Unprecendented Summit County alliance could drive down health care costs — for real this time
Gini Bradley’s quest to find a reasonably priced health plan is familiar to many Summit County residents: no great options, just more and more expensive ones.
“It’s insane about what we have to pay for health insurance,” said Bradley, who runs her own business as an independent consultant. Bradley has a retired husband and two kids in their 20s.
“We make too much for marketplace subsidies. I checked on the market how much it would cost to insure myself and our kids, and it came out to about $2,100 a month for the cheapest option with a $7,500 deductible.”
Bradley considered becoming a bus driver or working at a grocery store to help afford health insurance. She finally consulted an accountant to see if there were lifestyle changes or anything else she could to do get her taxable income to a level that could receive subsidies or tax credit.
“I was told I shouldn’t work, since that would reduce my income,” she said. “Essentially, I was told I needed to make less money to afford health insurance.”
Eye-popping health insurance premiums like Bradley’s have been digging big holes in family budgets across the High Country. But after months of study and thanks to recent changes in Colorado law, local leaders are floating a potential silver bullet to high health care costs.
The initiative is being called the “Peak Health Alliance,” a health care collaborative nonprofit that would bring the county’s largest employers together as a unified consumer force. Community purchasing collaboratives of this kind were approved by the state back in 2017. The end result, its proponents say, is lower health care premiums for most of the county’s workforce.
The idea for Peak Health came about after the Summit Foundation commissioned consulting firm Leif Associates to do a study of health care spending by Summit County’s largest employers with self-funded health plans, using data from the Colorado All Payer Claims Database.
The study found that high costs are one of the main drivers of high health care premiums among most workers in Summit County. Those high costs are in large part due to a lack of competition among the few health providers available in rural resort communities like Summit, as well as an unwillingness or inability of insurance companies to negotiate lower rates with local providers.
The data also found that outpatient services in Summit County were exorbitantly higher than Medicare rates, which are the negotiated rates the feds consider reasonable for how much services actually cost.
An emergency room visit in Summit County, for example, costs the average Summit worker over eight times more than the rate Medicare patients would pay. That pointed to a strong suspicion that providers were padding their bottom line rather than actually paying significantly more to care for Summit residents.
To give Summit consumers a stronger bargaining position, Peak Health Alliance will seek to combine the power of the community into a single negotiating entity that would approach providers and negotiate better rates. Peak would then bring that price list to insurance providers and have them bid with plans that meet those rates. The plans would be actual, traditional health insurance fully compliant with federal law. Peak’s main goal would be to reduce care costs, and the initiative would only succeed if Summit consumers save money.
Four of the county’s largest employers — the county government, the towns of Breckenridge and Silverthorne, and Breckenridge Grand Vacations — have already signed letters of intent to join the collaborative, which is set to launch by 2020.
Summit County manager Scott Vargo said that the county was “absolutely” on board with the initiative, recognizing the need to help achieve the “critical mass” of membership needed for the community collaborative to work.
However, he said the county’s commitment is contingent on plans and services not changing significantly for its employees, as well as premiums actually going down.
The plan is also being backed and promoted by Family and Intercultural Resources Center executive director Tamara Drangstveit, who said that it’s the kind of local solution needed to drive premiums down for working families while keeping health care dollars in the community.
Drangstveit acknowledges that aside from a few, smaller collaboratives — such as among public employees in Montana — this kind of alliance hasn’t really been attempted before.
However, when Montana hired a former health insurance executive, Marilyn Bartlett, to take a tough negotiating stance with the state’s largest hospitals on care costs for its workers, the plan worked.
After the negotiated pricing went into effect, Montana wound up saving $17 million in its first year and a half, with another $15 million saved in 2018. Quality and quantity of health care did not change at all, only cost.
The Peak Health Alliance nonprofit, when launched, will work with large employers who commit to signing on and not cutting side-deals with providers. Drangstveit said the hope is that if the initiative is a success, it will move beyond a pilot stage and be available to small businesses and individuals in Summit as well.
The plan has the blessing of the state’s insurance commissioner, Michael Conway. Conway said that he had been working with community leaders in Summit for over a year in coming up with a way to reduce premiums without affecting coverage, and this collaborative model might just be it.
“We’ve been trying to make the individual, small and large health markets work collectively so consumers are driving the conversation, rather than the insurance company negotiating on behalf of the consumer,” Conway said. “With this model, we’d be giving consumers a seat at the table. I am convinced that this will really bring health care costs down in Summit.”
Conway said that Summit County’s proposed model is the first to bring all these elements together at a community level.
“This collaborative model is starting in Summit, but it’s something that has real legs,” Conway said. “It’s a model that might be rolled out across the state, and has a real ability to drive down costs.”
Gini Bradley is not as worried about the particulars on how premiums will go down; she just wants some relief. Bradley’s daughter recently had an ACL tear, and she had to scramble to find $7,500 to pay the deductible right at the beginning of the year.
“But my heart goes out to other people who don’t have a safety net or can’t afford insurance and need to pay that kind of copay,” Bradley said. “They might need to sell a family heirloom or cash out their retirement. Anything that we can do locally, whether it’s the Summit Foundation or FIRC or whoever, anything we can do to lower costs, it has to happen.”
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