Colorado Opens The Door To Public Option

Colorado Democrats introduced a bill in the state legislature that opens the door to a statewide health insurance public option if insurance carriers don’t reduce health care premium costs by 20% over the individual and small-group markets.

The bill, introduced last week, ties back to a public option bill that state lawmakers introduced in March 2020 but was put on hold in May due to the COVID-19 pandemic and after opposition from insurers and hospitals.

There are two phases to the bill. In the first phase, insurance providers would be encouraged to offer a standardized health insurance plan for individual and small group plans in places where the insurers are already offering plans. This standardized health plan would be developed by the state.

In 2023, that plan would have to cost 10% less than the premiums the carrier offered on each market in 2021. And in 2024, it would have to be 20% less than a premium offered in 2021 unless purchasing alliances have already met those savings goals, according to the draft bill.

In 2025 and following years, insurance providers would not be allowed to increase those premiums by any more than 1% on top of yearly inflation.

The state insurance commissioner would create the standardized plan. Insurance providers, hospitals and pharmaceutical companies would have to agree on how to meet the benchmarks set forth in the bill.

If the cost reduction goals cannot be met, then the second phase of the bill would take effect. In this phase, the state would implement its own public option plan, the Colorado Health Insurance Option, to compete with other insurers on the individual and small-group markets. The public option would be 20% cheaper than current average premiums on a county-by-county basis.

Also under Phase 2, the bill would create a nonprofit, the Colorado Option Authority. This nonprofit would offer the public option on its own and not through insurance providers.

The governor would appoint nine people to a board to oversee the nonprofit. This board would include at least five consumers, representatives of consumers or small-business owners, a hospital representative and a provider representative. People employed by carriers or managed care organizations would not be eligible, and all board members would have to be confirmed by the Senate. The bill specifies the board must reflect the state’s diversity with respect to race, geographic location, income and more.

The state insurance commissioner would be tasked to devise a fee schedule for the public option plan to reflect what health care providers would need to be paid for their services in accordance with what consumers need to pay for care.

Providers must accept anyone enrolled in the public option plan and the fee associated with that person in the fee schedule so that the people who the public option cannot be turned down for care. The bill also contains several proposed licensing changes that could discipline providers who do not accept patients on the public option plan.

The Biden administration must approve a 1332 waiver before the Colorado public option plan could be launched. The money from the federal government would be used to supplement the program along with contributions from individuals paying into the nonprofit that funds the program, the bill’s sponsors said.