Colorado Gets A Reprieve From The Public Option. All Americans Should Be So Lucky.

Amid the COVID-19 crisis, Colorado lawmakers have shelved their plan to overhaul the state’s healthcare system and implement a public health insurance option.

Coloradans should count their blessings—for now, at least. The proposed “Colorado Option” would have curtailed access to quality care, particularly in rural areas.

Even as Colorado’s leaders are backing away from this proposal, presumptive Democratic presidential nominee Joe Biden continues to make a nationwide public option the centerpiece of his healthcare plan. It’s the wrong approach. A public option would drive some doctors and hospitals—and all private insurers—out of business. The end result would be single-payer health care.

The Colorado Option was to be a government-sponsored health plan that any state resident could purchase on the state’s exchange. The state gave the public option the right to dictate what it would pay providers for care, at a minimum of 155% of Medicare’s rates. Nationwide, private health plans pay providers about 241% of Medicare’s rates.

Hospitals would have been required to participate in the Colorado Option. The state had the power to revoke their licenses to operate if they refused.

The public health plan’s low payment rates would’ve been brutal for healthcare providers’ finances. According to an analysis by the Common Sense Policy Roundtable, a Colorado think tank, the Colorado Option would have cost hospitals between $536 million and $1.1 billion annually over its first three years.

Rural hospitals would have suffered the most; their revenues were projected to fall by 6.3% by 2024. Some of these facilities would have been at risk of bankruptcy, considering that every essential rural hospital in Colorado is already at high risk of closure.

Ultimately, these reimbursement reductions would have eliminated approximately 7% of hospital jobs, not to mention another 2,500 jobs in other industries across the state.

Those providers that remained open would have had to cut costs. That would have almost certainly required reducing the supply of care they would have provided. The result would have been long waits.

Then there’s the impact on private insurers. The public option would have swiftly pushed them out of business, too.

Given the Colorado Option’s ability to dictate reimbursement rates, it would’ve had a significant cost advantage over private insurers. So it would have been able to set premiums much lower than private insurers.

Private insurers would not have been able to compete. In short order, private plans’ customers would have fled for the cheaper public option. With no one to insure, private plans would have withdrawn from the state—and the Colorado Option would have become the only option.

It’s ironic that the greatest public health crisis of our time has temporarily saved Coloradans from such a bleak healthcare future. But the Colorado Option isn’t going away. Colorado’s Democratic Gov. Jared Polis remains enthusiastic about the idea. And its proponents plan to make another run at it next year.

Of course, if Joe Biden wins the presidency this fall, they may not have to. He’s called for all Americans to be able to enroll in a new federally chartered public option. The outcome would be the same—the death of private insurance.

Once that happens, American patients will face the same subpar care, long wait times, and rationing that’s characteristic of government-run health care elsewhere in the world. In Canada’s single-payer system, patients face a median wait of more than 20 weeks for treatment from a specialist following referral from a general practitioner. During last winter’s relatively mild flu season in Great Britain, one in four patients visiting emergency rooms waited more than four hours to be seen.

That Colorodans have avoided a public health insurance option calamity is good news. But their reprieve may prove temporary. If Biden gets his way, no American will be safe from the destructive effects of a public option.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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