How ColoradoCare would work
By Alissa Johnson
There is one statewide election issue that seems to have resulted in more lawn signs, guest speakers and letters to the editor than any other: Amendment 69, which would establish a statewide system to pay for healthcare.
Should it pass, ColoradoCare would be a game-changer, generating $25 billion in new taxes and giving people an alternative to paying ever-increasing health insurance premiums. In this article, we look at how ColoradoCare would work and some things to think about before voters cast their ballots.
What it is
Though ColoradoCare is often referred to as single-payer health coverage, a Colorado Health Institute independent analysis clarified that it is not. In such system, there is only one provider of insurance. With ColoradoCare, federal programs such as Medicare will continue to operate and residents could still purchase private insurance. ColoradoCare more accurately described as universal coverage.
As Joel Dyar, state field director for ColoradoCare Yes, explained, “Amendment 69 … is one proposal to begin a national process of reform by creating a universal healthcare system in Colorado. This idea would cover every resident, all the time, with good insurance and eliminate all for-profit insurance premiums, deductibles, and many co-pays.”
According to the 2016 State Ballot Information Booklet, ColoradoCare would cover the same healthcare services currently mandated by the Affordable Care Act. It will not charge deductibles, but can charge co-pays for some services.
How it would be funded
If ColoradoCare passes, it will require an estimated $36.2 billion to fund once it is up and running. The bulk of that comes from a payroll tax—3.33 percent paid by employees and 6.67 percent paid by employers. Non-W2 income such as capital gains, dividends, interest, rental income, non-corporate business income, and retirement income (including Social Security) will be taxed 10 percent.
There are exemptions. The new taxes would be applied only to the first $350,000 of income for taxpayers filing as single and $450,000 for those filing jointly. And retirement income will not be taxed up to $20,000 for people 55 to 64, up to $24,000 for those 65 and older, and up to two times those amounts for joint filers.
These taxes are projected to generate $25 billion per year—significantly less than the $36.1 billion that Coloradans already pay for healthcare, according to Dyar, including out-of-pocket payments, for-profit insurance companies, and state and federal programs.
Additional revenue will come from the transfer of funds from programs rolled into ColoradoCare, such as Medicaid and the Children’s Basic Health Plan.
Until the system is up and running, a .9 percent tax would be split between employees (.3 percent) and employers (.6 percent) and paid in full by individuals with non-wage income. Residents would still be paying for private health insurance during this time.
Linda Gorman, director of the Health Care Policy Institute at the Independence Institute, said it’s not just the volume of the tax increase that concerns her but the impact on workers and low-income individuals.
“If you’re working part-time or on Medicaid… you have to pay 10 percent of your income, so it hits low-income people pretty hard,” Gorman said. She also foresees problems for the workforce in general.
“All of the economic work out there shows that employers don’t have a magic pot of money so if they have to pay more, to maintain payroll they cut hours, cut wages or cut fringe benefits,” Gorman continued.
Yet proponents believe that ColoradoCare could benefit many people financially. As Dyar said, “ColoradoCare provides small businesses with the ability to get good insurance for their people at 6.6 percent of payroll, gets rid of the 59 percent of worker’s comp that is the medical portion, and puts about $2,100 back in the pocket of the average family who buys their [health insurance] products.”
Data from coloradocare.org suggests that Gunnison County could save $947,792 under ColoradoCare, where the annual ColoradoCare cost for residents is estimated to be $675,833 as opposed to the $1,623,625 spent for health insurance premiums and portions of worker’s comp premiums paid in 2013.
The disagreement is perhaps why the Colorado Health Institute recommends considering a key question before voting: Would ColoradoCare make health care more affordable? The answer may be different for different individuals, and looking at individuals versus statewide costs.
How it works
ColoradoCare would be a political subdivision of the state, but it would not be a state agency or controlled or directed by any state executive, department, commission, board, bureau or agency. Instead, a board of trustees would oversee the system. Initially, that means a 15-member board appointed by state legislature leadership and the governor. That board would establish seven districts within the state, and ultimately, three members would be elected from each by Colorado residents.
The board would determine how ColoradoCare functions, establish operating rules and procedures, determine benefits and set payment rates for providers. They would also hire executives to oversee operations and establish things such as a process to investigate fraud, among other facets of the program.
Many see that board as a positive aspect of ColoradoCare. Marsha Thorson, office manager for the Town Clinic of Crested Butte, believes that it would provide a more direct line of access to the people making decisions, especially compared to private insurance companies. “I have no idea how the people on these different insurance companies’ [boards of directors] get elected or what their credentials are. It’s an act of God almost to get a bio or a history of how long they’ve been serving,” Thorson said.
For people like Gorman, however, the setup asks for too much trust, particularly since the initial, appointed members are supposed to be sympathetic to ColoradoCare. She also questions the fact that ColoradoCare is exempt from the Colorado Fair Election Law, and thinks it would be too easy for the board to increase taxes despite the fact that residents vote on it. “There is no requirement for anything like the blue book, no requirement for when they give notice [of an election], when the election happens and no requirement to write a proposition that a yes vote increases taxes,” Gorman said.
The local discussion
Dr. Eric Thorson, also of the Town Clinic of Crested Butte, has heard many arguments for and against ColoradoCare. This summer, he and Marsha hosted group discussion for patients, with ColoradoCare Yes staff and healthcare journalist T.R. Reid, who is a proponent of the amendment.
“Marsha and I believe that ColoradoCare would significantly benefit many patients but understand that it might not be right for everyone. We want people to be educated and look at the numbers for themselves,” Eric said. They’ve both noticed a lot of what they would call misinformation related to Amendment 69, and what Eric feels is an assumption that the unknowns will turn out negatively.
“A lot of individuals have complaints that the amendment doesn’t drill down into the specifics of how the plan would be rolled out. I appreciate that. I had some of my own concerns about that, however a lot of people make the assumption that what comes out will be a negative situation as opposed to the reverse, which is that we as the citizens of Colorado would have the potential to actually make it what we want.”
In the sessions, attendees had the chance to look at what it would mean for them or their business specifically. Even for Dr. Thorson, the amendment comes with pros and cons—payroll expenses might go up, but the administrative costs of dealing with insurance companies could go down.
But not all local healthcare providers are as open to the idea of ColoradoCare. Orthopedic surgeons Rhett Griggs, Gloria Beim and others publicly announced their position last week.
“We all want affordable, quality, universal healthcare—but ColoradoCare is clearly not the way to achieve it,” they wrote, citing several concerns, including the fact that the payment model is not defined and aspires to something that does not currently exist despite many attempts to create it: a payment model that optimizes quality, value, and healthy outcomes.
They are not alone in their opposition. As of late August, Amendment 69 did not appear to be polling well. According to the Denver Post, a Magellan Strategies survey released in early September showed that only 27 percent of respondents would vote yes, with 65 percent indicating they would vote no. Eight percent were undecided.
Things to think about
While that suggests the amendment has an uphill battle to pass, there are some questions you can ask in making a decision. In addition to looking at what ColoradoCare would mean financially, the Colorado Health Institute suggests considering two additional questions when deciding how to vote: Who would gain and who would lose, either in the form of coverage, payments for coverage, or the power to influence coverage? And what are the outcomes—benefits or drawbacks—that cannot be known for the election?
Find more information at the State Ballot Information Booklet, much of which can be found reprinted online at BallotPedia.
For the Colorado Health Institute analysis, go to coloradohealthinstitute.org.