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Nicolais: Any health care “public option” second wave must make some changes

After Colorado bill sponsors pulled the public option from consideration in light of difficulties created by the coronavirus, they should reconsider compelling participation

Colorado’s public option for health insurance died an ignominious death last week due to coronavirus complications. Without the ability to engage all stakeholders, most prominently including the providers currently on the front lines combating COVID-19, sponsors chose pull the bill.

Unfortunately, proponents have promised to revive the measure once the pandemic subsides and the state Capitol reopens for regular business. Hopefully they will rethink some of its provisions before they do.

Mario Nicolais

Pitched as an effort to provide access to health care, the public option sounded like a positive step forward. As private options dwindled over the past few years, particularly in rural parts of the state when insurers dropped out of the health exchange markets, vulnerable Coloradans were left with little choice.

At one point, 14 Colorado counties were left with only a single insurer. Effectively the only “option” was to either go purchase that plan or go without.

The public health option sounded like an attractive public-private partnership solution. Private insurance companies would offer and administer plans based on prices negotiated between the state government and care providers.

Unfortunately, the version of “negotiation” employed by the state under the bill would have made Vito Corleone proud.

State agencies would set the rates hospitals could charge insurers for care to individuals covered under the public option. Those rates would be determined through a formula based on current rates paid by Medicare, a standard beginning point for most coverage negotiations between providers and insurers.

Because Medicare is effectively the largest “insurer” in the country, it uses its leverage to dictate prices below the actual cost of care. Hospitals and other care providers subsequently make up the difference in negotiated contracts with private insurers.

READ: Colorado Sun opinion columnists.

The underlying principle is no different than that espoused in the pages of “Love in the Time of Cholera” – a top pick from my pandemic reading list – by Dr. Juvenal Urbino: “In this profession, we try to have the rich pay for the poor.”

Given the convoluted practices underpinning price-setting for many medical providers, that initially seems like a fair trade. In the first semester of my MBA in Health Administration course, required reading included “Bitter Pill,” an in-depth 2013 Time magazine article detailing the unfair policies that hospitals often use to develop chargemaster lists that dictate the cost of everything form an aspirin to heart surgery, in order to provide a brief foundation for everything that followed.

If hospitals could then make the decision whether to accept the public option reimbursement rates or walk away from the table, I might even be supportive. But the lynchpin of the public option included compelled participation. And that is where I get off the bandwagon.

It is an Orwellian mockery to characterize any a circumstance where one party dictates the terms of an agreement and forces another party to accept it as a negotiation. Better descriptors would be coercion or extortion.

TODAY’S UNDERWRITER

Public option advocates would certainly point to ongoing stakeholder meetings as proof that all parties were equally engaged and included. Through my years in politics I have seen plenty of similar commissions and committees and stakeholder gatherings ostensibly convened to gather input before a final decision. 

Too often, those meetings are only dog and pony shows meant to provide PR cover for decisions that have already been made. I wrote about a similar problem in legislative testimony just over a year ago. 

In the end, proclamations from state leaders that “agencies are confident we have the authority” to compel participation lay bare the true nature of relationship.

Colorado, like every other state in the country, faces a crisis in health care. There are plenty of available choices, such as increased incentives for value-based care reimbursement structures, that could make a difference.

What Colorado shouldn’t settle for is a plan that mandates participation.


Mario Nicolais is an attorney and columnist who writes on law enforcement, the legal system, healthcare, and public policy. Follow him on Twitter: @MarioNicolaiEsq


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