Bloomberg Businessweek - USA (2020-03-02)

◼ POLITICS Bloomberg Businessweek March 2, 2020

34

THEBOTTOMLINE Coloradowantstomakehealthcarecheaper

byofferingpublicinsurance.Theplancouldbea blueprintfor

DemocraticcandidatesvyingfortheWhiteHouse.

cuttinghowmuchmoneyhealth-carecompanies

can make. Authorities proposed that the public

plans should be administered by private health

insurance companies. The state would set the

prices paid to hospitals according to “a clear, pub-

lic, and transparent formula,” the outline says,

rather than leave insurance companies to nego-

tiate rates. Insurers, in turn, would be required

to offer the public option plans across the state,

including in rural counties with no competition

today. They’d also face tighter limits on how much

premium revenue they can keep for administrative

costs and profits.

While Democratic presidential candidates

blamepharmaceuticalcompaniesandhealth

insurersforthehighpriceofcareacrossthe

country, Colorado politicians are clashing most

fiercely with the hospital industry. Health-

care costs have continued to soar, even after

theAffordableCareActplacedrestrictionson

health-insurerprofits,saysKerryDonovan,a

Coloradostatesenatorwho’sco-sponsoringthe

publicoptionlegislation.“Themissingfactor

hasgottobethehospitalsystems,”shesays.

“Youdon’thavetoexactlyhavea doctoratein

economics to come to that conclusion.”

An analysis last year by Rand Corp., a policy

research group, found that prices paid by com-

mercial health plans to Colorado hospitals were

among the highest in the 25 states for which ana-

lysts had data. Colorado hospital profits almost tri-

pled from 2009 to 2018, to more than $1,500 per

patient, according to a January report from the

state.Economistshavecitedconsolidationamong

hospitalsanda lackofcompetitionasfactors

driving up prices.

Hospitals, rejecting the idea that the state should

set prices, have proposed an alternative that would

limit total health-care spending in Colorado without

interfering in the privately negotiated rates between

insurers and hospitals. Targeting hospital profits is

“punishing hospitals that are operating efficiently,”

says Katherine Mulready, chief strategy officer of

the Colorado Hospital Association. Amanda Massey,

executive director of the Colorado Association of

HealthPlans,saysinsurerslikewise“havesignif-

icantconcernswiththeadministrationdictating

theproduct, the price, and the places we must sell

health insurance.”

A January mailer to Coloradans warned that the

proposal would lead to higher costs and hospital

closures, and that “politicians will be in charge of

our health care.” The ad was paid for by a local

affiliate of the Partnership for America’s Health

Care Future Action, a national umbrella group of *NET

COST

CALCULATED

AS

THE

DIFFERENCE

BETWEEN

INCURRED

PREMIUMS

EARNED

AND

BENEFITS

PAID

FOR

PRIVATE

HEALTH

INSURANCE.

†INCLUDES

FREESTANDING

FACILITIES

ONLY.

DATA:

CENTERS

FOR

MEDICARE

&MEDICAID

SERVICES,

OFFICE

OF

THE

ACTUARY,

NATIONAL

HEALTH

STATISTICS

GROUP

hospitals,insurers,pharmaceuticalcompanies,

andbusinessinterestsformedtofight“Medicare

forAll”andsimilarpolicies.Thegroupdeclinedto

sayhowmuchit wasspendinginColorado.

Advocatesforthepublichealthoptionsayindus-

tryis tryingtokillit beforea detailedlegislativepro-

posalhasevenbeenreleased.“There’sobviouslya

lotofnationalmoneybeingspenttoprotectthesta-

tusquo,”saysDylanRoberts,oneoftheColorado

statelawmakersdraftingthelegislation.Whilethe

Democratscontrolthelegislature,it’snota given

thatPolis’spublichealthoptionwillpassduring

thecurrentsession,whichrunsforaboutthenext

threemonths.Byraisingtheprospectofhospital

closuresandpromptingpoliticalopponentsofthe

proposaltospeakout,theindustry-backedadver-

tisingcampaignhasputlegislatorsunderpressure

tochangethepublicoptionorwalkawayfromit

entirely.“Thelegislators,especiallytheoneswho

haven’tbeenpayingcloseattentiontothis,arefeel-

ingtheheat,”saysBillyWynne,a health-carecon-

sultantwhoadvisedonColorado’sproposalbutis

nolongerworkingforthestate.

Coloradolawmakerswillhavetodecidewhether

thestate’shealth-carecostsaresohightheywarrant

thatkindofpublicinterference,saysMicheleLueck,

presidentoftheColoradoHealthInstitute,a non-

partisanresearchgroup.“Thisis kindoftheclas-

sicexampleof,‘What’stheappropriateroleof

governmentinterventionandregulation?’”she

says.“Arethingssobad,aretheysounaffordable

forconsumers,thatthegovernmenthastherightto

intervene?”�JohnTozziandEmmaCourt

Where Hospital Care Is the Priciest

Averagehospitalcostspaidbyprivateemployer-sponsoredhealthplansin selectedstatesin

2017 asa shareofwhatMedicarewouldhavepaidtothesamehospitalforthesameservices

Overall Inpatient Outpatient

STATES FOR WHICH FIGURES WERE UNAVAILABLE HAVE BEEN EXCLUDED. DATA: RAND

Mich.

Pa.N .Y.Ky.

Tenn.

Vt.

Kan. Wash.Ohio

Mo.Ill. Ga.

Mass. Te x a sColo.

Fla.

N.M.N.C. Mont.Wis.Maine

La.

N.H. Wyo.Ind.

400%

300

200

100

For more on the future

of health care, go

to Bloomberg.com/

prognosis