COLORADOCARE: Swing state begins to mull universal health care proposal

Supporters insist voters are so soured on insurance companies and complicated insurance exchanges that they are ready to try a radical new way of providing health care.

DENVER | A new plan for government-run health care that covers everyone is coming from a surprising corner: Colorado, a politically moderate swing state where Republicans and Democrats often share control of state government.

Universal coverage proposals — known as “single-payer” — have failed time and again in the United States. Left-leaning Vermont recently pursued such a system, only to abandon it as too expensive. President Obama’s health care law doesn’t cover everyone and has sparked enormous political backlash.

If the idea hasn’t worked in states that embrace Canadian-style, government-run health care, what are the chances it will fly in a moderate state that has the nation’s toughest restrictions on raising taxes?

Irene Aguilar, Jeanne Nicholson, Michael Walter

FILE - In this Oct. 2, 2015, file photo, Colorado Sen. Irene Aguilar, right, who is a physician at Denver Health, helps deliver more than 156,000 signatures to put a health care question on the 2016 ballot, outside the offices of the Colorado Secretary of State, in Denver. Also with her are state Sen. Jeanne Nicholson, middle background, and EMT Michael Walter. The group ColoradoCareYES wants to see Colorado start the nation's first universal health care plan. (AP Photo/Brennan Linsley, File)

It’s a long shot, supporters concede. But they’ve gotten the question onto 2016 ballots and hope that dissatisfaction on both sides with the current federal health law will make Colorado the first state to set up universal health care.

“I think we should take a picture of us throwing a bunch of cash down the toilet, because that’s what we have right now,” said Shelley Cohen of Denver, an advocate who handed out flyers about the plan at a recent meeting in a Denver church fellowship hall. About two dozen people came to hear details.

The plan would work like this: There would be a new, $25 billion-a-year tax taken out of paychecks, similar to how Medicare is funded. That money would then go to an elected board of trustees, which would act as an enormous insurance company and reimburse doctors.

The ColoradoCare tax would raise enough to cover everyone, even people who don’t work or aren’t legally in the country. It’s not exactly a “single-payer” plan, because Medicare and the military health care system would remain intact. But co-payments and deductibles would go away.

And so would most insurers. A brochure explaining the plan touts, “It is assumed that residents and Colorado businesses will choose to discontinue purchasing other insurance coverage.”

The campaign projects ColoradoCare would run annual surpluses of $2 billion, based mostly on trimming administrative costs from insurers and doctors’ offices.

Supporters insist voters are so soured on insurance companies and complicated insurance exchanges that they are ready to try a radical new way of providing health care.

“We will save not millions but billions,” said Jeanne Nicholson, a retired nurse and former Democratic state senator who is touring the state leading workshops on Colorado Care.

Edmund F. Haislmaier, a health policy research fellow at the conservative Heritage Foundation, said he’s skeptical Colorado’s plan will win public support. The price tag is so eye-popping — almost doubling the size of Colorado’s overall budget overnight — that even health-reform fatigue may not carry the campaign, he said.

“You can write the opposition campaign now. ‘Do you want your health care to look like the Post Office or DMV?’ The average person kind of gets that,” Haislmaier said. “When you’re talking about forking over an extra 10 cents a dollar on top of all your taxes, people aren’t going to like it.”

Indeed, a recent campaign to raise Colorado income taxes to shore up the state’s struggling public school system lost badly, despite almost universal acceptance that schools are underfunded. The 2013 schools income tax question would have raised taxes $950 million a year, a fraction of the ColoradoCare tax, but failed nearly 2-to-1.

Even supporters of single-payer health care have questions about ColoradoCare.

At the Denver meeting, one physician asked about the elected board of trustees that would set premiums and decide what to pay doctors for their services.

“This board is absolutely going to control the money, and special interests are going to control the board,” warned Dr. Vince Markovchick, professor emeritus of emergency medicine at the University of Colorado-Denver School of Medicine.

Others asked about abortion services — how could a government-controlled health system pay for them? The question raised the specter of ethical concerns about lots of medical services, from gender transition to fertility treatments to erectile dysfunction medicine. Shouldn’t those services be left to the private sector?

Nicholson said that covered services would be determined by the elected board of trustees. She conceded that a board controlled by insurers “could undermine all our efforts.”

“Even though this is going to be hard and there are going to be challenges, that doesn’t mean we shouldn’t try,” Nicholson concluded.

ColoradoCare supporters say they’ve learned from Vermont’s mistakes — such as trying to take over Medicare, instead of leaving care for people over 65 to the federal government. And the Colorado backers insist they won’t set brute-force price controls on doctors in order to keep costs manageable, which could drive doctors out of business.

“Doctors are leaving now, because they’re at the bottom of the food chain with insurers. Doctors who can afford to retire are retiring,” said Democratic Sen. Irene Aguilar, a physician who is ColoradoCare’s chief supporter in the Legislature.

She didn’t guess how much it would cost to run a campaign to persuade voters to approve ColoradoCare. Win or lose, the question will be an economic boost, she joked.

“This will be a great economic driver for our state because of all the opposition money that’s going to pour into Colorado,” Aguilar said with a grin.

  • Joe Rogers

    The author fails to show clearly that the $25 billion in premium tax means that Coloradans will not pay deductibles OR premiums. Along with the current state and federal funds for Medicaid the $25 billion equals what Colorado will spend on health care in 2019 the year ColoradoCare will go live. 10% might seem like a lot but with it Coloradans will get full medical, mental health, some dental and vision without deductibles or rising premiums. Imagine how much our 8% private health insurance premiums would go up if we Coloradans got to vote on it? Check out more at coloradocareyes.co

    • ElectricGuy

      Check ColoradoCare’s own numbers for disturbing errors. If they think this is how the numbers add up, they have much recalculating to do before reality is seen.

      • Retiree

        Sounds like you’ve seen the details of their plan. Care to comment on what, specifically, you think doesn’t add up?

        • ElectricGuy

          I’ve seen what they presented. It’s on their website as a summary of the plan.

          They double count admin (savings and presumed new CO based admin are more than allowed under ACA). They count existing tax breaks as new. They presume significant reductions in pricing they can’t support. They don’t discuss the impact of wealthy people moving from CO and poorest people being lured to CO. The proposal is for 10% of all income, but the summary only notes 10% of payroll.

          Want more?

          • Retiree

            Thanks for sharing. I’ll check it out for myself now. Can you point me to their Web site?

          • ElectricGuy

            coloradocareyes.com

          • Ken Connell

            See http://www.coloradocareYES.co (not .com) for much more than summary info . . .

          • ElectricGuy

            The summary I linked above is some of the most detailed information they provide. And it’s filled with obvious errors.

          • Bob Hertz

            Thanks Electric Guy for your observations. I am actually a fan of single payer, and I read about it a lot. But you are the first person to question the whole argument about huge savings.
            There are really three problems with the savings argument. One is that the savings may be exaggerated. Two is that in a labor intensive industry like health care, the savings would come from people losing their jobs at insurance companies and in billing departments of hospitals and clinics.
            The third and more subtle problem is that the savings would accrue to hospitals and clinics, not to the government. Single payer advocates often just subtract their savings number from projected spending, and it will not happen that way.
            Let me use an oversimplified example. Say that the single payer fee schedule allocates $500 to any orthopedist who repairs a broken arm without compllications. (I am making up that number, but bear with me.)
            Say that 50,000 Coloradans break their arm in the first year of single payor. So the authority must pay out $25 milliion in claims.

            Now let’s say that each major orthopedic clinic can lay off an insurance clerk. That is savings to the system as a whole.

            But the authority will still pay out $25 million.

            (unless the authority lowers the fee schedule right away in year one because of projected savings…..which is shall we say not likely to succeed.
            Feel free to contact me at bob.hertz@frontiernet.net to discuss further if you wish.

          • ElectricGuy
          • Joe Rogers

            A fellow wonk.

            I assume you refer to the first bullet on page two. The health industry administrative savings and the provider savings are not the same. Health insurance companies do a lot of activities that if there were one company you would need fewer people. For instance, each insurance company has an IT department or better yet for insurance each company has a utilization management department. Both are valuable for sure. But if you had one company maintaining the claims processing system or one company making sure people didn’t get gold plated electric wheelchairs you would obviously need fewer people.

            The provider administrative costs are more obvious. From personal experience I can tell you that large hospitals have 50+ people in their billing departments. Their job is solely to process and reprocess claims with the multitude of insurance companies, each with their own particular rules, so the hospitals can get paid. Just as with the health insurance components the hospitals will need fewer billing folks. There are more examples along these lines.

            Income tax deductions would be in addition to current amounts.

            Pricing is interesting. Each insurance company independently negotiates contracts with hospitals, SNFs, medical equipment vendors, pharmacy wholesalers, etc. The economic assumption is that as the largest health insurance company in the State, ColoradoCare will have more negotiating power relative to these companies than the fragmented insurers we currently have. Up to you if you want to agree.

            As for wealth and poor people coming and going. Almost everyone will save under the flat premium tax as Nathan stated above. Your argument is the same some made when we Coloradans expanded Medicaid. Two years after expansion we haven’t seen any “flood” of poor folks. Besides, our economy is doing really well relative to other states. Why not bring in good hard working Americans from less prosperous areas?

            The 10% is on all income. This fixes what some see as unfair in how folks who receive their income from capital gains pay a lower tax rate. This is the warren buffet point about billionaires paying less than their secretaries. ColoradoCare says we are all Coloradans and a dollar earned, however it was earned, means 10 cents to provide universal health care to all

          • ElectricGuy

            Admin is not the savior they propose it to be. They are likening it to Medicare, but that system has essentially no oversight and fraud is rampant. Provider savings are not so obvious, either. A decent billing app will account for different sysyptems of billing codes and there aren’t that many anyway.

            Essentially every dollar you spend on healthcare or insurance is tax preferred. Some folks do not receive their benefits in a tax preferred manner and would need to itemize for the deductions. People who do not itemize now will be unlikely to itemize under CC, however, as the amount is too low to trigger the change in filing. That leaves the current itemizers, who would continue the practice. So where are the additional $1B+ in saving to come from?

            Large providers have essentially the same power in the mariet as ColoradoCare would have. Recall the repeated spats between insurers and providers as they fought over reimbursement, to the point where insurers dropped providers from their network. As well, CC says they will not work this point very hard.

            I didn’t predict a flood of people in or out, but the math works in my favor, paricularly since CC will cover literally everyone, regardless of their tax payer status. That said, if we are to ‘bring in good hard working Americans from less prosperous areas’, what would they do? If there are jobs, people will work. If not, they will not. If there is free health care and a robust welfare system, not working is much easier to tolerate. If you could shift a high paying job to CO, why whould you want the additional tax burden? If you could shift out, why would you not expect a substantial decrease in taxes. Just moving to WY will save you 15%. On a $400k income, that’s $60k. Subtract $15k for health insurance and services and you still net a fat check.

            If you’re touting the Buffett Rule, you’re not a wonky as you think. First, Buffett was concerned about rates, not total dollars. He dodged the fact that he chooses to receive his income that way (hypocrisy knows no bounds) and that the income he receives is already taxed at 35%. If his income were all wages, he would actually receive a bigger check.

            My concern was that the public statements were at odds with the written policy. 10% of all income is differnt from 10% of wages. Almost everyone can’t save unless there are dramatic reductions in costs and CC has yet to make their case that it can be achieved, much less will be achieved.

            My point remains standing, CC has lots of work to do before this comes to a vote if they want it to have a chance of passing.

    • gofastgo

      Horse puckey! NOTHING IS FREE. Working folks will pay for those who NEVER pay for anything, the entitled, the demanding, the bums.

    • will Russell

      There is no requirement that doctors must take ColoradoCare. The current trend of doctors not taking any insurance will continue. Dentists, psychiatrists are just the start. There is a reason this is going to the voters, it could not pass the fiscal impact review when Senator Aguilar introduced it in the State Senate a few years ago.

  • davebarnes

    My prediction, which is totally unrealted to the merits of ColoradoCare, is it will go down 70/30.

    • Joe Hardhat

      There will be millions spent by both sides, so my prediction is 60/40. A slight majority of Millennials prefer socialism over capitalism … and old guys like us are fading away from the electorate. I was surprised (and alarmed) that Denver voters almost passed the tuition tax earlier this month.

      Anyway, the supporters will be playing fast and loose with the numbers. Remember how the ACA supporters told us about all the savings … what, $2,500 per household or something similar.

      • gofastgo

        It was less, or free, for many, and these are those same folks touting this mess.

  • gofastgo

    Not a chance. The backers of this ‘plan’ are the have-nots. Those who think everything should be free, along with subsidized housing, welfare, food stamps and child care. It’s a bad idea and one that won’t fly, even in state nearly as bad as Washington and Oregon for liberalism.

    • Joe Rogers

      You are obviously not a Coloradan. We are a level headed bunch of good hard working folks. And as my property price attests lots of people are moving to our vibrant awesome state for our moderate approach and strong economy.

      ColoradoCare can succeed and if given a chance by Coloradans we will prove it to nervous nellies like you

      • will Russell

        Coloradans are hard working but they settle for less from government than they should. Take a look at DMV. It is still run like it is the 1980’s. You have to go to one place for a driver’s license, to another place for license plates and its even worse if you are a trucker. Even the major car dealers are not on-line. Heck, they don’t even have a machine to scan in certified mail – just try to mail in a tax return certified mail. They won’t sign for it they are so understaffed. The offices are filthy. The Dept. of Revenue is mired in backwards technology and we want them to collect another 25Billion when they can’t do the job they are suppose to do now?

  • Squid

    I don’t see the electorate approving a $25 billion tax. People have a strong distrust of government so expecting people to more deeply involve government in health care is a long reach.

    • Joe Rogers

      The $25 billion replaces employer and employee premiums they currently pay to private health insurance companies. Sticker shock aside ColoradoCare will not increase Coloradans out of pocket costs. In fact, it’ll be lower for the vast majority of us because we won’t pay deductibles or coinsurance just the 3.33%.

      • Squid

        I don’t see how that is possible. Colorado has about 2.4 million people in the workforce. Some are part time workers. $25 billion / 2.4 million equals $10,400 per person. That is on top of Medicaid, non working dependents and others. That could drive down the payers to 2 million or less. Your premise is not viable.

        http://cclponline.org/wp-content/uploads/2014/09/SOWC_2014.pdf

        • Joe Rogers

          As ElectricGuy points out the premium tax comes off of all income earned except social security and disability. Including investment income helps things add up.

      • will Russell

        Section 6, III, 5 permits a provider to charge a copay with ColoradoCare’s OK. But it doesn’t require providers to participate. Thus, if you have a specialist who wants to charge you more and ColoradoCare doesn’t OK it, that provider may simply refuse to see you. Thus, it paves the way for the most skilled surgeons and other specialists not to participate.

  • Nathan Jansch

    As a small business owner that currently pays for health insurance for my employees, an 8% payroll tax would actually cost me less than what I’m currently paying. From that perspective, this proposal actually sounds intriguing. I have a hard time, though, not thinking about the government-run health care debacle that is the VA Health Administration. I’ll be curious to see the details of the ColoradoCare plan.

    • ElectricGuy

      Whether it is more or less than insurance premiums depends upon payroll. And don’t neglect the other third of the bill coming from employees. As well, you’ll see singles howling because they will be paying the same as those with families.

      • will Russell

        It is even worse. An individual investor who makes $350,000 a year will pay $35,000 in taxes for health care.

        • ElectricGuy

          I don’t see it as worse. All the self-employed pay both the employer and employee share of payroll taxes. Those who are not self-employed forego the employer share as wages, but they pay them, none-the-less.

    • Ken Connell

      Congratulations Nathan on running your numbers! And, under ColoradoCare you and your employees would be participating in a comprehensive Platinum-Plus Health Plan where 95% of your premiums would pay for health and health care services (unlike under the Affordable Care Act standard that requires private health insurers to spend only 80% on medical services) . . .
      Please note ColoradoCare would be voter-approved (not government-run like the VA system) health care IF voters pass it as Amendment 69 in the 2016 Presidential election . . . It would include a publicly funded health premium tax along with federal Medicaid and Affordable Care Act Waivers funding from the feds paired with a private “consumer health cooperative” with a member elected Board of Trustees to administer the payment of health and health care services for all Coloradans . . . This innovative public-private partnership would be unique to Colorado . . . and move us forward in becoming the healthiest state in America . . .

      • will Russell

        ColoradoCare is government run. It will be a political entity under the state constitution. Its collections will be done by the inefficient Dept. of Revenue and other agencies will have to funnel money into it for Federal monies they receive.

    • Joe Rogers

      Nathan, it’d be 6.67% to the employer and 3.33% to the employee. From your post that sounds like your benefit expense will be even lower and your net income even higher than you first supposed. As to the VA, whatever you think about how well the Feds run a health care system ColoradoCare will not own a single provider. Providers should only see upside in lower administrative costs from fewer billing specialists and improved cash flow again from lower administrative complexity.

      • will Russell

        Administrative complexity will remain. ColoradoCare is not a single payers system. Section 11 of the Amendment is very clear on that.

  • will Russell

    Retirees taking out RMD’s will be slammed with a 10% tax. There is no employer to pick up the 6.67%. For younger retirees under 65 who want to keep their employer insurance so they can participate in other retirement benefits, they will pay double, their current premiums and 10% to ColoradoCare.

  • will Russell

    The Amendment fails to address administrative costs: hiring more people at the Dept. of Revenue, hiring staff, finding offices. Unemployment insurance for layoffs from the private sector insurance industry. When various programs are combined and the money is funneled to ColoradoCare, those folks will be laid off. This will be an administrative mess.

  • will Russell

    Remember that the 3.33% tax that the working pay, or the 10% tax on non-payroll income may not be tax deductible on the Federal return. Federal law permits taxes collected by the taxing authority, in this case DOR, to be tax deductible, but these taxes are specifically not income taxes. The IRS will not make a formal decision until this comes into effect. Thus for those who don’t itemize, they could pay Federal taxes on it. We can’t know until its too late.