The proposed universal health care system on Colorado's November ballot appears financially unsustainable and may run a $7.8 billion deficit during its first decade, according to an independent analysis released Monday.
Amendment 69 - which would replace most current health insurance plans with a taxpayer-funded system called ColoradoCare - likely needs more revenue to remain viable, the Colorado Health Institute found.
The nonprofit organization studies health care trends across the state, and it does not take positions on ballot, policy or legislative proposals.
The analysis found that Amendment 69 would operate more efficiently than Colorado's current health care system - all while vastly expanding health insurance coverage.
But the proposal appears susceptible to the same problem that has bedeviled the nation's health care system for decades, said Michele Lueck, the Colorado Health Institute's president and chief executive. In short: Annual health care costs increases would still out-pace the state's economy.
"It is surprising that at the end of the day, what ColoradoCare really has going on is an issue that lots of health care insurance companies have going on - and that's that expenses exceed revenue," Lueck said.
Ivan Miller, executive director of the ColoradoCareYES campaign, questioned the report's conclusions. He stressed that it didn't fully account for ColoradoCare's long-term savings, and he disputed the assumption that Colorado would face federal funding cuts if Amendment 69 passed.
"We just don't see a rationale for that," Miller said.
If passed, the ColoradoCare program would become the nation's first universal health care system - ensuring that everyone, including undocumented immigrants, would be covered. The only people not included in ColoradoCare would be those receiving Medicare, Tricare or Department of Veterans Affairs benefits.
Under the proposed plan, the state's private insurance market and the state's Medicaid program would be replaced with one health care system. That would drop the state's current uninsured rate of 6.7 percent would drop to zero.
The system would rely on three revenue streams - the largest being a 10 percent income tax. Two-thirds of that would come from employers, and the rest would be paid for by employees.
ColoradoCare proponents also plan to ask the federal government to use federal money now being spent on Medicaid patients and subsidies offered through the state's health insurance exchange, Connect for Health Colorado.
Doing so would require the state to seek a waiver from the incoming White House administration.
The third revenue source would from Coloradans seeking care, in the form of copays.
In a best-case scenario, the program would run a $5.5 billion surplus its first year in operation (at soonest, 2019), the Colorado Health Institute's report found. The study's worst-case scenario predicted a $6.5 billion deficit by that time.
The most likely outcome, however, is a $253 million deficit during ColoradoCare's first year, according to the nonprofit. The shortfall would grow each year for a decade, the nonprofit said, and by 2028, the program is projected to fall $7.8 billion in the red.
"It really speaks in a lot of ways to how complex this issue is," Lueck said. "There are certain challenges that ColoradoCare may mitigate, but they're really hard."
The latest analysis ran counter to another forecast by ColoradoCare proponents, which said the ballot proposal would lead to a $1.5 billion surplus in its first year of operation.
The biggest difference between the two forecasts revolved around federal funding levels. Colorado Health Institute predicted ColoradoCare would have $4 billion less in federal funding than proponents suggest. The disappearance of the state's Hospital Provider Fee would account for roughly $1.6 billion of that difference.
Further, it remains unclear whether the federal government would allow ColoradoCare to use money currently being spent on Medicaid and the state's health insurance exchange for the new system, the report said. Much of that could depend on the coming presidential election.
Miller disagreed with the nonprofit's analysis. He argued that the federal government has worked with states seeking waivers in the past, which bodes well for Colorado's chances of keeping federal funding.
"It doesn't make sense, it doesn't fit with history and it doesn't fit with what Health and Human Services is pushing now," Miller said.
Lueck stressed that ColoradoCare officials could take steps to raise the system's revenues. Most notably, they could ask voters for further tax increases, though the report called such a plan "difficult." ColoradoCare also could scale back payments to doctors and other health care providers.
Lueck emphasized that pooling most of the state's residents into a single health care system probably would not help the state cut markedly better deals with providers, such as pharmaceutical companies, because ColoradoCare would remain a relatively small player in the industry.
If created, ColoradoCare would cover roughly 5 million people. Some national health insurance companies cover tens of millions more people.
The nonprofit also found that ColoradoCare would have higher-than-expected administration costs, and health care utilization rates would jump - driving up costs.
Still, the study's authors cautioned that the initiative's impact remains difficult to predict because most questions can only be answered after the election.
Should the measure pass, ColoradoCare's ultimate fate would largely rest with a board of directors, which would decide how much to reimburse doctors and hospitals and whether to ask voters for additional tax increases, the report's authors said.
And it remains to be seen how many people would buy private insurance to supplement their ColoradoCare coverage (easing costs), or whether residents would visit doctors more regularly (increasing costs), study authors stressed.
Those questions are difficult to answer now, the report's authors said.
"The thing that comes to light is the uncertainty around this," Lueck said.
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