Brief Comments on ColoradoCare

By Ida Hellander, M.D., David U. Himmelstein, M.D., and Steffie Woolhandler, M.D., M.P.H.

Organizers for the ColoradoCare ballot initiative have contacted some activists in Physicians for a National Health Program, seeking their endorsement and financial support. We summarize, below, our understanding of the initiative.

Description of the program

ColoradoCare is a ballot initiative for a publicly financed, universal health plan for the state of Colorado that would be operated by a private cooperative under a 21-person elected Board. While the ballot measure spells out the program's governance and Board structure in considerable detail, key aspects of the program are not specified, and/or left to the discretion of the Board. In the past the drafters made clear in public statements that ColoradoCare is NOT a single-payer plan.

The initiative would cover all Colorado residents under a publicly funded, cooperative insurance plan. While the new program would replace most private insurance, Medicaid and CHIP coverage, it would serve only as supplemental coverage for those covered by Medicare, the VA and TriCare. The initiative would not prohibit the purchase or sale of private coverage duplicating the public plan. However, proponents expect that little private insurance would persist, since most businesses and individuals would not want to pay twice for coverage.

The proposal would cover a broad range of benefits, but would not cover dental care for adults, or long-term care for most individuals.

ColoradoCare would be funded via a payroll tax of 6.67 percent on employers and 3.33 on employees, or 10 percent of non-payroll income (excluding pensions and annuities), along with federal funds that would have come to the state via subsidies for private coverage under the Affordable Care Act, for Medicaid, and for other programs.

The drafting of ColoradoCare was spearheaded by Colorado Sen. Irene Aguilar and psychologist Ivan Miller. Volunteers and paid staff gathered the signatures necessary to put it on the ballot. Journalist T.R. Reid has become a champion and spokesperson for the plan both inside and outside of Colorado.

Strengths of ColoradoCare

1. The proposal if implemented would cover all, or nearly all of Colorado’s uninsured – apparently (and laudably) including the undocumented.

2. The proposal includes some useful cost-control features, notably the creation of an annual budget, and the ability to negotiate lower prices with pharmaceutical companies.

3. The plan allows for a free choice of primary care doctor.

4. The financing plan is more progressive than the current system.

5. ColoradoCare's organizers have mounted an impressive campaign with considerable mobilization.

Weaknesses of ColoradoCare

1. Multiple payers would persist – probably including private insurers. As a result, it sacrifices much of the administrative savings that could be realized through a true single- payer reform because providers would have to maintain much of their current cost-tracking and billing apparatus in order to apportion costs among the multiple payers. Published cost estimates for ColoradoCare overstate the savings that could be achieved through single payer, and do not take into account the additional costs entailed by ColoradoCare's failure to adopt a full single-payer structure.

2. The initiative makes no mention of how hospitals or other institutions would be paid – apart from a rhetorical nod favoring ACOs. It makes no mention of global budgeting, separating operating and capital payments, or other constraints on hospital capital spending. Global budgeting is critical to achieving administrative savings; separating operating and capital payments is a bedrock of effective health planning, which is essential for long-term cost containment.

3. The initiative would not ban for-profit hospitals or other providers, despite clear evidence that they inflate costs and compromise quality. For-profit ACOs (indistinguishable from HMOs in most respects) might also flourish.

4. The initiative specifies that patients would have a free choice of primary care physicians, but makes no mention of whether the choice of specialist or hospital could be restricted.

5. While the plan would outlaw deductibles, the Board could impose copayments.

6. While the 10 percent tax rate would apply to both the rich and poor (including those with incomes below the poverty line), income over $350,000 would not be taxed.

7. The campaign's anti-government rhetoric is problematic.

8. Rather than specifying critical aspects of the plan, the initiative leaves many of these to be decided later by the Board. Delaying such decisions has often favored corporate interests, who can intervene after the popular mobilization required to pass a reform has subsided. In the case of the ACA, corporate lobbying during the rule-making process attenuated cuts in Medicare HMO overpayments; reduced promised funding for public health and community clinics; effectively neutered limits on insurance overhead; and watered down the mandated benefit package. In Vermont, the broad-brush program initially passed by the legislature was whittled down in the detailed design stage, leading to rising cost estimates and ultimate rejection by the governor.

Dr. Ida Hellander is director of health policy and programs at Physicians for a National Health Program. Drs. David Himmelstein and Steffie Woolhandler are internists, professors at the City University of New York School of Public Health, lecturers in medicine at Harvard Medical School, and co-founders of PNHP.

PNHP note: While there have been numerous articles about the ColoradoCare plan, one by Michael Corcoran, published by Truthout on Oct. 20, is among the most comprehensive.