Colorado Democrats preview public health insurance option

Colorado state Sen. Kerry Donovan speaks at a news conference on a public health insurance option bill that she and fellow Democrats are introducing at the state Capitol in Denver on Thursday, March 5, 2020. In the background stands another bill sponsor, Rep. Dylan Roberts. (Jesse Paul/The Colorado Sun via AP)

EDITOR’S NOTE: This story has been corrected to state that ads against a public option have been aired by the Partnership for America’s Health Care Future, not the Colorado Hospital Association.

DENVER  | Colorado Democratic lawmakers previewed highly anticipated legislation Thursday to create a state-run health insurance option that’s designed to drive down prices by making the existing insurance market more competitive.

The measure sponsored by Sen. Kerry Donovan and Reps. Dylan Roberts and Chris Kennedy calls for an option that’s offered by private insurers under state supervision.

It would set prices that hospitals and prescription drugmakers can charge people who choose to buy plans under the option, which would take effect in 2022.

Initially, it would affect roughly 300,000 residents on the individual market. The bill was expected to be formally introduced later Thursday.

In 2019, Washington became the only U.S. state so far to adopt a public option. Democratic Gov. Jay Inslee has called the program a step toward universal health care.

The Colorado sponsors insisted their proposal won’t put the state on the hook for health care costs. They acknowledged, however, that they had yet to pick up Republican sponsors.

“The people I represent are frustrated — beyond frustrated — at the lack of action to inject more choice in the marketplace and to lower costs for our friends, neighbors and families,” said Donovan, whose Rocky Mountain district has some of the nation’s highest insurance rates.

By compelling insurers to enter the market — especially the 22 Colorado counties with only one insurer — the plan could drive down individual market premiums by between 7% to 20%, Donovan said.

The plan would require hospitals and pharmacy benefit managers, which negotiate prescription drug prices, to participate.

The proposal calls for an advisory board consisting of experts in health care finance, patient advocacy, hospital administration and other areas to advise the Department of Insurance in crafting the option.

Sponsors said hospital reimbursement rates paid by insurers could increase if a facility has a large uncompensated or under-compensated patient load.

For months, a nonprofit lobbying group called the Partnership for America’s Health Care Future has aired ads assailing a prospective public option. The group, which opposes government-run health care initiatives, says price-setting could force facilities to increase prices for patients or insurers not in the individual market, cut services, or both.

“This proposal is too narrowly focused, paying for all of the promised savings through cuts to hospitals,” Colorado Hospital Association president and CEO Chris Tholen said in a statement Thursday. “It largely ignores critical components of the health care system, including insurance and pharmaceutical companies.”

Democratic Gov. Jared Polis has made health care coverage and affordability his highest priorities since taking office last year. A state-supervised public option plan is key to those efforts, Polis says.

To date, Polis and Colorado’s Democratic-controlled Legislature have created a reinsurance market to compensate private insurers for their highest-cost cases; mandated hospital price transparency; adopted consumer protections against surprise out-of-network medical bills; and launched an effort to import cheaper prescription drugs from abroad.

Polis has claimed that Denver-area hospitals enjoy some of the nation’s highest profit margins by overcharging patients.

His administration released a report in November that said Colorado hospitals’ average per-patient profit reached its highest levels in a decade in 2018 — $1,518, compared with $538 in 2008.