Gov. Polis, state electeds hold health forum to pitch new reinsurance, public option health care bills
Gov. Jared Polis joined other elected state officials for an impromptu health forum Friday night in Frisco. The officials pitched new, bipartisan proposals for health care reform in Colorado, speaking to the benefits of introducing reinsurance and a public option to Summit County residents, who pay among the highest health care premiums in the nation.
Polis was joined by state Sens. Bob Rankin, R-Carbondale, and Kerry Donovan, D-Vail; and state Reps. Julie McCluskie, D-Dillon, and Dylan Roberts, D-Avon, in promoting two bills the representatives had parts in authoring — HB19-1168 which would introduce a reinsurance program to Colorado, and HB19-1004 which would introduce a public option.
The reinsurance idea is not a new one, but has certainly been given new life after November’s election. A Democrat-controlled legislature and executive have given the proposal an actual shot at being passed this year, with implementation planned for 2020. The current bill is sponsored by McCluskie and Rep. Janice Rich, R-Grand Junction, in the state house and by Rankin and Donovan in the Senate.
Reinsurance is like insurance for insurance companies, where significantly higher claims are partially covered by a state reinsurance program. When an expensive claim reaches a designated threshold, the reinsurance program would kick in and pay the insurance company a certain percentage of the claim up to a certain point. The payment would be based on a fee schedule considered fair to providers and insurers. Consumers would not need to deal with any of this after treatment, as the process would work on their behalf and behind the scenes.
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The reinsurance program, whether it be formed as a state entity, nonprofit or some other company, would theoretically bring down premiums by reducing the risk load and costs for insurance companies, who could pass down the savings to consumers.
The program would create three tiers of consumers to prioritize cost reduction, consolidating the state’s existing nine insurance regions. Summit County and other Western Slope communities would be in the first tier, and the elected officials promised at the forum that there would be instant, dramatic savings for western residents up to 35 percent starting in 2020 if the reinsurance program passes this summer.
The lawmakers pointed out the success reinsurance has had in seven states, including Alaska, which was the first state to try reinsurance in 2017 and has seen a 26.5 percent average rate reduction.
Aside from reinsurance, a public option plan was also pitched. The plan, sponsored by Roberts and Rep. Marc Catlin, R-Montrose, in the state house and by Donovan in the Senate, would introduce a public-backed health insurance option that would operate on existing state Medicaid and Medicare infrastructure, essentially operating as a “buy-in” mechanism for those public health insurance programs. The plan is designed especially for residents of 14 western counties that have only one insurance option available to residents, creating a lack of competition and exacerbating the high cost of premiums.
While the lawmakers seemed very enthusiastic about the proposals, significant questions remain, such as how exactly the programs would be funded. In both cases, the lawmakers insisted the programs would come at minimal cost to state taxpayers, with the lion’s share paid by the federal government and with existing infrastructure.
But for the reinsurance program, the assumption is that “most” of the program’s estimated $272 to $338 million dollar price tag would be paid by the feds through what is called a “State Innovation Waiver.”
The waiver, which is provided for under Section 1332 of the Affordable Care Act, gives states the ability to waive requirements of the ACA, and recirculate federal funds meant for premium tax credits and cost-sharing reductions into state programs like the proposed Colorado reinsurance program.
However, that isn’t a guarantee — just what should logically follow if the ACA remains intact and provides those funds and in the same manner as they have been provided to states like Alaska. As has been seen with the dysfunctional federal government, where people’s lives have become political pawns, the ACA’s survival is not assured in the long-term. Congressional Republicans have repeatedly tried to repeal the ACA since its inception, and have indicated they will continue to do so. If the ACA gets repealed by Congress or killed by federal courts, those federal funds disappear and would need to be replaced.
Additionally, lawmakers at the forum did not provide specific numbers for how much of the reinsurance or public option programs’ cost would be covered by the feds, or what specific reimbursement rate would be offered to insurers and providers. The idea of fee schedules may also rankle free-market economists who see either program as socialized medicine. Amendment 69, which proposed a single-payer program in Colorado, was soundly rejected by Colorado voters back in 2016.
There is also not as much firm assurance for small businesses that struggle in the small market with up to 30 percent of business income devoted to providing employee health insurance. Those costs prevent hiring more employees and hinders business growth.
Tamara Drangstveit, executive director of the Family and Intercultural Resource Center, said she does believe reinsurance programs work, especially for people who shop for insurance on the individual market. However, she doesn’t see the theory of trickle-down savings by shoring up the individual market as a firm strategy meant for small business runners like herself.
“Reinsurance won’t really help the small business market, which I think is where we see the most amount of pain in this community,” Drangstveit said. “The premiums that small businesses like FIRC have to bear are crippling.”
Drangstveit added that she feels ideas like Summit County’s newly introduced Peak Health Alliance, a collaborative health cost negotiation program for the county’s largest self-funding employers, is better suited for the purposes of businesses like hers, and may work in conjunction with reinsurance to bring down costs overall.
Regardless, Drangstveit said she was very excited about the fact that unique, new strategies are finally taking flight. Health care has become the kind of complex problem that mandates innovative thinking and a lot of new, bold ideas. Drangstveit said that these new efforts are giving her hope that state government will be able to come up with a real solution.
“My takeaway from tonight is that for the first time, there seems to be a wide range of strategies that are really trying to fix the problem at all levels,” she said. “From transparency, to direct negotiations, to pilot projects that let people buy into insurance, to reinsurance, there’s a strategy for everything.
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