The new $38B health care universe may start in Colorado

If Colorado voters pass Amendment 69, the state’s new universal health coverage system implemented will cost an estimated $38 billion each year. The Colorado Health Institute analyzed the possible implementation of ColoradoCare and noted that unlike the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) goal of increased coverage through utilization of existing programs, ColoradoCare would replace Medicaid and private insurance entirely.

Operation

ColoradoCare would provide automatic coverage for everyone with a primary residence in the state. This coverage would be truly universal, including those who do not qualify for current coverage due to immigration status. Those covered would be able to see any provider that accepts ColoradoCare patients. Some services would be completely covered as required by the ACA, and others would require a co-payment. No deductibles would apply. The plan includes 11 categories of benefits, from primary care, to hospitalization, to palliative care.

The system would be considered a state “political subdivision,” similar to cities and counties, and would be operated by a board of directors. This board would control more annual funding than the entire state government. The size of ColoradoCare, if it were a corporation, would be ranked ahead of powerful companies like American Express, Nike, and McDonald’s in the Fortune 500.

The Institute noted that ColoradoCare proponents believe that the reduced administrative burden will save time and money, as much as $4 billion, while others are concerned that market competition would be reduced. ColoradoCare would not employ providers but rather reimburse providers for services, like under current systems. However, because ColoradoCare would be setting reimbursement rates and would also dominate the market, the Institute noted that providers would have a hard time turning down ColoradoCare patients.

Funding

The program would be covered by various taxes, starting with payroll taxes. Workers in the state would pay 3.33 percent, and employers would cover 6.67 percent. Non-payroll income, such as self-employment, business income, real estate income, and investment income would also be taxed at 10 percent. ColoradoCare would terminate all employer mandates and subsidies, which would be replaced by the payroll tax. In addition, current Medicaid funding would be redirected to pay for the new system.