A little-noticed provision of the Affordable Care Act would allow each state, starting in 2017, to adopt its own alternatives to what’s come to be known as Obamacare.
Object to the requirement that nearly everyone get insured or pay a penalty tax? Then get rid of Obamacare’s much-maligned individual mandate.
Don’t believe that businesses should be required to provide health insurance to their employees? Then do away with Obamacare’s employer mandate for companies with more than 100 workers.
Don’t like the government-run exchanges on which individuals with incomes up to 400 percent of the poverty line can get federally subsidized health insurance? Then do away with the exchanges or the subsidies.
One might suppose that super-red states such as Tennessee would have been quick on the uptake to explore alternative ways of addressing their health care needs while remaining entitled to just about as much federal funding as would go to the state under Obamacare.
But there’s a catch. In order to qualify for a state innovation waiver, as they are known, a state’s plan would have to satisfy a number of conditions. Among them: It would have to cover as many people as ACA with comparable benefits and affordability. No one could be excluded for a preexisting condition, premiums would have to be gender-neutral, and plans federally budget-neutral.
That’s a tall order, and only one state appears to be on the path for making fundamental changes that would hurdle all of the conditions.
That state is Colorado. And even there the initiative is coming from reform-minded citizens rather than state government. Under the banner Colorado Care, they are seeking to introduce what would be the first truly universal health care coverage in the nation. (Even with all of Obamacare’s sticks and carrots, nearly 10 percent of the U.S. population remains uninsured.)
Colorado Care would take the form of a single-payer system run by what seems tantamount to a separate branch of state government, independent of both the governor and the legislature but with its own elected board of governors. Proponents have gathered enough signatures on petitions to get it on the ballot in the 2016 election as a constitutional amendment, which is how Coloradans voted to legalize marijuana in 2012.
If approved, Colorado Care would have the authority to levy taxes to cover the cost of health coverage superior to most of the offerings on the Obamacare exchanges with no deductibles and very limited co-payments. Of a 10 percent payroll tax on earnings, two thirds would be paid be employers and one third by employees. The self-employed would pay the full 10 percent. But there would be a cap on the amount of earnings subject to the tax, just as with employee payments for Social Security. (But unlike the latter, Colorado Care claims all of its collections would be deductible from federal income tax.)
The Colorado Legislative Service has validated that the levy would generate the $25 billion in revenues that Colorado Care’s projections say is needed when it would commence operation in 2019. An additional $11.6 billion would be derived from its assumption of responsibility for Medicaid in the state and presumed entitlement to federal funding equal to what’s now going to subsidize insurance costs on the exchange.
When it comes to outlays, Colorado Care’s planners claim it would reduce the cost of health care from 19 percent of the state’s GDP to 15 percent. The biggest source of savings: a $6.2 billion reduction in administrative expenses. “These savings come from removing redundant insurance industry administration and from decreasing bureaucracy and paperwork in providers’ offices,” a planning document states.
Needless to say, health insurers can be expected to fight a plan that would virtually put them out of business. So will the National Federation of Independent Businesses, which has long championed the proposition that many small businesses can’t afford to be saddled with the cost of health care for their workers. The Koch brothers’ Americans for Prosperity may spend millions more bashing the plan as government-run health care or socialized medicine.
How robust a campaign will Colorado Care’s proponents be able to muster? State Sen. Irene Aguilar, who is in the forefront of the effort and herself a physician, responds by email: “We think we can put on a good campaign with about $2 million. I anticipate the opposition spending significantly more. We have a lot of people power!”
It’s not clear to me what sort of role doctors generally may play in the campaign. A planning document states that, “The national competition to attract and retain providers will create powerful economic pressure on Colorado Care to achieve its savings by cutting waste and keeping administrative costs low for the providers, while keeping compensation competitive and the work experience satisfying.” But they will have to be convinced.
My own biggest criticism of the proposal is that its one-size-fits-all approach to benefits doesn’t allow for consumer choice. Much better, in my view, to provide some leeway for people to opt for coverage with higher deductibles at lower cost.
This could possibly be accomplished by offering some sort of payroll tax rebate to people who so elect. The plan already provides for such a rebate to people on Medicaid, which would still be governed by a federal prohibition on charging them a premium.
Virtually every other advanced nation in the world has universal health care with a single-payer system. If the Colorado Care initiative is successful, it could serve as a model for the U.S., just as Romneycare in Massachusetts served as a model for Obamacare, warts and all.
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