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Showdown At The State Capitol Over State-Controlled Health Insurance, The Bill May Be In Trouble

DENVER (CBS4) - A bill to create a state-controlled health insurance plan appears to be trouble. Three of the four Democrats on the Senate Health and Human Services Committee say they have serious concerns about the bill.

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(credit: CBS)

The legislation has changed a lot since it was first introduced. It initially included the possibility of a state-run insurance option. That was scrapped in the House and replaced with a standardized plan that every insurer in the state would have to offer.

Not only would the state dictate how much insurers could charge for the plan, but also how much providers would get paid. Anyone who didn't go along would face thousands of dollars in fines and hospitals could even be shut down.

Sen. Rhonda Fields, Chair of the Health Committee, says providers have been through enough in the last year. She said threatening providers with punishment if they refuse to take lower payments is piling on.

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Sen. Rhonda Fields (credit: CBS)

"Can you imagine us suspending a license for a hospital?" Fields asked.

Senators Joanne Ginal and Janet Buckner also voiced reservations about the bill, which would require insurers offer the state plan at a premium 18 percent lower by 2025 than the plans they now carry.

"I'm not quite sure how they arrived at that number," said Fields.

Fields says there's a lot about the bill that's unclear, including what the standardized plan will even look like.

"It's like navigating in the dark," she explained.

What we do know is the state will set reimbursement rates as a percentage of Medicare's and every provider in the state will be forced to accept them or face a $5,000 fine per year. Hospitals would face a fine of $10,000 per day for the first 30 days and then it would jump to $40,000 a day, after which they could lose their license to operate.

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Fields says there shouldn't be forced participation. Bill sponsor Kerry Donovan insists everyone needs to have skin in the game.

"The fines that are contemplated are the very end of the line after voluntary negotiations and two different public hearings," Donovan said.

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Sen. Kerry Donovan (credit: CBS)

The bill would only cover the individual and small group markets on the state exchange, which is about 15 percent of Coloradans who have insurance.

"We do believe that because this is a small portion of most people's business, that they'll be able to absorb and figure out how to make this work across the business," Donovan said.

But insurers say the reimbursement rates aren't low enough in some parts of the state for them to meet the 18 percent reduction, and providers say they're too low for them to stay in business because they already take reduced rates from Medicaid and Medicare, which cover 30 percent of Coloradans. They're also worried the standardized plan could become a starting point for rate negotiations for other plans.

"We took weeks to reach compromises," said Donovan, who insists the bill strikes a good balance.

While the bill does not directly impact most Coloradans who have insurance through their employers, there is concern that insurers and providers will look to them to make up some of the losses. Donovan says the bill prohibits cost-shifting and the State Insurance Commissioner will know if it's happening.

All Senate Republicans oppose the bill and, if even two Democrats join them, it will fail. Fields says she hasn't decided how she will vote.

"We'll see what it looks like after it's fully amended," Fields said.

The bill is expected to be debated on the floor next Tuesday.

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