First statewide universal coverage: Can it happen?

In November, voters in Colorado will decide in November whether the state should be the first to pay for universal healthcare for its residents.

Proponents of a single-payer state system gathered enough signatures to put ColoradoCare on the ballot. Amendment 69, which was called Initiative 20 during circulation, calls for Colorado residents to continue to choose their medical providers, but their bills will be paid by the state via a 10% payroll tax generating an estimated $25 billion per year. ColoradoCare would contract with healthcare providers to pay for certain healthcare benefits and be responsible for administering Medicaid, children's basic health programs, and all other state and federal healthcare funds.

State Sen. Irene Aguilar, MD (D-Denver), has been introducing this bill every session since she entered the legislature in 2011. Although she has supported the ACA and Colorado-related legislation (she is a member of the Connect for Health’s legislative oversight committee), she doesn’t believe that current healthcare reform goes far enough to reduce the costs of healthcare and contain costs within the healthcare system.

Reid

“People are dismayed at the results of the ACA [Affordable Care Act],” says David A. Reid, founder and CEO, EaseCentral. “They expected low-cost healthcare and did not get it. The focus on universal government paid healthcare, to many, means ‘free healthcare.’”

The health insurance exchange in Colorado was very successful, according to Proteus Duxbury, healthcare expert at PA Consulting Group. By the end of the 2016 open-enrollment period 178,000 people have enrolled for coverage through Connect for Health Colorado. Nearly 70,000 of those individuals were eligible for the advanced premium tax credit, reducing the overall financial burden and making coverage more affordable. In addition 238,000 people may gain access to Medicaid under the Medicaid expansion program that is in place within the state.

Duxbury

“Access has increased within Colorado but this has not bent the cost curve of care delivery,” Duxbury says. “The ACA really hasn’t contain costs and consumers are paying more and more out of pocket for their care. Newly insured people are finding it difficult to navigate the system, understand how to purchase the right insurance plan and more importantly how to utilize it in a cost efficient way.”

The premium for the second lowest cost on-exchange silver plan has raised 32% in the new plan year, according to Duxbury.

“The failure of the Colorado HealthOP [health insurance co-op] late last year to remain financially viable has almost certainly also had an upward impact on the cost of on-exchange plans within the state,” Duxbury says. “The CO-OP program was designed to help create nonprofit, member-controlled health insurance plans that offer ACA-compliant policies in the individual and small business markets.”

Next: What eliminates costs?

Eliminating deductibles and patient copayments, along with adding additional benefits-as proposed in Colorado, does not eliminate costs, according to Reid.

“This simply places the cost on a centralized system for provider payments rather than placing the burden on individuals,” Reid says. “The physician and hospital costs alone-completely unaddressed by the proposal in Colorado-would equate to premium increases in excess of 30% over existing health plans with deductibles.

“A handful of people now enjoy subsidized coverage under the ACA,” he continues. “However, the push back from most of the public is due to the fact they expected the ACA to create affordable healthcare by reducing costs. The act did nothing to address costs, it simply expanded coverage to all by mandate. The actual cost for health coverage increased, and this is undisputed by all, the only beneficiaries from a cost standpoint are those that qualify for government subsidies.”

Health systems have been playing a “shell game,” Reid says. “Based on plan or government reimbursement for certain services, they adjust their cost structure and practice patterns to maximize reimbursement rates,” he says. “The continued pressure on costs will force managed care providers to reduce costs. This will mean reduced services, less time with physicians and less personalized healthcare.”

Hoskins

The implications for payers in the state is not entirely clear, according to Kyla Hoskins, healthcare expert at PA Consulting Group. “Colorado is one of a handful of states where Medicaid does not contract with commercial insurance companies to administer the program, so their role could be significantly reduced,” Hoskins says.

The options, according to Hoskins, could include:

• Exit Colorado. Rethink presence in Colorado.

• Adapt to a new business model. Options might include integrating with a hospital system, focusing on Medicare Advantage business or contracting with the state to do claims processing.

• Integrated managed care plans could have a leg up. “There might be an opportunity for major players such as Kaiser to work with the state on population health management,” Hoskins says. “Pressure on managing the health of Coloradan’s in order to reduce costs will be acute. This could be an opportunity for an established, integrated managed care organization to step in and dominate.

“It is not clear if there would be an option for Coloradans to supplement their health coverage with their own private coverage.”

Several of the state exchanges have already filed bankruptcy and are rolling their state exchanges into healthcare.gov, according to Reid. “To move toward a universal, state-based, program with no deductibles will require a level of funding that would never pass any legislative body today.”

Duxbury says that although it is impressive that ColoradoCare received enough votes from the people to be placed on the November 2016 ballot, it is unlikely to pass “given the large amount of opposition from diverse stakeholders and the likelihood that voters will support such a large tax increase, roughly $38 billion/per year,” he says.

“Influential stakeholders are vocally opposing ColoradoCare with an opposition campaign, including conservatives, Democrats, hospitals, the pharma industry, insurers and chambers of commerce,” he continues. “These are the same stakeholders that worked together to successfully deliver the ACA within Colorado. Colorado is a purple state and we do not have a history of voting for tax increases. The proposals are actually cost neutral. Insurance premiums and deductibles would be eliminated and a modest tax increase would be implemented. But this is a difficult notion for people to grasp in the state and support.”

There isn’t enough awareness about ColoradoCare-or health insurance-to the average voter to be confident that voters will understand the referendum, Duxbury adds.

If ColoradoCare passes, the state would apply for a waiver from the ACA. “If it does pass the ballot, it will still need to be submitted to the federal government-HHS and IRS-via an ACA Section 1332 Innovation Waiver,” Hoskins says. “The federal government must then approve Colorado’s plan in order for it to be implemented. Hillary Clinton has publicly said she is against the measure because it would increase taxes on the middle class.”

Next: Other options

It is likely that the state will need to address the cost of healthcare without ColoradoCare, Duxbury and Hoskins agree.

According to them, there are a number of ways to do this including:

• The Center for Improving Value in Health Care is actively working to make healthcare costs in the state more transparent by leveraging the All Payer Claims Database. Consumers can go to their website and compare the cost of basic interventions within the state

• Connect for Health Colorado helps consumers select the insurance plan that is right for them and help them utilize it in a cost effective fashion. They are investing in decision support tools for doing this, as well as using tools such as Kyla, an interactive avatar, to help consumers understand basic insurance concepts like deductibles and out-of-pocket expenses.

• Colorado and Boulder are becoming hubs for digital healthcare and the state is seeing the benefit of some of the innovations that are being developed here. Locally based Cirrus MD, for example, is working with Rocky Mountain Health Plans to deploy telehealth so members can have a text or video conversation with a doctor from anywhere. Centura Health runs a successful remote patient monitoring program in the Denver area, demonstrating a real impact on health outcomes for patients aged 65 years and older.

“There is a fear that if this was to happen sick people would move to Colorado to take advantage of free healthcare,” Hoskins says. “Moving to a single-payer model state by state does not make sense. It really has to be tackled nationally.”