Going Public? Colorado's "Public" Health Insurance Plan
June 9, 2021
House Bill 21-1232 or the “public option bill” is before the Colorado legislature for the second time and the numerous rounds of rewrites have changed the character of the bill itself. Initially proposed as a public health insurance plan offered by the state, the bill now seeks to mandate a standardized health insurance plan that is operated by private insurers. If approved, the public option bill aims to reduce premiums in the individual and small group market by 15% over a three-year period, or by 2025.
Come 2022, the state insurance commissioner would create a standardized insurance plan that offers certain health care services and dictates the services that insureds could receive without paying towards the deductible. Unlike the initial iteration of the bill, the current amendment grants private insurers the authority to run the standardized plan, rather than having to compete with a plan run by the state. Private insurers would only have to offer the standardized plan to the counties in which they already sell plans to the individual and small group market. The core of the bill would require private insurers who offered the standardized plan to attain a 15% decrease in premium rates compared to 2021, by the year 2025.
Hospitals would be required to accept patients insured by the standardized plan and could face penalties for refusing those patients or refusing to accept corresponding reimbursements rates. Monetary penalties could begin at $10,000 per day for the first thirty days followed by $40,000 per day for each day thereafter. The insurance commissioner would also have the authority to suspend a hospital’s license but not revoke a hospital’s license. Physicians who do not accept the standardized plan will not face monetary penalties as a result of an amendment to the bill. Thus, hospitals will have to determine how to provide care where a physician refuses to accept a patient insured by the standardized plan.
Insurers or providers that find the mandated premium rates unattainable would have the opportunity to attend arbitration before the Division of Insurance to argue their case. A public hearing would be held wherein interested parties could present evidence in support of the insurer or provider. At the close of the hearing, the state insurance commissioner would have the authority to establish reimbursement rates that enable carriers to meet the premium rate requirements. The insurance commissioner’s decision could then be appealed to a state district court.
Even if passed however, the bill cannot be implemented or financed without a 1332 waiver. The insurance commissioner would have to apply for a 1332 waiver from the federal government allowing the state to offer individualized health care coverage that met the basic requirements of the Affordable Care Act. The waiver would also grant federal funding to the program.
Proponents are confident Colorado will receive a 1332 waiver under the current administration.
This bill is complex and frequently changing. Although amendments mean that physicians will no longer face repercussions under the public option bill for refusing to accept the standardized plan, hospitals will need to stay vigilant of further amendments to the bill and penalties for refusing care to insureds.