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Colorado Democrats have a new plan for reducing health care costs or creating a public health insurance option

Colorado Democrats unveiled a public insurance option bill Thursday for the second year in a row, although a state-run insurance plan may not come to fruition if health care providers meet the bill’s goals for reducing the cost of insurance.

The aim is to help the 15% or so of Coloradans who buy insurance on the individual or small-group markets and people who are uninsured. Sponsors believe the bill will increase competition in counties where there is only one health plan on the marketplace, give consumers more choice and give the industry more of an incentive to lower costs.

The bill is significantly pared down from last year’s legislation, which would have created a public-private health insurance option rather than a phased approach. And there are additional concessions to the health care industry that vary even from the draft released earlier this month.

“I think given what’s happened in the world with COVID over the last year and the feedback we got from all different types of stakeholders and different communities across the state that this is the responsible and reasonable way forward on this issue,” said sponsor Rep. Dylan Roberts, an Avon Democrat.

The bill would create a standard insurance plan that insurers could choose but are not mandated to offer through the Connect for Health Colorado marketplace. If a zip code doesn’t have at least two companies offering that plan — or if insurers don’t meet targets for reducing monthly premiums (overall, a 20% reduction in costs by 2025) — the state could step in sell its own “Colorado Option Health Benefit Plan” to individual and small group markets.

Republicans opposed the effort last year, and in a February speech, Senate Minority Leader Chris Holbert of Parker said his caucus would continue to fight against a public health insurance option.

The Colorado Association of Health Plans, which represents health insurance companies, also opposes the bill. Executive Director Amanda Massey believes the first phase of reducing costs 10% two years in a row isn’t evidence-based and sets the industry up for failure.

“That target is being set off of one plan that currently exists and will be measured on a yet-to-be-determined standardized plan that does not yet exist,” she said. “And that standardized plan will likely have more benefits and be more expensive.”

Although bill sponsors acknowledged the new plan may not go as far as some progressives wanted, they said it’s a step to reducing health care costs. The bill also allows for an exemption for certain health care providers that can prove the plan will hurt them to the point they won’t be able to take Medicaid patients.

“The reality is is that access to equitable access to quality health care for everyone, regardless of your zip code, race, or residency status is an epidemic that we are facing in addition to a global pandemic,” said bill co-sponsor Rep. Iman Jodeh, an Aurora Democrat.

The Colorado Hospital Association also believes the targets set are not reasonable or evidence-based in the first phase and that the second goes too far, said Katherine Mulready, senior vice president and chief strategy officer.

“It provides the state with a whole lot of authority without any numbers or certainty to back it up,” she said. “And we’re afraid that that uncertainty could lead to really significant damages to health care access and quality in the state.”

Sponsors, however, say the plan will help small businesses and individuals who otherwise can’t afford insurance or medications and treatment, leading to more emergency room visits.

Ashley Henshaw, co-owner of Stepping Stones Learning Center of Littleton, said at a news conference Thursday that the system is not set up to help small businesses “protect our most valuable assets, our employees.”

“We need the Colorado health insurance option to make small businesses more competitive,” she said. “We are at a market disadvantage for recruitment and retention because you do not have the same advantages in the insurance market to purchase the best plans.”

Roberts also said the bill won’t just address the “root cause of rising health care costs” but also takes health care providers “at their word” because they indicated they could reduce costs on their own.

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