Denver Business Journal, July 16, 2007

Businesses and residents would have to pony up an additional $455 million to $1.6 billion a year to provide health care coverage for Colorado's estimated 770,000 uninsured.

That's according to preliminary estimates from a consulting group studying four proposals to reform the state's health care system.

The proposals offer different remedies for what ails the health care system, ranging from voluntary "purchasing pools" to coverage mandates for businesses and individuals to a taxpayer-financed "single-payer" program.

With the architects of the proposals still tweeking the final details, the numbers are bound to change, but they provide a first glimpse at the economic costs of health care reform.

The cost to businesses, governments and individuals varies depending on the plan.

Suggestions for funding mechanisms have included taxes on cigarettes, alcohol and junk food to plug the funding gaps not covered by mandates, cost shifting and federal programs such as Medicaid.

While companies and individuals who pay for coverage already are paying the medical bills for Colorado's uninsured in the form of double-digit premiums and higher deductibles, it's too early to determine if Colorado businesses, legislators (and possibly voters) will endorse government mandates for more taxes and fees to get everyone else on board.

The debate comes as policymakers tackle other costly issues, including education, transportation and a constitutional fix for Colorado's budgetary constraints.

Current annual health care spending in Colorado is $30.3 billion, according to The Lewin Group, a Falls Church, Va.-based consulting firm appointed by the Blue Ribbon Commission on Health Care Reform to estimate the costs and effectiveness of the four proposals.

Commission spokeswoman Edie Sonn cautioned that the estimated price tags for all four proposals most likely will change dramatically.

Lewin will present final modeling results to the Blue Ribbon Commission on Health Care Reform on July 17.

Sonn said in addition to the four proposals, the commission probably will draft an "alternative" proposal that will possibly incorporate elements of other proposals and ideas from the commissioners.

After gathering public feedback, the 27-member commission, which was appointed by Govs. Bill Owens and Bill Ritter and state legislators, will prepare a final report to the General Assembly by Jan. 31, 2008.

Ritter has charged the commission with the task of exploring proposals that will provide coverage for the state's uninsured while keeping a lid on rising premiums.

Although Ritter and House Speaker Andrew Romanoff have said they intend to address health care reform in the 2008 session, it's unclear whether the Legislature will adopt part or all of the commission's recommendations, craft its own plan or implement less sweeping measures to resolve the health care crisis.

But the staggering cost of reform could provide political fodder for opponents who favor "free market" solutions while cooling the ardor of reformers.

Health care experts agree that proposals that require tax increases and/or coverage mandates will meet resistance from the business community and voters.

Any kind of new tax or tax rate increase would have to go to a public vote under the terms of the Taxpayer's Bill of Rights (TABOR), although observers say the Legislature could bypass TABOR and create a quasi-governmental insurance organization not run by the state. Such an entity could be funded with fines and fees collected by the uninsured.

But while proponents say the social and economic benefits of universal coverage far outweigh the drawbacks, some warn that statewide reform efforts often fall short and cost more than forecast.

Sally Pipes, president and CEO of the Pacific Research Institute, a San Francisco-based think tank, said the much-touted Massachusetts health care reform plan spearheaded by Republican presidential hopeful Mitt Romney, ended up costing a lot more than original estimates.

Initial state funding for the Massachusetts initiative was targeted at $126 million, but ballooned to $276 million when it was approved by the Massachusetts Legislature and Massachusetts Gov. Romney in 2006.

Pipes added that Mas­sa­chusetts businesses have found loopholes around mandates, in some cases spinning off into smaller companies to avoid the requirements.

Although official numbers are not available, Pipes said Massachusetts is "nowhere near" providing coverage for the uninsured who don't qualify for one health care subsidy or another.

Under the new law, Massachusetts residents were supposed to obtain coverage by July 1 or face a penalty.

Massachusetts has also faced some obstacles because of the Employee Retirement Income and Security Act of 1974, or ERISA, a federal law that pre-empts some state regulation so employers don't have to separately administer health plans in multiple states.

A report by the Health Economics Consulting Group published in 2006 also found flaws in a proposed single-payer plan in California that Lewin studied.

The report concluded that Lewin's cost estimates for the plan, which was approved by legislators but vetoed by California Gov. Arnold Schwarznegger earlier this year, were "overly optimistic."

The report maintained that the single-payer plan was not immune to cost-inflation problems common to the existing health care system, despite Lewin's favorable assumptions to the contrary.