DENVER – A Colorado House Committee on Tuesday approved an amendment that re-writes the statewide public health insurance option bill so that it no longer includes a state-run option, but instead would force insurers to offer the standardized plan developed by the state and to cut their insurance costs for consumer using the individual or small group marketplace.
The latest iteration of the measure, HB21-1232, was rewritten following feedback from insurers and the health care industry during and after its April 9 committee hearing, sponsors said Monday, and has led most of the top health care groups and organizations, including the Colorado Hospital Association, to take a neutral stance on the measure rather than opposing it.
“If the bill is amended as we have agreed to with the sponsors, the Association is moving to neutral. We will re-evaluate our position if there are significant material changes made to the bill that impact Colorado hospitals,” the Colorado Hospital Association board of trustees said in a statement. “We thank the sponsors, Reps. Dylan Roberts and Iman Jodeh and Sen. Kerry Donovan, and members of the administration for their collaborative approach working on this bill.”
The state will still come up with a standardized health insurance plan by Jan. 1 of next year that insurance carriers will offer on the individual- and small-group insurance markets in every county of the state.
The standardized plan for both markets will have to cover at least as much as the most restrictive plans insurance companies are offering, and insurance companies will have to offer the standardized plans in each county in which they operate starting Jan. 1, 2023.
The premium rate for the plans will have to be at least 6% less than the rates for plans that were offered in 2021, adjusted for inflation.
Then, starting in 2024, the plan will have to be at least 12% less than the plans offered in 2021, and in 2025, the plan will have to be at least 18% less than premium rates offered in 2021.
Starting in 2026, insurers will only be able to raise premium rates for the standardized plan the amount of medical inflation over the past year.
According to the legislation, if insurers don’t feel they can meet those premium rate requirements, they or a health care provider can go to arbitration before the Division of Insurance and explain why they can’t meet the requirements in a public hearing. Insurers would be able to file an action plan as well if they are not meeting requirements.
Depending on what is heard at such a hearing, the commissioner of the Division of Insurance would be able establish hospital reimbursement rates for each carrier in order to meet the premium rate or network requirements, according to the draft amendment.
The amended bill would still be contingent on approval of a federal 1332 waiver with the Department of Health and Human Services. If that is denied, the Division of Insurance commissioner would set premium rate requirements.
The state would do a survey, to be completed by Jan. 1, 2026, to determine how effective the standardized plans were for Coloradans who purchased and used it.
Previously, the measure had a two-phased approach in which providers would have two years to offer a 20% less-costly standardized plan than they are offering with their current plans. If the cost reductions were not met, the second phase would kick in, which would have established a state-run option to compete with insurers on the individual and small-group markets.
Rep. Dylan Roberts, D-Avon, one of the bill’s prime sponsors, said Monday that the sponsors think the bill gets to a better place for the insurers and health care industry, but also accomplishes its original intent.
“We always started with the goal of lowering insurance costs for Coloradans and making sure that they have a new quality option available on the individual and small group market,” Roberts said. “This is still a big change to our health care industry, and I think we need a big change because consumers are paying too much.”
He called the introduced version a “starting point for negotiations” and said the sponsors heard “constructive feedback” in committee from the industry that they took to the drawing table.
“By using existing infrastructure and not using a nonprofit, we have been able to strike an agreement,” Roberts said.
Rep. Iman Jodeh, D-Aurora, said some of the considerations included being sure providers were getting money for the services provided.
Meanwhile, supporters of the original bill say while they would have preferred to keep the state-run public option portion in the bill, they are still optimistic about the changes.
“Really, the core of this bill is about bringing affordability to Coloradans and improving the equity and access that we see through our health insurance products. And that’s still what this bill will accomplish,” said Adam Fox, with the Colorado Consumer Health Initiative.
While the Colorado Hospital Association, Rural Health Alliance, SEIU and other health care groups that opposed the original version of the bill are now taking a neutral stance and not actively campaigning against it, others still disagree with even the amended version.
House Minority Leader Hugh McKean, R-Loveland, said earlier this month that the original version of the bill was a non-starter with Republicans, and he said he was still not supportive of the bill following changes Monday, though he did not offer concrete proposals.
“What I think we all share and agree on is we want to see the same level of care or better and reducing costs. And how that happens, I think, is much more of a symbiotic conversation than a bill that mandates certain numbers and certain percentages,” McKean said in an interview. “And so, I think you see all these changes, and I think is what it really says is that there’s not a really good, clear path. And I think that is usually when we ought to all really pull back and say, well, this is not the solution.”
Part of the concern McKean has with the bill has to do with the amount of power he believes the state’s insurance commissioner would be afforded under the legislation to make decisions.
Another concern has to do with the actuarial analysis used in the bill to establish a fair reimbursement rate for providers.
Because of all of the changes with the COVID pandemic and additional medical costs, McKean believes a new analysis is needed for lawmakers to understand what hospitals need to be able to charge to break even.
“I want to know what is it that my doctor in my hospital needs to have to make sure that they can stay in business,” McKean said.
Conversely, others are criticizing the bill for being too lenient on hospitals and insurance providers and worry that insurers will find other ways to recoup the premium reductions.
Bill sponsors disagreed and said they were pleased with the path moving forward after discussions and work with the health care industry, with sponsor Sen. Kerry Donovan, D-Vail, calling Monday an “exciting day.”
“If everybody’s a little unhappy then maybe that means you’re doing the right thing,” Roberts said Tuesday. “If getting a bill passed means making some compromises while still keeping in place of lowering healthcare costs and creating a new option in Colorado, I have to consider that option.”
Roberts says he doesn’t believe his constituents particularly care how it gets done or what it’s called so long as the result is lower health care costs while maintaining the same quality of service.
The amendment to the measure was discussed at a meeting Tuesday in the House Health and Insurance Committee and passed out of committee. It now continues through the legislative process.