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Colorado Democrats unveiled their proposal to create a state-level public option for health insurance at the Capitol on March 5.EXPAND
Colorado Democrats unveiled their proposal to create a state-level public option for health insurance at the Capitol on March 5.
Chase Woodruff

Democrats' Public Option Bill Sets Up High-Stakes Fight with Health Lobby

Laura Packard survived a stage IV cancer diagnosis three years ago, but the stack of medical bills she showed off at the Colorado State Capitol on Thursday, March 5, wasn’t for her chemotherapy and radiation treatment.

“These are all of my bills after cancer,” said Packard, a small-business owner and health-care reform activist. “As a part of this bill, I was checked for respiratory viruses — i.e., the flu — and UC Anschutz billed $1,227.11 to check me for the flu. So that’s important information to keep in mind right now.”

Packard and other advocates for health-care reform joined Democratic lawmakers at the Capitol to formally unveil the “Colorado Option,” a proposal for a state-level public option for health insurance that would be available to Coloradans who purchase coverage on the individual market.

“We need more competition,” Packard said. “And we need to make sure the hospitals that are making obscene profits off of patients like me pay their fair share.”

The Colorado Option would be administered by private insurance companies, which would sell the plan alongside their other offerings through Connect for Health Colorado, the “health exchange” established in 2014 as a result of the Affordable Care Act. But its reimbursement rates for hospitals would be capped by state regulators, and insurers would be required to spend 85 percent of premiums directly on patient care. That could save Coloradans up to 20 percent on health-care costs, Democrats said at the announcement, and allow as many as 18,000 who currently lack insurance to get covered.

“We have built a uniquely Colorado solution that provides real support to struggling people, increases competition and ensures our Colorado hospitals will continue to have the resources they need to serve our communities,” said Senator Kerry Donovan, a Democrat from Vail and one of the lead sponsors of House Bill 1349, the legislation that would create the public option. “This is the change we need, and this is the change we promised.”

HB 1349’s introduction follows the passage of preliminary legislation last year that directed state regulators to study the design and implementation of a public option, and it sets up a high-stakes showdown between Democrats and the health-care industry in the final months of the 2020 legislative session. In January, a report released by the state's Department of Health Care Policy and Financing laid blame for skyrocketing health-care costs at the feet of Colorado hospitals, which raked in over $1,500 in profit per patient in 2018, a nearly threefold increase since 2009.

"We've seen record profits for hospital systems at the same time that the cost of care has gone up for working Coloradans," Donovan said. "Every other industry has sacrificed on our path to lowering the cost of health care, and we are bringing hospitals to the table with this bill."

If passed, the bill would make Colorado just the second state, after Washington, to enact a state-level public option. But first, Democrats will have to overcome a powerful health-industry lobby that has opposed their plan at every turn and came out swinging once again after their announcement.

“Unfortunately, despite bold promises and inflammatory rhetoric, the ‘Colorado Option’ is just a repeat of failed policies," Chris Tholen, president of the Colorado Hospital Association, said in a statement on the bill's introduction. “This proposal is too narrowly focused, paying for all of the promised savings through cuts to hospitals. It largely ignores critical components of the health care system, including insurance and pharmaceutical companies."

Supporters of the public option took pains at the March 5 press conference to portray it as a "public-private partnership" that wouldn't require substantial state investment. The plan's availability on the ACA would promote "competition" and "consumer choice," and help correct a "market failure," said Representative Chris Kennedy, a Democrat from Lakewood.

None of that is likely to satisfy the bill's opponents in the health-care industry, who had already spent hundreds of thousands of dollars this year to oppose the measure even before it was introduced. The opposition has been led in large part by an opaque advocacy group known as Colorado's Health Care Future, which was launched by a national dark-money organization with ties to hospital, insurance and pharmaceutical lobbyists.

The group has blanketed airwaves in Colorado with ads opposing the state option, using language that is nearly identical to that used in its national advertising against far more sweeping proposals like Medicare for All. "We need to build on what’s working in health care, not start over with a government-run system we can’t afford," one ad says. (The Colorado Option, a privately run plan that would only be available to the 8 percent of Coloradans who purchase coverage on the individual market, would do no such thing.)

At the announcement, bill sponsors said that they'll continue to negotiate with hospitals and other industry groups over ways that the public-option proposal can be improved — but stressed that with the high costs of health care continuing to impact so many of their constituents, they won't back down from the bill's core goals.

"This is the issue I hear at the doors: that we must lower the cost of health care, and we must make health care and consumer choice a priority," Donovan said. "No matter where you live, every Coloradan deserves affordable health care, and the Colorado Option is a step in that direction."

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