in and sell public option plans in that county. That would solve a major problem with the original proposal — how to ensure that consumers in every county have multiple choices when shopping for insurance.

But it also raises new questions about how the state would exercise this authority.

Though there are currently eight insurance companies selling coverage in the individual market through the state’s insurance exchange, there are 22 counties where only one company has plans for sale. Those counties are on the Western Slope and the Eastern Plains.

So how would Conway decide which companies to order into which counties? Would some companies feel the burden of this rule more than others?

This becomes especially complicated because every insurance company has to contract with an adequate network of doctors who accept its plans. And, while hospitals would be required to accept public option insurance at specified prices, the same would not be not true for independent doctors and other health care providers.

Conway said he will look to the legislature to create guidelines for how to make these decisions.

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)

Federal dollars would help lower-income residents … but what if the feds don’t approve?

The state’s proposal doesn’t need federal approval to get going. But boy would it help.

Conway said the state intends to submit an application for what’s called a 1332 waiver — named after the section of the Affordable Care Act that authorizes such applications — to get some extra money from the federal government. The waiver would allow the state to get a cut of some of the money that the public option would save the feds by lowering insurance premiums.

Early estimates are that the state could receive as much as $89 million. The proposal calls for using that money to help lower-income people afford coverage, with anything left over being used to help the middle class.

But will the federal government approve of Colorado’s plan? The waiver application won’t be submitted until the winter of 2021. That means whoever wins the 2020 presidential election will decide whether to approve the waiver. (The conventional wisdom is that a Democratic president would be more receptive to state public options and other free market tinkering than a Republican president would be. Earlier this year, for instance, Colorado Democrats had a plan to set hospital rates as part of a different 1332 waiver application, but then they changed course over concerns that the waiver wouldn’t be approved.)

Meanwhile, a waiver would become moot if the federal courts strike down the entire Affordable Care Act, which is a looming possibility.

Colorado state Rep. Dylan Roberts, D-Eagle, speaks on Feb. 1, 2019, at a town hall meeting in Frisco about the high cost of health care in Colorado mountain communities. (John Ingold, The Colorado Sun)

Lawmakers have a lot to do here … but will they go along?

Conway and Bimestefer sent their proposal to the legislature on Friday. And now it’s up to lawmakers to decide whether to sign off on everything or tear it all up.

Rep. Dylan Roberts, the Avon Democrat who sponsored last session’s public option bill, said he didn’t see anything in the final proposal that is dead on arrival at the legislature. But he also called the proposal “a really great start.”

That means there’s a lot more to come. Mulready, with the hospital association, said her group plans to propose its own idea for how to cut health care spending in the state.

Health care consumer advocacy groups will surely back the state’s plan.

“It’s time for Colorado to forge ahead and ensure the public option becomes a reality to continue our progress toward every Coloradan being covered,” Adam Fox, the director of strategic engagement for the Colorado Consumer Health Initiative, said in a statement.

But Roberts’ bill passed last year with only a handful of Republicans in support. And actually putting this plan in place could require lawmakers to take controversial votes in an election year.

So it’s entirely possible that the details of the plan will change during the coming legislative session.

“What they got to us is a proposal,” Roberts said. “And we look forward to working with all interested parties.”

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...