It’s late January in Colorado. We don’t know who the candidates for President will be. We don’t know who the Republican nominee for US Senator will be (at least eight people have declared). We don’t know if we’ll be suffering through a drought or washed out in floods (so far, snow pack as tracked by Denver Water is running a bit above normal). What we do know is one of the citizen initiatives that will be on the ballot: a constitutional amendment that would require the state to provide single-payer health insurance through a program called ColoradoCare. State-level single-payer programs have been proposed before. Some have even passed. None of them have ever been implemented. After reading through it, I think this ballot proposal is in the same situation: unlikely to pass if people look at the details, and unlikely to be implemented if it does pass.
Amendment 69 demonstrates both the good and the bad sides of ballot initiatives. On the good side, this is a topic that the General Assembly is unlikely to take up in the foreseeable future. A significant number of people are at least interested in the topic: more than 100,000 registered voters signed the petitions. That’s farther than most proposed initiatives get. On the bad side, it’s twelve pages long. It’s not written badly, as these things go, but it’s not great either. As an initiative now approved for the ballot, the language is frozen, no matter what sort of improvements might be suggested in the course of public debate.
To be honest, I don’t see how it can possibly pass, or at least how it could be implemented. Let me go through the three big reasons for that.
To start with, ColoradoCare isn’t really a complete single-payer plan. The amendment includes this:
ColoradoCare serves as a secondary payor to any health insurance plan in which a beneficiary is enrolled… ColoradoCare shall serve as a state health plan that pays for designated health care services for Medicare beneficiaries; except that ColoradoCare shall not pay for services: (a) Covered by Medicare parts A, B, and D; or (b) covered by a Medicare Advantage Plan that a beneficiary has with an entity other than ColoradoCare; or (c) that would have been paid by Medicare parts B or D had the beneficiary purchased those optional Medicare coverages…
Clearly, the state can’t force things on the federal government. I suspect that when things get far enough along in the federal courts, the state can’t tell Aetna that they can’t sell health insurance in Colorado either, and the state can’t tell IBM that they can’t buy health insurance from Aetna for their employees in Colorado like they do in 49 other states and the District of Columbia. This reduces one of the main indirect benefits of single payer: under single-payer, care providers know which diagnostic/treatment code combinations are paid and which aren’t, and what the amount will be, so they no longer need to hire more bookkeepers than nurses.1
In addition to those problems, Amendment 69 assumes that the state will be able to get a variety of waivers from the federal government on various programs. They need waivers for the Affordable Care Act system, Medicaid, and the Child Health Plan Plus. To be blunt, they need the money those federal programs would spend in Colorado to help make the finances work.2 The waiver question is more complicated in Colorado than it would be in most states. Because of our Taxpayer Bill of Rights (TABOR), ColoradoCare would be organized as a TABOR enterprise not under direct control of the rest of the state government. It is easy to imagine the Centers for Medicare and Medicaid Services saying “Whoa there, big fella. What’s this ‘enterprise’ thing? We deal with state governments that have general taxing authority, not special fees.” If the waivers are not granted, so that ColoradoCare does not receive those federal funds, and the tax levels specified in the Amendment turn out to be insufficient, the board of trustees is instructed to simply shut the whole thing down.
What about those taxes? The fiscal note done by the non-partisan legislative staff estimates about $25 billion will pass through ColoradoCare annually. That roughly doubles the size of the state government, based on spending levels. In addition to the federal dollars mentioned, substantial new state taxes are required. Adults who are covered by ColoradoCare will pay a 10% payroll tax (two-thirds paid by the employer) and a 10% non-payroll income tax with a cap on the total taxes to be paid (by my reading, the cap is $35K for singles and $45K for couples filing jointly, adjusted annually for inflation). Consider the impact that has on, say, the self-employed furnace guy who takes care of my heating system. In round numbers, he would now pay 25% in payroll taxes, starting from dollar one, then his federal and state income taxes. In return for the increases, he would no longer have to pay any premiums for private insurance and the business wouldn’t have to buy any worker’s comp insurance. Worksheets available at the organization’s web site suggest that some part of the payroll tax would be a deduction for both the state and federal income taxes. I’m not so sure, but I am not a tax accountant.
Much of that money would otherwise pass through the hands of big insurance companies, who will be… reluctant to give that up. Let’s just say that I’m confident that various groups of opponents will be putting up a lot of money for the ad campaigns. Colorado being a purplish swingish state these days, my mailboxes – both electronic and dead-tree versions – are already stressed out in election years. This is only going to make things worse.
ColoradoCare illustrates all of the reasons why past state-level attempts at single payer have failed. And why I believe future state-level attempts will fail as well. They can’t actually be single payer, in practice. The federal government is too deeply involved in health care for states to design a straightforward program; they have to twist and turn to get federal approval for too many things. And the state government gets a lot bigger. At least IMO, that’s a triple whammy that no state is going to overcome these days. This is an experiment that no state is going to manage to try.
Front page image by Michael Fleshman
- Full disclosure. I have a personal interest in how things work with Medicare coverages and taxes. The organization behind ColoradoCare estimates that the program would take effect sometime in 2019. By that time, Medicare will be my primary health insurance.
- In another interesting wrinkle, before the PPACA passed, about half of all Medicaid spending went to long-term care (I’m not sure what the post-expansion figures are). Not medical long-term care, but simply the expenses of a roof, a bed, three meals a day and some oversight for the indigent elderly who can no longer completely care for themselves. Almost all states have received waivers from the CMS to use Medicaid dollars to provide in-home assistance because that’s so much less expensive than institutional care.