By Shaun Boyd

DENVER (CBS4) – Colorado could become only the second state to offer its own health insurance option. A new law required the Division of Insurance and Department of Health Care Policy and Financing to develop a public option. They are now taking public comment on a draft of that option.

On Monday, the Colorado Division of Insurance (DOI) and the Department of Health Care Policy & Financing (HCPF) issued a draft report on the development of a State Option for health insurance coverage.

On Monday, the Colorado Division of Insurance (DOI) and the Department of Health Care Policy & Financing (HCPF) issued a draft report on the development of a State Option for health insurance coverage. (credit: CBS)

It takes direct aim at hospitals. Denver area hospitals saw their profits grow 50% in the last two years while one in five Coloradans had trouble paying medical bills. While Obamacare limited insurance companies’ profits, the state insurance option would limit hospitals’ charges.

“Reimbursements, rates to hospitals are going to be set,” said State Insurance Commissioner Mike Conway.

Conway said the public option would initially only be available for the 8% of Coloradans in the individual market. He says their premiums could drop between 9-18%.

Kim Bimestefer, Director of Health Care Policy and Financing, said the plan is to bring rates in line with the national average. Colorado hospital prices are growing 57% faster than the national average, she said, and are among the highest in the country.

“What we didn’t say was hospitals you can only make this much in profit and this much in expense. We didn’t say that. What we said was you can lower your prices equal to and get more competitive with other states,” said Bimestefer.

The state will save money on administrative costs because it will require private insurance companies to administer the public option and for less money than they administer plans on the individual market now. They will also be required to pass any rebates they get from drug companies to consumers.

Sen. Jim Smallwood, an insurance broker, warned about unintended consequences.

“I’m concerned with what insurance companies are going to do if they’re forced to be in a market where they’re losing money and, candidly, I’m also really concerned about physicians and facilities being forced to take massive decreases by providing care to patients under the public option,” said Sen. Smallwood. “I would really worry about long term access, whether we’re going to have enough doctors and hospitals willing to participate in a program like that.”

Bimestefer says if hospitals don’t participate voluntarily, the state may force them to take lower reimbursements and if either hospitals or insurance companies try to shift costs, a new law allows the state to intervene.

“We recognize this is an industry that needs to start changing. We’re asking our hospital CEO’s to step up and be part of the solution,” said Bimestefer.

Chris Tholen, Executive Vice President of the Colorado Hospital Association, which represents more than 100 hospitals, issued this statement:

“By opening this public option to all Coloradans, there is the potential to significantly damage the health insurance market in our state. The way the plan is drafted, patients could choose to leave their current coverage to choose the public option, which could destabilize the current health insurance market. The Association is also skeptical about what appears to be the first step toward price control or rate setting as well as an intent to make provider participation mandatory. These factors, when combined with the potential to dismantle the private insurance market are cause for concern. Colorado hospitals fully recognize that there is much work that needs to be done to address health care affordability. But embarking on a path that adds further uncertainty by destabilizing Colorado’s insurance market, on top of instituting government price controls, will likely cause consequences on the state’s health care system beyond what is intended.”

The state will take public comment for the next three weeks. The plan won’t go into effect until January of 2022.

Shaun Boyd

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