I love the idea of universal healthcare.
I also love the idea of full employment, a free college education and a world without fossil fuels, but I’m old enough to know that even if all these things were even remotely realistic, their implementation would be obscenely expensive.
This weather-beaten cynicism — and more than a decade reading and writing about healthcare reform — is enough to scare me away from Colorado’s Amendment 69. It would drive employers out of business or out of the state, marginalize benefit brokers and paint consumers into an economic corner.
In short, Amendment 69 would not only launch the largest healthcare reform effort since President Obama signed the Affordable Care Act into law in 2010, it would also establish the first single-payer health system in the United States. ColoradoCare, as it’s dubbed, would be a nonprofit subdivision of the state, created by an amendment to the constitution.
A proposed 10% payroll tax foots most of the bill for ColoradoCare, which would launch with an expected $38 billion budget — give or take a copay. (Non-payroll income would also take a 10% hit.) Keep in mind, the state of Colorado’s annual budget, by comparison, is less than $26 billion. So, one could argue, this single vote could more than double state spending overnight.
So, let’s say ColoradoCare has a hit with universal coverage. The problem is, it’s got at least three strikes against it in terms of costs, competition and control.
Amendment 69’s single greatest flaw is its lack of cost control — or at least cost-cutting — measures. The proposal does nothing to address the rising cost of healthcare. In fact, based on what we’ve seen with the ACA, utilization will skyrocket after ColoradoCare’s launch. Worse still, the vast majority of those new users would be sicker than your average bear, something we call adverse selection in the insurance business. Premiums would rise, copays would jump and the budget shortfall — already expected to be $230 million the first year — would balloon quickly. Employers, too, would begin shedding workers from their plans, since they’re stuck paying two-thirds of the payroll tax anyway, adding even more new enrollees to the nascent healthcare plan.
And that’s for the larger employers who could afford it. For small business owners, this presents a bit of a Sophie’s Choice: absorb a higher cost of doing business by paying their two-thirds’ share of the payroll tax increase as indicated in the amendment or pass that along to their employees with wage cuts or freezes.
ColoradoCare would still allow residents to buy their own private plans, of course. But, after a few years, competition would whither from an already anemic market. Again, look at what we’ve seen with Obamacare, which has seen three of the nation’s largest five carriers leave the exchange markets already. Those one or two carriers who actually stick around in Colorado would have a stranglehold on the market, allowing them to cut plan options, slash whatever broker commissions remained and assume an unprecedented level of control in negotiating contracts.
Finally, there’s the issue of control, which when it comes to ColoradoCare, rests in the hands of its board of trustees, 21 elected private residents who would govern the nonprofit from outside the grasp of state government. This board of trustees would also wrest control of the state’s Medicaid program and budget, while also operating outside the jurisdiction of the state’s department of insurance and secretary of state, allowing it control of its own election process. And, at the risk of sounding like one of our presidential candidates, Amendment 69 would actually confer the power to vote in its own elections to those otherwise barred from the voting booths, such as convicts and non-residents.
Amendment 69 sounds great. It means well. But you know what they say about good intentions. Besides, after thumbing through the amendment it becomes pretty clear that there’s a lot that’s not really clear. It reads a lot like the ACA in how many details are left to be decided later, presumably by the board. We’ve seen too much of that “regulation on the fly” with the ACA over the last few years to want to go down that road again.
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