Is single payer healthcare coming to Colorado?

Colorado voters will decide state's healthcare future in 2016 election

Voters to decide if Colorado switches to single payer healthcare in 2019
Will Colorado switch to single payer healthcare in 2019? Voters will decide. Peter Muller/Cultura/Getty Images

In the fall of 2016, voters in Colorado will have to make a choice. Do they want to continue with the status quo system of health insurance, or switch to a single payer system that insures everyone in the state under one centrally-run insurance program?

Already a high-performing state

Colorado implemented regulations requiring maternity coverage on all policies and a ban on gender rating for health insurance premiums before those provisions became the norm nationwide under the ACA.

The state has consistently been a leader in healthcare reform, and was among the first to establish a state-run exchange.

Colorado currently has a robust health insurance market, with ten carriers offering individual health insurance plans through the exchange. The state also expanded Medicaid under the ACA, and the uninsured rate had fallen to 10.7% by the first half of 2015, according to Gallup data (the Colorado Health Access survey pegged the uninsured rate even lower in 2015, at just 6.7%).

But for some, healthcare still out of reach

Although health insurance is generally more accessible and affordable than it was prior to 2014, single-payer advocates in Colorado note that health insurance does not necessarily make healthcare more accessible. A recent survey in Colorado indicated that more than 16% of the insured population are actually "underinsured" which means that their out-of-pocket costs exceed 10% of their income (5% for people who earn less than 200% of the poverty level - about $40,000 for a family of three).

Is single payer the answer?

Proponents of ColoradoCare - including Colorado Senator Irene Aguilar, who has been a longtime healthcare reform advocate and who is spearheading the ColoradoCare initiative - believe that a single payer system will result in lower healthcare spending in Colorado, greatly reduced financial barriers to accessing care, and universal health insurance in the state.

According to the ColoradoCare website, "ColoradoCare would cover all residents and cost less than the current system." Seniors 65 and older would keep Medicare; ColoradoCare would be for non-elderly residents.

Throughout the summer of 2015, ColoradoCare supporters gathered signatures in an effort to get Initiative 20 (Amendment 69) on the 2016 ballot in Colorado. They succeeded; their valid signature count ended up being more than 110% of what they needed, and the ColoradoCare initiative will be on the ballot in Colorado in November 2016.

How would ColoradoCare work?

To implement ColoradoCare, the state would use a Section 1332 innovation waiver in order to obtain Affordable Care Act funding for the program. Section 1332 waivers are part of the ACA, and will become available starting in 2017. They allow states to go beyond the basic provisions of the ACA and design their own approach to healthcare reform, while still accessing all of the federal funding that would have been directed to the state under the ACA, including federal funds that would have been spent on premium subsidies, cost-sharing subsidies, and Medicaid expansion.

If approved by voters, ColoradoCare would take effect in 2019, and is projected to cost a total of $35.6 billion that year.

Funding is expected to come from a new state income tax, federal funding under the 1332 waiver and a Medicaid waiver, existing state Medicaid funding, and a small amount of cost-sharing when people access care:

  • $25 billion = healthcare premium tax assessed on Colorado residents' incomes (10% total, of which two thirds would be paid by employers and one third would be paid by employees)
  • $11.6 billion = federal waivers that would allow the state to use ACA funds and federal Medicaid/Children's Health Plan funds, as well as state Medicaid funds.
  • $1 billion = out-of-pocket expenses for residents, including copays. But total out-of-pocket expenses are expected to be far lower than they are today, as ColoradoCare would have no deductible and no copay for primary and preventive care.

    Total projected funding for 2019 is $2 billion more than the program is expected to cost, meaning that ColoradoCare would head into its second year of operations with a surplus, if all goes as planned.

    Administrative cost savings are projected to be nearly $8 billion in 2019 under ColoradoCare (compared with the current system), through a combination of administrative savings in private health insurance and healthcare provider offices.

    ColoradoCare would run more like Medicare (admin costs under 4%), as opposed to the current regulations that allow insurance carriers to spend up to 20% of premiums (15% for large group plans) on administrative expenses.

    Will ColoradoCare become a reality?

    For a 1332 waiver to be approved by the federal government, its proposed changes must ensure that coverage and care remain at least as comprehensive and affordable as they would have been without the waiver. The waiver proposal must also ensure that at least as many people are covered as would have been the case without the waiver, and the waiver must also not increase the federal deficit.

    Based on those criteria and the model that ColoradoCare has outlined, it appears that federal approval is attainable. What's more in question is the will of the Colorado voters. As expected with such a measure, there is fierce debate in the state in terms of whether ColoradoCare will be beneficial for state residents or not.

    There is no doubt that there will be intense criticism of Amendment 69, but the measure also has grassroots support. If Amendment 69 is approved by voters, all eyes will be on Colorado as the state navigates the process of establishing a single payer system. 

    Vermont was the first state to propose a 1332 waiver path to single payer healthcare, and they appeared to be well on their way to a 2017 implementation when they abruptly pulled the plug in December 2014. State officials cited cost as the reason for abandoning their single payer efforts; the cost estimates generated in 2014 were significantly higher than what the state had previously calculated. ColoradoCare's supporters and creators are aware of the situation in Vermont, and have hopefully learned from Vermont Officials' now-defunct planning process.

    Ultimately, the decision now rests with voters in Colorado, during a presidential election cycle in a swing state - it will certainly be interesting to watch.

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