ColoradoCare impact on small business key for voters
October 9, 2016
For the Zalinski family, owners of TreadZ shoe and clothing store in Glenwood Springs, Amendment 69 on the Colorado ballot this fall offers a chance to maybe pay less for health insurance than they are now, and to have more certainty in their coverage.
It might also help their business retain employees, since it's not large enough to be able to provide health insurance for the handful of workers it employs.
But it's the "chance" part of Amendment 69, the personal and business income tax-funded statewide universal health care proposal that voters will decide on in the Nov. 8 mail ballot election, that has Erin Zalinski and other critics of the measure concerned.
"I've gone to all the meetings, and asked all the questions. I'm informed and intrigued by it," she said. "But as a business woman, I just don't see how it can be sustainable."
Zalinski agrees with arguments from opponents that ColoradoCare, as it would be known, is just too risky for the state to take on.
Opponents point to economic studies that suggest it will likely end up costing more in the long run and lack accountability. And, because it would be embedded in the state constitution, it would be difficult to do away with or to make changes, if it doesn't work out.
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Carbondale rancher Bill Fales sees things differently.
As a sole proprietor ranch owner, he's willing to take the chance on Amendment 69 and the 10 percent business income tax he and wife Marge would pay for health insurance, rather than the approximately 39 percent they now pay for a health plan under the federal Affordable Care Act, commonly referred to as Obamacare.
"The present system is so totally unacceptable, it's just ridiculous," Fales said. The system it replaced, which allowed insurance companies to deny people coverage for pre-existing conditions and resulted in countless medical bankruptcies, was unacceptable as well, he said.
"I think I'm going to vote for it," Fales said of the ColoradoCare amendment, which would create a state-government-run system using tax dollars as a way to provide health coverage to all Colorado residents.
"Yes, it's a lot of money," he said of the $25 billion tax that would fund the system. "But it's less money than we're spending now as a state on private health care.
"To me, it just doesn't make sense for health care to be on a for-profit system," Fales said.
His opinion is counter to that of others in the farm and ranch industry, though. The Colorado Farm Bureau opposes Amendment 69, mostly because of its impact on agricultural operations.
"It's just too expensive for the state to take on something like this," Charles Ryden, a "semi-retired" rancher in Silt who is the Garfield County chair for the Farm Bureau. His wife, Angela, also sits on the Farm Bureau's district board.
"My biggest concern is that it's going to run all the good doctors out of the state, because they're not going to get enough reimbursement under this system," Ryden said.
Business groups opposed
ColoradoCare would be funded by the new state income tax premium and federal funding that would be retained under an allowed Affordable Care Act waiver for states that come up with their own health insurance systems.
The new, $36-billion program would be overseen by a 21-member elected board of trustees with representation from seven districts across the state.
Instead of private health insurance premiums, employees would pay one-third, or 3.33 percent of the 10 percent payroll tax, while their employer would pick up two-thirds of the cost, or 6.67 percent.
Supporters point out that's significantly less than the average 13.5 percent of payroll the average business now pays for employee health insurance.
T.R. Reid, an author and champion for universal health care who is with the Yes on Amendment 69 campaign, said at a recent Club 20 debate in Grand Junction that many businesses are supporting the measure because they see the potential savings in comparing the tax to what they now pay in premiums.
"Under ColoradoCare, you would be paying 6.67 percent for health insurance and the health portion of workman's comp," Reid said. "That's cheaper than what most businesses are paying now, and your workers are covered the same as everyone else."
That means they won't be inclined to leave one business because some other employer has a better health plan, Reid said.
However, sole proprietors and other small business owners would pay the full 10 percent tax on their business income, in addition to the percentage paid on any employees they might have.
It's that double-whammy for small business owners in particular that has business groups, including local chambers of commerce and Club 20, a Western Slope public policy advocacy group, opposed to the measure.
"Our board has taken a stand opposing Amendment 69 for several reasons, one being the specific effect on the self-employed," Marianne Virgili, president and CEO for the Glenwood Springs Chamber Resort Association, said. "Probably 95 percent of those businesses are structured as a sole proprietor, limited liability companies or an S-Corp.
"Therefore, all their company income would be treated as personal income and subject to the full 10 percent payroll tax," she said.
Dylan Lewis, who owns Lewis Marketing with his wife, Lindsey, said he first thought ColoradoCare might be a good thing to replace the state's current private insurance exchange under Obamacare.
But the more he studied it the more he said he viewed it as a major tax increase to run a huge new government bureaucracy.
"We're a service-related economy, and the impact will be even higher on retail stores," said Lewis, who represents several small-business clients in Garfield County. "The margins are so low on retail to begin with, if you take another 10 percent off, they are not going to want to do business in Colorado anymore. …
"It just doesn't make any sense for a small business owner to support this," he said.
weighing both sides
Steve Reynolds and his wife Virginie own Steve Reynolds Wellness and La Provence Spa in the Hotel Colorado in Glenwood Springs.
Reynolds also co-chairs the Club 20 health care committee and has been before the Colorado Legislature on numerous occasions lobbying for a single rate system in the state, rather than the current zoned rating system that has led to some of the highest insurance premiums in the country for rural resort areas in particular.
"We've got to do something. What we have now is not only not working, it's so not working," Reynolds said.
If ColoradoCare were to work the way it's proposed and cost what it says it will, Reynolds admits he would pay somewhat less as a business owner for health insurance — between 10 and 14 percent of his business and payroll income, rather than the 25 to 35 percent he pays now with a silver plan under the Obamacare regulations.
Still, "I don't think that Amendment 69 is completely the answer," he said.
He agrees with his counterparts in Club 20 and other opponents that it's wrong to write a health care program into the state constitution and to leave health care decisions up to an oversight board, for which there are some serious concerns about accountability.
"Let's say it moves forward and works good for a while, but then you want to make some slight adjustments," Reynolds said. "Well, you can't, because it would require another constitutional amendment and vote of the people to correct it."
That's not to say what's being proposed couldn't be a model for a legislative solution, he said.
"I will tell you, if it doesn't pass I hope that Sen. [Irene] Aguilar will work with our Club 20 group or some other group to continue to explore this issue," Reynolds said. "We also need to get away from the partisan politics of it, because the issue is still there."
Aguilar is the Denver-area state senator who has pushed for health care to be taken up by the Legislature, and ultimately took it to the people in the form of a petition drive to put the Amendment 69 question on the ballot.
Reynolds also is skeptical about Colorado or any other state going it alone to implement universal health care for its residents.
"I'm normally a bigger fan of having government address issues at lower levels, but in this case it might be better dealt with at the federal level," he said.
In that case, there may be a good model contained in Amendment 69, Reynolds said.
The other issue is to find a way to control health care costs, which is the biggest driver of insurance costs, whether it's public or private, he said. That's especially true in rural areas, as Colorado has discovered under Obamacare, he added.
Reynolds notes that his wife is from France, which has social medicine. But even there, "While it works well, it works way better if you live in a city."
Most of Colorado doesn't have enough population to divide the numbers evenly. That would be just as pronounced within a state-run system, Reynolds said.