Covering the high cost of getting sick

John Santistevan says the size of your paycheck should not determine the value of your life. He is one of the public and private leaders in Colorado trying to craft a health care system everybody can live with.

The Colorado legislature took up a bill on March 5 that aims to do just that at a price more Coloradans can afford.

In the weeks ahead, state lawmakers will sit through hours of hearings on the high cost of insurance, hospitals and medicine. They will hear heartbreaking testimony from sick people too poor to pay the price, as well as corporations predicting dire unintended consequences from reckless solutions. In other words, the biggest political questions of a nation are coming to Denver for a spell.

Colorado lawmakers will do more than draft a public-private insurance plan with lower rates. They will invite in the question of how much is too much profit for a vital industry that employs a lot of people and stimulates a lot of the economy, especially in small towns.

They also have to balance cutting costs at the sake of quality, accessible services. Colorado lawmakers must balance competing interests in the weeks ahead in policy that is about profits and politics, as well as people’s lives and livelihoods.

Caught in the mix are the people Santistevan cares for as president and CEO of Salud Family Health Centers that serve rural and, often, indigent Coloradans.

He’s trying to make it work for everybody, he said. Officials from Jared Polis to the Republican minorities in General Assembly say the same.

“As a state and as a country we do have to control our spending on health care costs,” Santistevan told Colorado Politics, as he prepared to open his 14th clinic at the end of last month.

“We can’t continue to incur inflation in what people spend on health care; we have to bend that curve. The challenge of that is looking at the system as a whole and where we might be able to have some savings, and where we’re denying people’s access to health care.”

In other words, don’t hurt the poor and medically needy, while taking a swipe at corporations and millionaire CEOs.

For James Kiser, the CEO of Montrose Memorial Hospital on the Western Slope, the issue is complex, ripe for unintended consequences, while doing little to curb the state’s uninsured population.

Costs, inevitably, will be shifted from those who can’t pay to those with employer-based insurance.

“It could result in some rural hospital closures in Colorado and result in high unemployment from those organizations,” he predicted of those with narrow margins.

The governor and lieutenant governor called Kiser the day before he spoke with Colorado Politics to ask for his input and support, he said.

“They’re moving in the right direction,” he said. “I do think an option needs to be created, but it just needs to be well thought-through.”

The public option

About that option: The new legislation would put the state commissioner of insurance in charge of the plan, which depends on a hospital reimbursement formula that controls costs, according to the bill.

All hospitals are required to participate. Here’s another biggie: The plan has to pay out at least 85% of its premiums on claims.

A hidden cost-driver on drug prices — rebates paid by drugmakers to insurance companies for high-priced medicines — would be eliminated and reflected in the price to consumers.

The proposed state law makes it clear the authors aren’t fooling around. A hospital could be fined up to $50,000 a day and have conditions placed on its license to operate for failing to participate in the plan, a power vested in the state health department.

“Ensuring that all people have access to affordable health care is a challenge that has vexed public officials and policy experts for decades despite seemingly constant efforts to address the issue,” the bill states. “Although great strides have been made in increasing access to health care coverage through federal legislation, not enough has been accomplished to address the affordability of health insurance.”

The public option proposal isn’t the only game in town.

Members of the Joint Budget Committee are looking at what’s being called a “total cost of care” bill, which is being referred to as an alternative to what public option opponents say is an untested public option idea.

The total cost of care model has already been implemented in several states, including Oregon, which also looked at the public option idea. At least four states have so far adopted the model, which sets benchmarks for the growth of costs in the healthcare system, and for anyone who is involved in patient care.

Gov. Jared Polis, like other Democrats in Colorado and nationally, is certain voters want relief. They’re tired of getting ripped off, he says in his speeches on the subject.

The Washington Post said health care was a major driver of votes on Super Tuesday. Health care was the top issue in 4 out of every 10 Colorado Democratic voters, the newspaper reported.

At a statehouse press conference on Feb. 27, he checked off a list of accomplishments he and his fellow compatriots have passed since he took office last year.

“We’re looking at every method to save people money on their health care,” Polis said in the West Foyer just outside his Capitol office.

Their successes are numerable: they’ve increased hospital pricing transparency, stepped in on surprise out-of-network billing, pursued cheaper drugs from Canada, capped insulin prices and made it easier for communities of geography and profession to get group insurance rates.

None of the bills so far, however, have stirred the political mood as much as the government getting involved in setting prices by offering cut-rate health insurance.

The idea has public support — with a caveat, polling suggests.

A Kaiser Family Foundation survey last month suggested that 56% of Americans like the sound of a national Medicare for All health plan, but 68% favored a public option to compete with private insurance.

Lowering costs, then, is more politically palatable than eliminating private insurance altogether.

Skeptics say it’s not nearly as simple as passing policies when you control the votes, however.

Chris Brown, the top researcher at the Common Sense Policy Roundtable, says the public option idea with price caps takes on the symptoms of high health care prices without doing much for the systemic roots that drive up prices — unhealthy behaviors, supply and location of health care providers due to market barriers to service, and expensive care for the elderly.

In a widely considered white paper for the Colorado business group, Brown predicted certain and significant unintended consequences.

“Focusing exclusively on reducing insurance premiums for some in the individual insurance market via direct government actions could come at the expense of all other health care stakeholders, including patients, employers, insurance carriers, hospitals and others,” he said.

Delivering on price

Creating savings is where this gets tricky.

Democrats are eyeing cost controls that include caps based on Medicare rates. Hospitals and doctors say they can’t survive on that, and patients will get less care, especially in rural areas that already struggle with access. Throw in the fact that billions of dollars in spending, millions in taxes and the jobs of thousands of Colorado workers complicate the formula.

Meanwhile, Americans spend $1 out of every $7 on health care, more than $20,000 for a family of four, studies last year showed.

Colorado has some of the best-rated care in the country, but it also has the second-fastest rising prices in the country, and hospital profit margins have consistently topped the national average, according to a RAND Corp. study a year ago.

A study of Colorado rates by the Polis administration found hospitals in the state could break even at 132% of the federal Medicare reimbursement rate and proposed paying 143%, which has the industry up in arms.

Robert Smith, the executive director of the Colorado Business Group on Health, pointed out the study’s finding that the average Colorado hospital would break even at 109% of Medicare reimbursement, while the RAND analysis found they usually bill between 250% and 300% factoring in everyone else.

“When a hospital ... is paid 780% of Medicare, when other hospitals provide comparable outcomes at 250%, I don’t think you can reasonably conclude that those kinds of prices can be justified to provide high quality,” he said.

Republicans are skeptical and organized against it, saying the private market, doctors and patients should decide the matter, not elected officials on a partisan mission.

“The public option is nothing more than Polis’ sneaky attempt to instate single payer after Amendment 69 was overwhelmingly defeated,” said House Republican leader Patrick Neville of Castle Rock.

He referred to the single-payer proposal called ColoradoCare, which took a 4-to-1 pounding on Election Day four years ago. Polis ran for governor in 2018 on a pledge of universal health care.

The Polis approach

Polis campaigned on cutting the cost of health care, and his legacy probably depends on delivering.

His message to the industry: Buck up; it could be worse.

“The term public option could mean anything,” Polis said at Politico’s 10th annual State Solutions Conference in Washington, D.C., last month, pitching his plan on a national stage.

He said other (Democratic) proposals lean more toward single-payer systems, such as Medicare for All.

“What we’re essentially saying is, ‘You’re not cut out of this model, but there might be a little haircut you take,’” Polis said. “Clearly it’s better than the government-run model, but it’s not the free-for-all in the current state of the industry.”

Politico reporter Gavin Bade asked, “Price caps?”

“Yes, of course. We have to have leverage for better rates from the providers, from the hospitals, but leave enough for them to continue to be successful, to be profitable and to thrive in our state, but rein in some of this overcharging and excess billing that has run rampant across the board,” Polis replied.

Two high country Democrats, Rep. Dylan Roberts of Avon and Sen. Kerry Donovan of Vail, are the main architects of the public option bill.

Roberts said he never expected it to be easy.

“The status quo is very powerful, especially the status quo for health care,” he said in a Sunday afternoon phone call. “They’re going to fight very hard to protect their exorbitant profits, but when people actually look at the details of this bill, they will realize it’s not as scary as the TV ads are trying to make it seem, that it’s actually a reasonable proposal that is targeting a very specific problem that we have in Colorado, which is individual market customers who have little or no choice and extremely high insurance premiums, which are the people I represent.”

He doesn’t buy the dire predictions about shuttering rural hospitals.

“This plan actually has the potential, and I believe will help our rural hospitals,” Roberts said. “It’s going to mean they’re going to receive reimbursements at a higher rate than they currently are and that more people are going to have insurance and more people are going to be coming in and using their services.

“I’m from rural Colorado and I would never introduce a bill that would close a rural hospital.”

Political hurdles

Much of the fight comes down to political philosophy around cutting costs, which creates gridlock.

Eaton Mayor Kevin Ross, who operates an insurance agency and is running for Weld County Commission, sees mission creep in what the Democrats are doing.

The Affordable Care Act drove out a lot of health insurers, he said. Sure enough, in 2013, the first year alone, 23 health insurers canceled policies in Colorado covering 106,083 people in the individual market and 143,116 in the small-group market, according to the Colorado Division of Insurance.

Now the Polis plan will put more pressure on them to go elsewhere, by pulling down profits and increasing regulations.

“This, in my opinion, is a movement to bring in a single-payer system that’s government-run by squeezing out the private market,” Ross said.

He added, “I can’t think of one thing the government does better than the private market, can you?”

For Rep. Mark Baisley, a Republican from Roxborough Park, government isn’t the solution, it’s the problem.

“Costs are too high, too high throughout the health care industry,” he said. “But it is caused … more by government interference into an industry that was standing alone and very healthy, very cost-effective and very responsive until large organizations and government got so involved.

“This is just more strangulation on the industry and it’s taking us in the wrong direction even farther — furthering the mistakes we’ve been making for decades.”

Hospitals profiting

One part of the problem facing policymakers and the public is the vast amount of studies and stats that strain continuity.

The Colorado Hospital Association said people with private insurance will only end up paying more under the Polis plan.

“Cost shift exists because of chronic underfunding of state and federal public health care programs — namely Medicare and Medicaid,” the association’s senior vice president, Julie Lonborg, said in an email.

She said that, in Colorado, Medicare typically pays 70% of what it costs to deliver care, while Medicaid pays 77% — and together they cover more than 60% of Coloradans who are hospitalized.

She said profits also are the result of hospitals controlling their costs.

“Colorado needs solutions that improve affordability of care; these solutions should be approached carefully — CHA and its member hospitals are working with Colorado’s legislators to create such solutions,” she said.

Dan Weaver is the vice president of communications for UCHealth, an 8-year-old nonprofit health care system that includes University of Colorado Hospital in Aurora, Memorial Hospital in Colorado Springs and Poudre Valley Hospital in Fort Collins.

“UCHealth agrees that health care costs and insurance premiums need to be reduced,” Weaver said in an email exchange, sharing some information the hospital company had shared with Polis.

Weaver also questioned singling out hospitals when the link to high insurance cost doesn’t, to him, seem solid.

He pointed to a Kaiser Family Foundation report in 2018 that found Colorado has the ninth-lowest individual insurance premiums in the nation, with the second-slowest growth in premiums over the last five years.

“And specifically on profits, it’s important to remember that nonprofit health care systems like UCHealth, which includes 12 hospitals and a medical group, reinvest revenue back into the communities we serve and into the services we offer our patients,” Weaver said. “Often, the numbers being shared about hospitals’ ‘profits’ include non-patient revenue like investment income, donations and one-time adjustments.”

Factoring in those investments leaves “a small buffer for economic bad times, slow government and payer reimbursements, and unexpected expenses,” he said.

Last year, the system provided $933 million in total community benefits, including $367 million in uncompensated care, both records for the 8-year-old nonprofit health system.

“Importantly, UCHealth operates as efficiently as possible which has allowed us to launch numerous initiatives to lower health care costs and to provide community benefits.” Weaver said.

There have been dozens if not hundreds of contentious meetings so far, involving both sides on bills that complement and overlap in the overhaul.

The clashes in politics, opinions and numbers pop up all over the place in unrelated conversations at the Capitol.

The topic was failing schools, not health care, on Feb. 13 when Rep. Chris Kennedy of Lakewood, a Democrat chairing the committee, upbraided the sponsor, Republican Rep. Tim Geitner of Colorado Springs, for failing to talk to committee Democrats or likely opponents, before proposing his bill.

“I’m working on a bill related to hospitals,” Kennedy began. “I had 40 people in a room, and I let hospital executives yell at me for an hour the other day about everything they thought was wrong with my bill.”

He added, “That is just the first step.”