Health Care Cost Controls Advance at the Capitol

A roundup of significant health care measures making their way through the General Assembly

Health care affordability is a heavyweight issue every year, it seems, at the Colorado General Assembly. But with Democrats controlling both chambers, and Gov. Jared Polis instituting an aggressive agenda that includes a reinsurance program, certain health care measures have more momentum at the capitol this session than in years past.


Last month, Polis issued an executive order to establish the Office of Saving People Money on Health Care, which would study Colorado’s rising health care costs and methods to control them.

A slew of mostly Democratic backed bills is making its way through the legislature, from a hospital transparency measure to one that would take steps toward a public option for health insurance.

A state report released Jan. 22 jolted the conversation over hospital spending and transparency. Colorado Department of Health Care Policy and Financing found that hospitals in the state have been shifting increased costs onto private insurers, even as the hospitals saw increased revenue. According to the HCPF study, changes in state and federal health care law, including the Affordable Care Act, resulted in hospitals reaping more in Medicaid payments and providing fewer services that went unpaid. But hospital costs are still rising, and the HCPF report indicated those costs contributed to the rising medical insurance premiums for Coloradans.

Hospitals have performed their own analysis of rising health care costs. The Colorado Association of Hospitals had come out with its own report Jan. 16, which largely pointed to Colorado’s high cost of living as a driver for the state’s relatively high health care pricing.

According to the CHA report, that is partly why hospitals in Colorado spend the sixth most on workers, services and equipment compared to hospitals in other states. The CHA report noted that Colorado has the second largest proportion of Medicaid admissions in the U.S., and that further analysis is needed to figure out why.

Katherine Blair Mulready, chief strategy officer for the Colorado Hospital Association, said much has been made of HCPF’s cost shifting report but that its broad implications “don’t paint an accurate picture” of Colorado’s health care providers as a whole.

“The big picture is, even the HCPF report acknowledged the limitations of its own data,” Mulready said. “The data largely does speak for itself” in terms of presenting some averages on costs, she added, but those figures greatly vary from hospital to hospital, which HCPF wasn’t able to drill down in its analysis.

Mulready said HCPF’s and her organization’s reports each “happened to coincide” with the introduction of a major hospital transparency bill last month.

HOSPITAL TRANSPARENCY MEASURES TO ANALYZE EFFICACY

The first bill introduced in the House this session is also one of the most closely watched.

House Bill 1001 would require hospitals in Colorado to send financial data to the state in order to help the government better analyze the state’s rising health care costs. HB 1001, which is largely sponsored by Democrats, passed in the House on a 39-22 vote on Jan. 29 and will be taken up by the Senate Health and Insurance Committee.

HB 1001 would require hospitals to submit Medicare cost reports, financial statements and other data to HCPF each year. HCPF would then generate its own annual report on statewide health care costs using that data.

During the bill’s Jan. 29 reading on the House floor, Democratic bill sponsor Rep. Chris Kennedy said the information will help consumers, businesses and insurance companies negotiate contracts with hospitals.

“If we are looking at two hospitals side by side,” Kennedy said, “and we can see this hospital is very efficient with their practices, but this [other] hospital is spending money on all these new capital projects that may not be necessary or high administrative costs … then an insurance company is going to choose to have a more efficient hospital in their network.”

The Colorado Hospital Association recently came out in support of HB 1001 after some friendly amendments. One of those changes made it clear that HCPF would not include in its hospital expenditure reports any information that is confidential, proprietary or contains trade secrets.

“We see this as the start of broader transparency measures,” Mulready said, adding that CHA “wanted to demonstrate that hospitals are willing to be part of the solution on these issues.”

REINSURANCE PROGRAM

Lawmakers will debate, once again, whether Colorado will join a small group of U.S. states moving to provide reinsurance in an attempt to stabilize health insurance premiums.

A few states have set up funds to help insurers cover high-cost medical claims, with Alaska being the first in 2016. Alaska, which saw premiums in its individual insurance market spike by nearly 40 percent in both 2015 and 2016, reported its reinsurance program led to a 7 percent premium increase in 2017 and a 22 percent decrease in 2018.

Backed by Polis, House Bill 1168 would have Colorado set up a fund that would step in to help reimburse insurers once they reach a certain threshold, or “attachment point,” in claims for a patient. The bill, which was introduced Feb. 1, currently doesn’t set the attachment point or what percentage of the claim the fund will pay for above that point. The state is still estimating how much a reinsurance program would cost if implemented.

Before Colorado could open a reinsurance program, the state Commissioner of Insurance would have to seek either what’s called a state innovation waiver or federal funding from the U.S. Department of Health and Human Services. HB 1168 would authorize the commissioner to make those requests.

A similar measure died in the Republican-majority Senate after passing in the House last year.

“I heard in my own community — and in mountain and rural communities across the Western Slope — that access to affordable health care is the single greatest challenge for hardworking families,” said bill sponsor and Democratic Rep. Julie McCluskie in a press release. “The time for action is now, and we must continue working across the aisle to help lower the high cost of health care in our state.”

PUBLIC OPTION PROPOSAL

Governors in California, New York, and Washington have all recently made a push for public health care coverage in various ways.

Colorado would take steps toward a public option, as well, if House Bill 1004 is signed into law.

According to the declaration in HB 1004, “a state option for health care coverage that uses existing state health care infrastructure may decrease costs for Coloradans, increase competition, and improve access to high-quality, affordable, and efficient health care.”

HB 1004 would direct HCPF and the Division of Insurance to submit a proposal to lawmakers that outlines a public option, including what it would cost and how it would be implemented. Those departments would have to present a summary of the proposal to joint committees ahead of the 2020 session.

The House Health and Insurance Committee approved HB 1004 on Jan. 23 in a 9-2 vote and sent it to Appropriations.

“Families are deciding whether to pay out of control health insurance costs each month or forgo coverage for themselves and their kids,” said Democratic sponsor Rep. Dylan Roberts in a press release.

He added that the bill is one way the state can make health insurance affordable for Coloradans in rural communities, where there’s limited competition, if any, among insurers. “This bill is part of the puzzle, it’s done in a responsible way to create a new health insurance option in Colorado.”

“There’s a perception out there that providers are inherently opposed to a public option,” Mulready said. But hospitals are open to the idea as long as there are “some important guardrails” that prevent the public option from harming the individual and small group markets, she added.

— Doug Chartier

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