Colorado already has a public option in health care — it’s just exclusive to sick people who have been rejected by private insurance companies.
It’s called CoverColorado, and it insures 9,800 people who have to pay about 140 percent of what the average Coloradan pays in health- insurance premiums. It is not too far-fetched, though, that the program could morph into a true public option open to everyone — a competitive choice in the individual health-insurance market.
Key federal lawmakers crafting health care reform have rejected calls for a national public option, instead suggesting that states create their own programs. The recent shift in the debate has reform advocates considering the possibility of expanding state-run, high-risk insurance pools.
“We have the infrastructure completely built,” said Suzanne Bragg- Gamble, executive director of CoverColorado.
Turning CoverColorado into a true public option would require changes in state law and, most likely, a major infusion of federal dollars. It would have to happen gradually — there is no way the program could take on an estimated 800,000 uninsured Coloradans all at once, state officials said.
“It’s always a question of funding,” said Sen. Gail Schwartz, a Snowmass Village Democrat who is among the state lawmakers eyeing CoverColorado’s potential. “It has proven itself to be successful and accountable. Are there other opportunities that could be folded into that structure?”
CoverColorado will collect $41.7 million in premiums this year. That is less than half what it will pay in claims: an estimated $83.9 million.
The difference is picked up through a per-customer fee on private insurance companies, the state’s unclaimed-property fund and a grant from the Medicare program. No money from the state general fund supports the program.
A last resort
The reason CoverColorado is so expensive — in terms of customer rates as well as claims — is that almost everyone enrolled has a profound health problem or a history of one.
Many CoverColorado customers have a chronic disease, such as cancer, diabetes or hemophilia. Some are healthy but have been rejected by private insurers for something in their past: a 35-year-old woman treated for depression in her teens, a 5-year-old born in another country with no proof of infant vaccinations other than her parents’ memories.
The program offers discounts, but premiums are still steep enough to price out thousands of Coloradans with severe health problems.
For people with a family income between $40,000 and $50,000, the discounted rate is 120 percent of average insurance premiums in the state. And for families that earn less than $40,000, the discounted rate is 100 percent.
Premiums are paid through automatic withdrawal from a customer’s checking account. Customers who fail twice to have enough money in their accounts are barred from re-enrolling for a year.
“The only reason CoverColorado cancels someone’s coverage is if they don’t pay,” Bragg- Gamble said. “We don’t drop people because they’ve gotten a new health condition.”
The state program contracts with UnitedHealthcare to provide coverage.
Among those insured through CoverColorado is Dr. Bruce Madison, a former emergency-medicine physician who had a heart transplant in 2004. After he left a job at the University of Colorado Denver, Madison was rejected by two companies as he sought to buy private insurance.
“That left CoverColorado as my insurer of last resort,” said Madison, who pays a $1,200 monthly premium for himself and his wife, who had breast cancer. “I’m very fortunate to have that available. It’s expensive, no doubt about it, but for someone like me, I obviously have to have it. I can’t go without health insurance — it’s just too financially dangerous to do that.”
Colorado is among 35 states with high-risk-insurance pools. At a recent national convention, the public-option question ranked high on the discussion list.
“We are a public option,” said Vernita McMurtrey, chairwoman of the National Association of State Comprehensive Health Insurance Plans. “We are basically nonprofit organizations.”
High-risk pools would have to significantly lower their rates if they were to attract a broader customer base. States likely would need subsidies from the federal government, at least at the start.
“Most states have hundreds of thousands of uninsured that would flood into a public program,” McMurtrey said. “It absolutely cannot happen overnight. It has to be phased in for a state to function and not be bankrupt.”
The association has met with members of Congress about a three- to five-year transition plan to help states create public insurance options.
Not without challenges
Still, some reform advocates are wary. State-run public options would face serious challenges trying to compete with private insurance companies, said Elisabeth Arenales, an analyst with the Colorado Center on Law and Policy.
State-run public options would have fewer customers than a national system, with fewer people to spread risk and share cost. In Colorado, two insurance companies — Anthem Blue Cross and Blue Shield and UnitedHealthcare — have about half the market share.
“We have really been hoping that whatever happens would happen at a federal level,” Arenales said. “(But) a state- run public option would be better than no public option.”
Jennifer Brown: 303-954-1593 or jenbrown@denverpost.com
