State-operated insurance could be a tough pill to swallow for small business owners

State Senator Ray Scott

Over recent years, rising health care costs have become a primary concern among small business owners as they have for much of the public. We have watched with reluctant disappointment as politicians have eagerly pitched government-provided solutions — and with even greater disappointment as they cleverly eschew questions about the true costs of such plans or how these quick fixes intend to address the root causes driving up costs.

Sadly, here in Colorado — a state where we pride ourselves on pragmatic solutions — elected leaders have begun to adopt this same big government mentality. This month the Department of Health Care Policy & Financing and Division of Insurance introduced a proposal to create a state-operated public insurance option. The plan makes lofty promises to bring down costs for a small share of residents. But the negative effects on all Coloradans would be disastrous.

As evidence shows, top-down government interference in the health care market produces poor results. Colorado’s public co-op program created under the Affordable Care Act failed to cover costs despite a 25 percent premium increase. When it was dismantled, 83,000 individuals were left without coverage and taxpayers were saddled with a $72 million federal debt. In 2016, nearly 80 percent of residents rejected Amendment 69, which would have created a $8 billion deficit within a decade.

The state’s latest proposal offers little to suggest it will be different. The public option is likely to create less access to quality care; put an unsustainable strain on health care providers; and, ultimately, push many into one-size-fits-all plans that ignore their unique needs.

The proposal seeks to reduce costs by capping reimbursement rates to doctors, nurses and hospitals by nearly 40 percent. Effectively, its answer to high costs is to simply pay health care providers less — a tail wagging the dog approach. Many providers simply can’t afford to earn less. A REMI Partnership study this fall found that setting reimbursement rates would create a loss of as many as 4,500 health care workers. Another study found nearly one in three rural hospitals could be forced to close.

Similarly, the state-operated option could force insurers out of Colorado. The plan requires carriers to offer the public option even though it might not be economically viable to do so. Insurers will have one of two options: shift costs to other groups, like employer-sponsored plans, or exit the state. Both are losing outcomes. Either prices will go up for most residents — more than half of whom are covered by employer plans — or Coloradans will have fewer choices. Many could be forced out of the plans they enjoy if their carriers leave.

For small business owners, that likelihood is daunting. They rely on competition among insurers to create high-quality, personalized plans that fully meet employee needs. Margins are tight, and even small price increases can be the difference between providing coverage or not. The REMI study notes that a 5 percent increase in the employer-sponsored market from cost shifting could jeopardize more than 8,300 jobs and $919 million in gross domestic product.

Unfortunately, the state’s proposal offers no economic impact analysis. Instead, it hopes health care providers and insurers will volunteer solutions to absorb the $1 billion in reimbursement cuts. That offers little reassurance to employers and employees across Colorado who will be forced to accept government-run plans — as state officials have suggested.

Rather than top-down government controls, policymakers should look for comprehensive solutions that tackle costs from all sides. Answers that engage all facets of the health care industry are the only way to make health care more affordable and sustainable while at the same time creating greater access to care, more choice and deploying more services critical to meeting such new needs as behavioral health and substance abuse.

Health care affordability is a problem, but the answer shouldn’t come at the expense of most residents’ care and coverage. It should not come at the expense of small business owners, who strive to ensure employees have access to high-quality plans tailored to their needs.

I encourage the governor to tap the brakes on the state-operated public insurance option. The true costs are too high. Instead, we should build on what’s working and explore real solutions that bring all sides of the industry to the table to address the factors causing health care costs to rise.

State Sen. Ray Scott, a Republican from Grand Junction, represents District 7 in the Colorado Legislature.