Expanded Medicaid could have $4 billion in impact

The Colorado Statesman

Gov. John Hickenlooper on Monday, surrounded by fellow Democrats and health care professionals, signed a bill that expands Medicaid rolls in Colorado by an estimated 160,000 adults.

Senate Bill 200, sponsored by Sen. Irene Aguilar, D-Denver, and House Speaker Mark Ferrandino, D-Denver, will expand Medicaid coverage for low-income Coloradans up to 133 percent of the federal poverty level beginning Jan. 1, 2014, up from 100 percent. The coverage will include families making up to $31,322 and individuals making up to $15,282.

He also signed House Bill 1266, sponsored by Reps. Beth McCann, D-Denver, and Bob Gardner, R-Colorado Springs, and Aguilar, which aligns state health insurance laws with federal health care reform policies, including requiring health plans to cover dependents up to age 26 and prohibiting exclusions based on preexisting conditions.

On Saturday, the governor also signed Senate Bill 242, sponsored by Sen. Jeanne Nicholson, D-Black Hawk, and Rep. Dianne Primavera, D-Broomfield, which creates a limited oral health benefit for adults in the Medicaid program.

“This is going to support working Coloradans and improve economic security for individuals and families, and ultimately even for businesses…” Hickenlooper remarked at the Medicaid expansion bill signing ceremony Monday outside the Capitol.

The governor expects the expansion to have a $4 billion impact on Colorado by generating additional economic activity.

“It keeps our businesses going and makes sure that those employees… when they’re hurt, when they suffer an illness or an accident at home, that we make sure they have the medical attention they need, and also for their family,” Hickenlooper continued.

Much of the discussion surrounding Medicaid expansion revolved around cost. A fiscal analysis states that the legislation increases state expenditures by $304 million in Fiscal Year 2013-14, $888 million in Fiscal Year 2014-15 and $1 billion in Fiscal Year 2015-16.

The federal government — under President Barack Obama’s health care overhaul — will pay the cost for the first three years. But beginning in Fiscal Year 2016-17, the feds will reduce its share gradually until, in 2020, it covers 90 percent of expansion costs.

Legislation in 2009 authorized the state to collect hospital provider fees. The state will tap into this cash fund in order to offset some of its share of Medicaid costs. Hickenlooper said his administration has also identified Medicaid cost savings that will help pay for the state’s share of the load.

“Almost a year ago we started focusing on how can we find savings? How can we go and make sure that we say to the citizens of Colorado that we’re going to expand Medicaid coverage, but we’re not going to do it from the general fund?” stated the governor.

Much of those savings were identified by the Colorado Department of Health Care Policy and Financing.
“We are moving forward with expanding coverage to low-income Coloradans… At the same time, we’re increasing access to health care, we’re working hard to contain costs to deliver more value for every health care dollar spent,” explained Sue Birch, executive director of the Department of Health Care Policy and Financing.

Aguilar, a Denver physician who has championed expansion for years, pointed out that nearly 833,000 Coloradans are without health insurance.

“As a physician, I know that without adequate health coverage and preventive care, people wait and go to the emergency room when they are sick,” stated Aguilar. “In the end, it costs taxpayers in uncompensated care costs, and it’s a blow to our economy, which benefits from a healthy workforce.”

For that reason, the bill had the support of the Colorado Hospital Association and physicians groups. The health insurance industry and business associations also supported the measure.

Republicans, however, still fought the bill over spending fears. Only one member of the GOP voted for the bill, Sen. Larry Crowder of Alamosa. He said his constituents wanted him to back the legislation because of his district’s unusually high poverty rate.

“I was opposed to Obamacare when it started, but when you think about it, Obamacare is in place. I don’t think we can look back anymore,” Crowder told The Colorado Statesman. “I think we need to see how we can make it work for the population of the state of Colorado.”

But the rest of his party disagreed. Rep. Amy Stephens, R-Monument, is baffled why the state is supporting increasing entitlement spending for the poor when there are disabled people on waiting lists to receive medical care.

“I do not see why we are not taking care of our most vulnerable first before expanding to able-bodied,” she opined.

Health benefit exchange preparing for launch

Perhaps the state’s most critical task in implementing federal health reform is to create a health benefit exchange, or an online marketplace where individuals, families and small businesses can shop for health insurance.

Part of the program will provide access to financial assistance for eligible Coloradans in an effort to reduce the cost of premiums. That could come in the form of Medicaid, or a subsidy.

The exchange — which has been named Connect for Health Colorado — is set to launch in October. Plans purchased between October and Dec. 31 will take effect Jan. 1, 2014.

Despite her opposition to Obama’s federal health care law, Stephens had pushed for the online insurance marketplace, suggesting that increased competition could lead to a free market approach to lower insurance costs. She sponsored a measure in 2011 that set creation of the exchange into motion.

Her legislation caused her a bit of heartburn after conservatives questioned whether she was legitimizing Obamacare. The bill earned the nickname “Amycare.”

“We have to,” Stephens defended her drive for the exchange. “It’s in all of our best interest to make this exchange successful and competitive, and that’s where my thinking is, and it’s why I ran it.”

Under Obama’s law, states could have chosen to allow the federal government to establish an exchange for them. But Colorado opted to create its own state-specific insurance marketplace, joining 16 other states in doing so.

Several states have seen insurance companies resistant to join the exchange, fearful of uncertainties. Executives at the four largest providers have said it is possible that they will only sell insurance in less than a third of the exchanges, and many won’t consider states where they already offer coverage.

It remains to be seen how many providers will offer plans in Colorado. The deadline for filing intents was Wednesday.

Myung Oak Kim, spokeswoman for Connect for Health Colorado, said she expects between eight and 10 carriers to participate and dozens of plans to be offered, as well.

Gretchen Hammer, chairwoman of the Connect for Health Colorado board, said she has been encouraged by discussions with insurance providers.

“The health plans in Colorado have been a key stakeholder group that has helped to support the building of the exchange,” said Hammer. “So, we have had strong partnerships with all of the stakeholder communities… It has been a collaborative process…”

Another concern with the exchange that has been raised is whether it might swell the Medicaid roll. But Hammer does not believe implementation will overburden the entitlement program. Instead, she believes it will serve its purpose, which is to provide insurance to the uninsured.

“From one perspective, the expansion of Medicaid and the implementation of the exchange creates a system of coverage that we hope will enable more low- and moderate-income Coloradans to access health insurance coverage,” she said.

Fears around financial sustainability of the exchange have also been discussed throughout its implementation. It is estimated that operational expenses will be between $22 million and $26 million annually. Officials hope for the marketplace to be self-sufficient starting in 2015, without using public dollars. It will be supported in part by a 1.4-percent administrative fee on health insurance carriers, according to Kim.

Hammer is not worried about unexpected costs that could throw the budget into jeopardy: “The sustainability plan that has been presented to the board of directors has stayed consistent as we have moved through the legislative process,” she explained. “Those numbers have continued to be on target…”

Officials expect to meet the October launch date. Stephens, who sits on a legislative implementation review committee for the exchange, said she has faith. But she expressed worries that the information technology component of the exchange could delay its opening.

“The question is, does the IT stuff get up and going on time? Is it working? Have we worked the kinks out?” asked Stephens. “That, to me, is the most critical piece.”

Meanwhile, exchange organizers recently launched a public outreach media campaign to educate Coloradans on its implementation. They also plan to open a customer service center this summer. And testing of the system has already begun.

“I feel like we are building an exchange that will meet the mission that we have, which is to increase access, affordability and choice for individuals and small businesses in Colorado,” attested Hammer. “And since we’re building the exchange ourselves here in Colorado, we’ve been able to pay close attention to the needs of our businesses, to the needs of our rural communities, to the needs of our unique populations in Colorado, and we feel like that has enabled us to build a better exchange to better meet the needs of Coloradans.”