Lawmakers are likely to wage a divisive battle over health care in the upcoming legislative session that begins on Jan. 9. Issues over expanding Medicaid, asking voters to approve universal health care, and the Colorado Health Benefit Exchange currently top the list.
Sen. Irene Aguilar, D-Denver, is leading the ambitious health care agenda for Democrats. Her most contentious battle could be over expanding Medicaid, which Republicans are weary of doing without containing spending.
She has been emboldened by an announcement by Gov. John Hickenlooper on Thursday that his administration will expand Medicaid to 133 percent of the poverty level in 2014, representing an estimated 160,000 new adult Medicaid clients. The Affordable Care Act mandated Medicaid expansion to 133 percent, but the U.S. Supreme Court said the federal government couldn’t force states to expand the program.
A new way of calculating income means that the expansion would actually reach 138 percent of the poverty level. For a single person, 138 percent of poverty level equals $15,415. For a family of four, the income threshold equals $31,810.
Hickenlooper, a Democrat, says the expansion can be paid for with a $280-million savings in Medicaid spending over 10 years. The savings would come from:
• $22 million by boosting efforts to prevent duplicative services;
• $86 million by increasing effectiveness, such as coordinating care;
• $86 million by reforming payment systems to reward value instead of volume;
• $43 million by improving and leveraging health information technology; and
• $43 million by redesigning administrative infrastructure and reducing fraud.
“This is a step towards what we’ve talked about for a couple of years now about how do we move and make sure we’re making Colorado the single healthiest state in America,” Hickenlooper said at a morning press conference at the Capitol.
President Barack Obama’s administration said in early December that states must meet the 138 percent threshold in order to receive 100 percent underwriting of new costs. The federal government will fully pick up the tab for expansion costs between 2014 and 2016, according to the U.S. Department of Health and Human Services. After that, the matching rate will trickle down until 2020, when the state will be responsible for 10 percent of the costs.
Hickenlooper said he is confident that the federal government will follow through with its assistance.
“Historically, the federal government when they make commitments are pretty reliable in fulfilling their commitments,” remarked the governor. “Nothing is ever certain, but I feel fairly comfortable…”
A study by the Kaiser Commission on Medicaid and the Uninsured and the Urban Institute found that Colorado would have to pay about $858 million over the next 10 years to expand Medicaid. But Susan Birch, executive director of the Department of Health Care Policy and Financing, said the study did not take into account Colorado-specific programs, such as the hospital provider fee, which the legislature backed in 2009 to generate additional federal Medicaid matching funds.
“They used a template that they overlaid nationally, and it didn’t take into account the nuances of Colorado’s funding methodologies,” explained Birch.
Aguilar, a primary care physician at Denver Health Westside Family Health Center, said she will run the necessary legislation to implement the Medicaid expansion. Hickenlooper could expand the system on his own, but Aguilar will co-sponsor so-called “Medicaid 2.0” legislation with House Speaker-designee Mark Ferrandino, D-Denver, to streamline the reforms.
“It’s what we’d like to see Medicaid look like from this point forward,” explained Aguilar.
“Since I sat for 22 years with patients in rooms, I get a better sense of how human behavior works, and what kind of things create a hassle for providers that are not necessarily saving costs,” she added.
The expansion has the support of hospitals and physicians across the state who believe broadening Medicaid could make it easier to accept entitlement payments. The Colorado Hospital Association says expansion is its top priority for 2013.
“Strengthening and expanding Medicaid will lead to improved physical and economic health for all of Colorado,” said Steven Summer, president and chief executive of the Colorado Hospital Association.
Summer points out that there are more than 800,000 people without health insurance and another 675,000 people who are considered underinsured across the state. Colorado hospitals last year paid $1.4 billion in uncompensated care costs to uninsured patients, he said.
“Colorado hospitals take great pride in providing quality care for those who need it, regardless of their ability to pay,” said Summer. “Expanding Medicaid will strengthen our ability and commitment to continue to care for patients in every corner of this state.”
Physicians agree, and the Colorado Medical Society has thrown its support behind the expansion.
“It is very important that patients get the right care at the right place at the right time and for the right value,” said Dr. Jan Kief, president of the Colorado Medical Society. “And not only is this really an opportunity for our generation here to close this gap, but to reinvent it with some innovative changes.”
The insurance industry, however, is taking a more measured approach.
“As an industry, we understand the importance of Medicaid; we understand the importance of people having coverage,” said Marc Reece, spokesman for the Colorado Assocation of Health Plans. “But it’s just the devils in the details with something like this. With as big of an expansion there are a lot of questions you’re going to have to answer about how everything is paid for before we commit one way or the other.”
Sen. Kevin Lundberg, R-Berthoud, who sits on the Senate Health and Human Services Committee, is already raising concerns about costs. He does not believe the state can expand Medicaid without increasing costs on its citizens.
“We can’t afford it,” surmised Lundberg. “I know what [Aguilar’s] end game is, which is she wants socialized medicine for all, and we can’t afford it.”
Universal health care
Aguilar is not shy about wanting a universal health care system. She is also proposing a constitutional amendment that would be referred to voters in order to create a Colorado Health Care Cooperative. The cooperative would seek a waiver from federal law to provide health insurance to all Coloradans.
Aguilar has suggested paying for the program with a 6 percent payroll tax and a 6 percent income tax, which would be pooled to allow the state to negotiate with providers for delivery of health care services.
Noting that she is proposing a referred measure, Aguilar says she must receive the support of four Republicans in the Senate to push the bill through the upper chamber. It would need two-thirds support from both the House and Senate to make it onto the ballot.
“I don’t want this to be a party thing, I think it really needs to be bipartisan to have a chance with voters,” said Aguilar.
Already, however, Republicans are resisting even sending the idea to voters. Lundberg said he wouldn’t vote for the measure because he doesn’t want to waste his constituents’ time with “bad ideas.”
“They’ve given me responsibility to make the first decision, and if I believe it’s not in their best interest, then I’ll not be bothering them with bad ideas,” declared Lundberg. “If I believe that it has some merit, then yes, I’m a great fan of not only the referred process, but also the initiative process… I like empowering people with decisions.
It’s just that they’ve empowered me with the responsibility of sifting through what’s the good stuff and what’s the bad stuff, and I think if it’s bad stuff, I’m not going to send it on to them.”
For Lundberg, the issue of universal health care comes down to philosophy: “What will put us on the right track is to get the government out of the business of being the primary medical provider for the citizens,” he said.
The insurance industry is raising concerns as well; fearful that Aguilar’s plan could irreversibly damage providers. But it is waiting to issue a formal statement.
“The impact on the industry, if you eliminate these kinds of health insurance industries … it is just a very concerning idea,” said Reece.
The Colorado Hospital Association is also anxious about the proposal, concerned that it is too early following implementation of the Affordable Care Act to be worrying about a single-payer health care system in Colorado. Melissa Phillips, spokeswoman for the Colorado Hospital Association, said hospitals are still scrambling to adhere to federal law.
“Although we always support efforts to promote and expand coverage to Coloradans… we unfortunately cannot support her vision for a universal health care system in Colorado,” explained Phillips. “We just feel it’s an inappropriate time to be discussing this legislation.”
But the Colorado Foundation for Universal Health Care believes now couldn’t be a better time to address a single-payer system. The group has been advocating for a health care cooperative system. It plans on releasing data in the coming weeks showing that such a co-op would curb costs and provide quality health care.
“This kind of proposal is an opportunity to not only create universal health care, but you’re actually lowering the premiums on the average for people across Colorado, and the study we’re doing will be able to show how much it will be lowered, but it’s significant,” said Dr. Ivan Miller, president of the Colorado Foundation for Universal Health Care board.
Health Benefit Exchange
Supporters of a universal health care system also point out that the state’s Medicaid population is expected to grow as high as 800,000 people, even without expansion. Therefore, they believe a single-payer system could streamline increased demand and cut costs for the state.
The developing Colorado Health Benefit Exchange — which is expected to launch in early 2014 — must divert people to Medicaid if they qualify, causing Medicaid rolls to swell.
The exchange will work similar to how people shop for airline tickets online. Serving as a consumer marketplace for insurance, the goal of the exchange is to lower prices and connect people with entitlement programs.
But sustainability remains a concern. As part of an effort to fund the burgeoning exchange, lawmakers will be asked to transfer funding from the soon-to-end Cover Colorado high-risk insurance program to the Health Benefit Exchange.
“Sustainability is key, and we understand that, and we think that given that the exchange is here to serve the entire state of Colorado, we’d just like to see the sustainability plan actually encompass that idea and look towards all potential sources of sustainability revenue, and not put the burden on the back of any one particular group…” said Reece.
But Lundberg, who sits on the Legis-lative Health Benefit Exchange Implementation Review Committee, does not believe it is possible to fully fund the exchange. He has repeatedly told ex-change board members that there are already options for consumers to com-pare and purchase health insurance.
“It’s not a business model that works,” he lamented about the exchange. “If what they’re trying to do is provide all of the options for the consumer on medical insurance, they are there today… they refuse to look at that. Why should the taxpayer pay for something that’s already available?”
Instead, Lundberg believes the state should defer to the federal government and allow the Obama administration to implement the online insurance marketplace. But he believes that would only show that a benefit exchange is not a workable product.
“If they set up a dysfunctional system, I say let them run with their dysfunction,” attested Lundberg. “I’m not going to enable them through state systems, and I’m under no illusion that the state system is going to give Colorado any autonomy whatsoever.”
Gretchen Hammer, chairwoman of the Colorado Health Benefit Exchange board, is not concerned with sustainability. She says funding mechanisms are in place.
“I’m confident that we have a long-term sustainability plan that will enable us to have a successful exchange in Colorado,” countered Hammer.
Other health care priorities
Several other health care issues may face lawmakers in the upcoming session, including:
• Harmonizing discrepancies between state and federal insurance regulations;
• Ensuring that Colorado’s Essential Health Benefits package is implemented, which lawmakers could try to expand;
• Raising caps on damages in medical malpractice lawsuits; and
• Expanding mental health services and programs with an additional $18.5 million.