Can Colorado socialize the health insurance industry, covering basically everyone in the state, and not break the bank?
More than a month from the first ballots being mailed to Colorado voters, experts disagree on the financial viability of a proposed constitutional amendment that would transform Colorado into an test case for socialized health insurance.
The debate reignited last week when proponents of the Amendment 69 measure cried foul on an independent, nonpartisan analysis predicting billion-dollar budget deficits that could doom the proposed system within a decade of implementation.
The problem, experts say, is that no other state has done this before, meaning there's almost no way to tell who is right.
"Everybody will claim that their little nugget of data is the absolute truth, but everybody is claiming they have the truth," said John McDonough, a professor at the Harvard T.H. Chan School of Public Health. "It's like Jerusalem in the year 15 A.D. or something, where you got all these prophets going around saying 'I have the truth; No, I have the truth; No, I have the truth.'
"So you've got a lot of prophets walking around Colorado right now claiming to have the truth, and the truth is: Nobody knows. There is no truth. Or the truth is not to be found."
Myriad factors play into the debate - chief of which is whether Colorado would continue to receive billions of dollars in federal funding.
The reason hits at the one detail proponents, opponents and independent analysts can agree on: The proposed system can't support itself with taxes alone.
ColoradoCare, which will appear as Amendment 69 on the ballot, would implement a universal 10 percent payroll tax (employees would pay 3.33 percent and employers 6.67 percent), which everyone agrees will generate about $25 billion in its first year of implementation.
That's not enough to run the system, everyone agrees, and federal funding that the state now receives would help fill or eliminate the gap.
Dr. Ivan Miller, executive director of ColoradoCare, says that if you assume federal funding stays the same, and that ColoradoCare can rein in the rising cost of health care by .5 percent, the system would have a surplus of $2.6 billion in 2019 and operate in the black for nine years.
Experts at the Colorado Health Institute - a nonpartisan, independent think tank - are concerned the federal government might refuse to match state dollars intended to increase the Medicaid provider rate to that of Medicare, if all providers are being paid the higher ColoradoCare rate.
Now the federal government matches money brought into the state coffers by the Hospital Provider Fee to bring Medicaid payments up to the Medicare reimbursement rate.
"It's all predicated on this gap between Medicaid and Medicare, so ... if we decided to raise the Medicaid rates we would start to narrow that gap and it narrows the federal funds you can draw down," said Amy Downs, vice president of research with the Colorado Health Institute. "Why would the federal government say now that you're paying providers above this rate, we'll give you this money anyway. We didn't feel like that made a lot of sense."
Opponents, including the group Coloradans for Coloradans and the Colorado Hospital Association, have largely pointed to the Institute's report as proof the measure should be defeated. Steven Summer, president and chief executive of the Colorado Hospital Association, also raised doubts the state would continue receiving its share of federal funding.
Losing that money would be disastrous, he said, and it probably would leave rural hospitals suffering the most. Those hospitals often serve more Medicaid patients and attract fewer out-of-state patients - leaving them more heavily reliant on a ColoradoCare system that may not prove financially sustainable.
Should ColoradoCare face a revenue shortfall, ColoradoCare officials would either have to raise taxes, cut payments to providers, or scale back covered services.
Leaving that to chance is "speculating in a very dangerous area," Summer said.
"Giving them the benefit of the doubt, you come up with: I don't know," Summer said. "Which means you're really playing high-risk poker."
Ralph Ogden, senior legal counsel for ColoradoCare Yes, said the intent is that providers would be paid at 133 percent of the Medicare rate. The current Medicare rate is about 80 percent of the actual costs for health-care providers, Ogden said.
"I would think that the federal government would like to see providers paid at a higher rate," he said. "People will have greater access to providers because more providers will be willing to take Medicare and Medicaid if they get something closer to 100 percent of their costs."
Anders Fremstad, assistant professor of economics at Colorado State University, said the federal funding debate is a moot point.
"The amendment says that if it's not financially viable, ColoradoCare does not go into effect, so to me this conversation is a little bit puzzling," Fremstad said, who backs Amendment 69 but is not a paid member of the campaign.
If Amendment 69 passes in November, two Republican leaders and two Democratic leaders in the General Assembly and the governor will appoint a combined 15 members to a board of trustees to temporarily serve on an implementing board that will last about three years.
Medicare, Tricare and Veterans Affairs beneficiaries would keep their coverage. However, they must still pay into the ColoradoCare system.
As soon as possible, the board would seek a waiver from the federal government to take over Connect for Health Colorado, which is the existing exchange for private health insurance under the Affordable Care Act.
And the final clause of the amendment calls for the termination of ColoradoCare if "the board determines that ColoradoCare has not received the waivers, exemptions, and agreements from the federal government sufficient for its fiscally sound operation."
Complicating matters, independent experts say the proposal's myriad uncertainties make predicting whether ColoradoCare succeeds in expanding health-care coverage and curtailing costs - much less staying solvent in the process - nearly impossible.
Too early to tell
Too many issues can only be addressed after the election, said several health-care policy professors surveyed by The Gazette.
For example, how will Coloradans adapt to such a system, and what effects that could it have on medical costs and accessing that care? Will covering everyone in the state expose pent-up demand for medical care and cause a rush on services? Or did Medicaid's expansion in 2014 mostly take care of that problem?
Fremstad said both the Colorado Health Institute's analysis and one done by Miller for the Colorado Foundation for Universal Health Care assume some level of increased use of services, because there would no longer be high deductibles or copays.
"It does not increase spending as much as it would cause savings if we eliminate this bureaucracy of private insurance," Fremstad said. "CHI also in its independent analysis believes that just through savings we can actually expand coverage, improve coverage for all of these people, while reducing health costs."
CHI's study does credit ColoradoCare for an estimated $2.3 billion in efficiencies (like reducing corporate profit of insurance companies) after accounting for $1.5 billion in increased costs to run the new government agency. It would only cost about $1.7 billion to expand coverage to the roughly 350,000 uninsured individuals in the state.
But even if waivers are granted, establishing a single-payer system solely in Colorado - as opposed to across the nation - has deep drawbacks, opponents say.
Vermont's bid to establish such a system unraveled in 2014 after the state's governor said that proposal was financially unfeasible. The proposal's high tax burden proved politically unpalatable, experts say, and it cost too much to provide coverage that was at least as good as what residents had on their current insurance.
Such a proposal also may do little to cut down on charity care provided by hospitals, because hospitals may end up facing the burden of shortfalls not immediately funded by tax increases, Summer said.
And hospitals' administrative burden would not improve greatly because they still must set up billing arrangements with insurance companies for out-of-state patients, he added.
"There is only a savings on a universal-coverage single payer, if it's done nationally," Summer said. "It does not make sense to do it on a state basis."
Federal funding questions
The question of federal funding remains difficult to answer.
To continue receiving billions of dollars in federal funding under the new system, Colorado would have to apply for waivers from the incoming White House administration.
No one waiver exists. Rather, the state would have to piece together several different forms to create ColoradoCare, said Larry Levitt, senior vice president at the Kaiser Family Foundation.
One of them - a waiver focused on Medicaid money - is used often and has a long history in almost every state. The other - a broader waiver aimed at other federal funding, such as money currently earmarked for insurance subsidies - has not been seriously tested.
"The breadth of ColoradoCare would certainly be unprecedented in terms of what a state has done," Levitt said.
The Medicaid waiver, called a 1115 waiver, has been used most recently to garner political support for expanding Medicaid in Republican-led states that have been hesitant to adopt an Affordable Care Act provision without putting their own twist on it, a Kaiser Family Foundation analysis shows.
The most experimental approach came in Arkansas, where Medicaid recipients were allowed to purchase plans from the state's health insurance exchange using Medicaid funding.
The program became known as the "private option," because Medicaid patients gained coverage through insurance companies, rather than the government.
Other states, including Indiana, Iowa and Montana, received permission to collect premiums or monthly fees by Medicaid recipients. In some cases, states reduced those payments when patients hit certain healthy-living benchmarks.
Getting buy-in from different players - such as a state's administration, health-care providers and insurance carriers - usually helps persuade federal officials to grant such waivers, said Benjamin Miller, director of the Eugene S. Farley Jr. Health Policy Center in Aurora.
"States that may not have that more multi-systemic buy-in, I think you find that it's harder for them (federal officials) to say yes because the likelihood of it succeeding may be smaller," Miller said.
The other waiver Colorado may need - the so-called 1332 waiver - remains in its infancy. Lawmakers included it in the Affordable Care Act to spur experimentation and innovation on a state-by-state level by allowing states to make massive changes in their health-care sector.
Exactly how far states can go remains unclear, Miller said.
"This is where I think there's still a lot of confusion still," Miller said. "How much can you do under a 1332 and how many additional waivers might you need within the 1332 to do additional changes?
"And this is where I just simply say to you: I don't know if anybody knows this."
Vermont was expected to use such a waiver for its own universal health-care system that never gained traction. Instead, Vermont appears to be among a handful of states using the waiver to make smaller adjustments to their health-care systems.
No matter the waiver that Colorado submits, two requirements remain: Colorado must show the federal government that its proposal is cost-neutral, and the number of people covered must stay the same or increase.
"ColoradoCare envisions a health system that provides more accessible and affordable care to patients, so I don't think that would be a likely hiccup," Levitt said. "The tough negotiations would come over the money."
The biggest wild card centers on whoever wins the White House, experts said.
The odds of federal officials approving any such waivers would be small if Republican presidential nominee Donald Trump wins the November election. The billionaire businessman has repeatedly vowed to repeal the Affordable Care Act, also known as Obamacare, though he has not laid out a specific replacement plan.
Democratic nominee Hillary Clinton, however, has said she wants to largely build on the health law and expand it.
"I wouldn't rush to any conclusions because it think it would be too early to say," McDonough said. "It depends who's running the show down there next year."