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.


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.


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.

Thirteen States, Including IL, FL, CA, See Opportunity to Make Medicaid Cuts

Amid the Obama Administration’s encouragement for states to expand their Medicaid rolls per the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), 13 states have implemented cuts to the program or are preparing to implement reductions in provider payments and benefits offered to Medicaid recipients. Some states may have seen June’s Supreme Court decision, requiring that states be allowed to opt-out of PPACA’s Medicaid expansion scheme, as an opportunity to scale back their Medicaid programs.

Eligibility Requirements

While the decision did not specifically state so, some state level officials have interpreted the lifting of the Medicaid expansion requirement as the lifting of the PPACA-imposed prohibition from altering their Medicaid eligibility requirements. Wisconsin has already changed its policy to deny Medicaid coverage to non-pregnant adults who are both offered affordable employer-sponsored coverage and have an income that exceeds 133 percent of the federal poverty level (FPL). Some adult recipients must also be responsible for paying new or increased monthly premiums. Wisconsin officials estimate these changes will save the state around $28.1 million.

Other states that have made changes to their eligibility requirements since the PPACA decision or are preparing to do so include the following:

  • Hawaii–Non-pregnant adults will no longer be eligible for Medicaid if their income exceeds 133 percent of the FPL (the limit was formerly 200 percent of FPL).
  • Illinois–Parents’ income must not exceed 133 percent of FPL (formerly 185 percent of FPL).
  • Connecticut–Plans to limit adult coverage to those with less than $10,000 in assets, not including one car and a home, and to calculate income for adult children aged 19 – 25 living at home by including their parents’ assets and income.
  • Maine–Plans to reduce parental eligibility to 100 percent of the FPL (currently 200 percent of FPL) and to do away with coverage for 19 and 20-year olds.

Drug Benefits

Currently, 16 states limit the monthly amount of drugs that recipients can obtain through their Medicaid programs. Four states have increased prescription drug copays and/or imposed monthly caps since the PPACA decision was issued:

  • Alabama–With the exception of long-term care patients and HIV and psychiatric drugs, Medicaid beneficiaries were limited to one brand name drug through July 31. Now, beneficiaries are limited to four brand-name drugs monthly.
  • California–Implemented $1 and $3 copays for specific drugs.
  • Illinois–Program recipients are now limited to four prescriptions monthly, in addition to being subject to increased copays. Recipients may seek state approval to receive more than four drugs.
  • South Dakota–Beneficiaries must now pay copays of $1 for generic drugs and $3.30 for brand name drugs.

Other Cuts

In addition to budget-saving measures surrounding prescription drug benefits and program eligibility, states have implemented a variety of other cost reductions since the June decision, including provider payment cuts, emergency room copays, and reductions in coverage. Among those cuts are the following:

    • Alabama–Physician and dentist reimbursement has been reduced by 10 percent. The frequency of routine eye exams has been reduced to one every three years, and eyeglass coverage has been completely eliminated.
    • California–Payment rates have been frozen for nursing facilities while private hospital reimbursement has been reduced by $150 million. Clinical laboratory reimbursement has been lowered by 10 percent.
    • Colorado–Copays and enrollment fees, to be determined by family income, have been added to the Children’s Health Insurance Program. Nursing home reimbursement rates have been reduced by 1.5 percent, and orthodontics coverage has been limited.
    • Florida–Reimbursement rates have been lowered by 1.3 percent for nursing facilities and 5.6 percent for hospitals. Florida is planning to reduce the allowable number of home health visits for non-pregnant adults to three per day maximum, emergency room visits to six per year maximum, and primary care visits to a maximum of two monthly, pending federal approval.
    • Illinois–Reduced reimbursement to non-safety net hospitals by 3.5 percent and to non-physician, non-dentist providers by 2.7 percent. Routine dental care and chiropractic services are no longer covered. Beneficiaries who visit an emergency room for non-emergency purposes now incur a $3.65 copay.
    • Louisiana–Payments have been reduced by 3.7 percent to dialysis centers and dentists, 3.4 percent to non-primary care physicians, and 1.9 percent to mental health providers.
    • Maine–Services obtained at ambulatory surgery centers and sexually transmitted disease clinics will no longer be covered. With the exception of pregnant women, smoking cessation products will also not be covered.
    • Maryland–Payments to hospitals have been lowered by 1 percent and by 2 percent for nursing facilities.
    • New Hampshire–Hospital reimbursement has been reduced by $160 million.
    • South Dakota–Coverage for non-emergency adult dental services has been limited to $1,000 per year.


End of Week Roundup

This week, CMS is preparing to hike rates for primary care services provided under Medicaid. In the face of upcoming health reform requirements, are employers going to elect to eliminate health insurance coverage for their employees? Also this week:

  • The FDA’s over-the-counter drug proposal may result in Medicare & Medicaid savings.
  • The Senate Finance Committee examines opioid ties to the drug industry.
  • Why are small businesses failing to take advantage of the health care tax credit?
  • How your organization can effectively educate physicians on how to buy-in to its compliance program.
  • Colorado passed a bill to make hospital bills more affordable for the uninsured.


Uninsured Coloradans to Receive Lower Hospital Rates

Last week, Colorado Governor John Hickenlooper signed a bill establishing the Hospital Payment Assistance Program, which aims to make hospital bills more affordable for uninsured residents who do not qualify for Medicaid. This group of people is often at risk of receiving the highest hospital bills since they receive rates greater than those paid by insurance companies, which negotiate prices with the hospitals. Without that power of negotiation, uninsured patients are often left paying the full “sticker price,” for services, which can go up to as much as 495 percent of cost for inpatient services and 842 percent of cost for outpatient services. Those with the least ability to pay end up paying the highest rates.

Senator Irene Aguilar, who is an internal medicine doctor in addition to a legislator, sponsored the bill, recognizing the devastating financial impact that one medical episode can have on the rest of an uninsured person’s life based on the current system. She stated, “The goal of [the program] is to provide a way for hard-working uninsured Coloradans to responsibly pay a fair price for their medical care…so that they don’t endanger their health and livelihood out of fear of bankruptcy.” Proponents for the bill included the Colorado Consumer Health Initiative, which represents over 500,000 consumer members.

The bill does not apply to outpatient providers such as clinics and physician offices, and it will only apply to medically necessary services. Those covered are limited to patients whose family’s income does not exceed 250 percent of the federal poverty level (currently $57,000 for a family of four) and who do not have insurance coverage. Patients must not qualify for Colorado Indigent Care Program (CICP) coverage.

The major provisions of the bill provide the following protections to eligible consumers:

  • Transparency of hospitals’ charity and financial assistance programs. These policies will be required to be posted in waiting rooms, on the hospitals’ websites, on billing statements, and directly to the patients before they are discharged.
  • Capped prices. An uninsured patient cannot be charged more than the lowest price the hospital has negotiated with insurance companies or other third parties for the same service.
  • Extended payment plans. Before sending a patient’s account to a collection agency, the hospital must make an attempt to set up an extended payment plan.

The law is scheduled to take effect this August and will not be enforced by a specific government agency. Members of the Colorado Hospital Association (CHA) will be trained by the organization before the effective date, according to the CHA.