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Colorado’s Public Option: Brilliant Idea or Risky Experiment?

March 4th, 2020 – Democratic majorities in Colorado’s state House and Senate give state lawmakers the power to make Colorado a test subject for the nation. Democratic Governor Jared Polis has successfully introduced health reform in several areas, but it is the Colorado’s proposed “public option” that is currently gathering attention at the national level.

The public option is to start on January 1st, 2002 and new details are coming in fast and furious.   Health insurance carriers offering individual and family health insurance plans will be required to offer public option plans in the same counties where they are selling other plans.

In rural Colorado, many counties have just one choice today and there is no doubt that more competition and affordable healthcare coverage options are sorely needed for rural Coloradan’s.  In counties with just one option, Colorado’s Division of Insurance will compel the existing carrier and possibly another insurer to offer the public option.

However, it’s a different story in Colorado’s more populated Front Range.  Unlike Washington state, the only other state with a public option, Colorado boasts a very healthy insurance market and has a good deal of competition in the major population centers, which is good for consumers and businesses.

Colorado’s proposed Public Option is government run health insurance administered by private insurance companies. Insurance companies with a large enough market share would be required to offer the plan and spend 85 cents of every dollar taken in on medical care. The jury is still out to see if these requirements might damage competition in the individual and/or employer sponsored group health insurance markets.

“We are very concerned — and I would say opposed — that the government will tell us the product, the price and the place that we have to sell,” said Amanda Massey, executive director of the Colorado Association of Health Plans. “That is fundamentally opposed to private business and competition.”

Colorado’s hospitals are also concerned with the proposed plan, as local industry representatives complain that the plan would reduce income by 40% to some hospitals, which could have far reaching consequences both with the level of services and access available for patients.

Colorado will force hospitals and providers to participate in its plan, with payments for services based on a multiple of Medicare’s rates.  Warning and escalating fines up to $50,000 a day will help compel hospitals to take the public plan and it’s lower reimbursement rates.  However, hospitals can request an exemption.

If the public plan alienates insurance companies, hospitals and providers and ends up reducing choices to Coloradans there could be lasting political consequences.

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