DENVER – Proponents and opponents of a single-payer health care ballot question agree on at least one thing – the experiment would come with uncertainties.
Some of the proposal is expected, such as a 10 percent tax to cover the $25 billion price tag.
Similar to how taxes are currently taken out of all employees’ paychecks, 3.33 percent of a person’s salary would go to ColoradoCare. Employers would handle the rest of the 10 percent, taking on a 6.67 percent burden from payroll. So if a person makes $100,000 per year, the employee would have $3,330 taken in a payroll deduction and the employer would add its share, $6,670.
How employers would pay the tax would vary based on how they currently pay taxes and fees to the government. Some employers pay monthly, some weekly, some quarterly. In most cases, employers would likely be able to pay with an electronic check.
It’s more complicated for independent contractors. In most cases, they would need to pay the 6.67 percent out of their limited liability company based on earnings, along with other taxes the business pays. Separately, there would be the 3.33 percent, based off earnings, but paid as if they were an employee of their limited liability company. The process could vary based on how each independent contractor is established.
Independent contractors would pay the full 10 percent, though some medical expenses are tax-deductible, and they wouldn’t have to shop for insurance through the individual marketplace.
The unemployed would be covered, with no change in their plan. Federal dollars would also presumably roll into ColoradoCare to cover costs, and some unemployed people would be eligible for Medicaid.
How proponents came up with the two-thirds, one-third split between employers and employees was based on a presumption that salaries have largely stayed stagnant based on rising health care costs.
As state Sen. Irene Aguilar, D-Denver, a lead proponent of the initiative, explained, “We didn’t want employees who have essentially given up salary increases for insurance to lose that money. We wanted there to be a way to keep employers paying for health care.”
Establishing a board Where things get a bit uncertain is in the makeup of the board and how that board would operate the complex multi-billion-dollar system.
If the initiative passes in November, an interim board would be established to begin implementation. That 15-member board would be comprised of appointees by the governor and Legislature. It would make initial staff hires, including a chief executive, a chief financial officer and a chief medical officer.
Within three years of ColoradoCare taking effect, a full 21-member board would take over. Here’s where the uncertainty kicks in. Voters would elect the board through special elections in seven health care districts.
Opponents raise concerns with this, pointing out that the elections would likely turn political, and those elected to the board might not have the skills and background needed to effectively run the system.
“There are good examples of what has happened to school board elections and the politicization of school board elections in this state,” said Cody Belzley, policy director for the opposition, who has worked on state-level health policy for 12 years, serving as the senior health policy analyst for former Gov. Bill Ritter, a Democrat.
“For an entity that’s responsible for a budget that’s significantly larger than the state’s budget and is making terribly important health care choices, the likelihood is that these elections become highly politicized.”
Aguilar shrugged that off, quipping, “I’m stunned into silence. I know there are some legislators who have no clue what they’re doing, so I cannot guarantee who the people will elect.”
Just how much supplemental staff the board would hire is also unknown. As one proponent said, “It will be as small or large as it needs to be.”
Dave Sabados, a consultant for ColoradoCare, added, “It’s not pulling numbers out of a hat. There were a lot of smart people who gave estimates.”
Cost and interim tax But those estimates are just that, estimates, and the board could potentially have to ask voters for additional funds, or reduce benefits.
There are questions as to whether the $25 billion is an accurate figure, and whether the tax structure is adequate. An independent study by the Colorado Health Institute found that the system would struggle to cover costs. But proponents recently released a competing study which said the Health Institute report failed to account for federal Medicaid dollars, and that the system would be solvent.
A certain basic level of benefits must be provided to seek a waiver from the federal government to implement ColoradoCare. And it would operate as a zero-deductible plan. Co-pays would be assessed to supplement the system, though it’s unclear how much those co-pays would cost. Proponents say it would be around $25.
In the end, however, there may be a need to ask for more money. If the system took in too much money, it would be refunded to taxpayers, or the board could choose to increase benefits.
What some voters may not be aware of is that for a period of time, they would pay a smaller tax for ColoradoCare’s implementation, while also paying for their private insurance.
The interim tax is 1 percent, instead of 10 percent. Employees would pay 0.3 percent, and employers would pay 0.7 percent. The formula would be identical to the full tax once ColoradoCare takes effect.
The goal would be to raise $4 billion to get the program started. Aguilar described the interim tax as “investing in your future.”
Just how long the interim period would last is unknown. Proponents are shooting for two years, with a target date of January 2019 for full operation. Elections for the board would be conducted in December 2019, which means the system could go into full operation under the interim board.
As a precautionary measure, proponents built in an “escape” clause in case ColoradoCare does not receive the waiver from the federal government, or not enough money is available. Transitional taxes would be refunded to taxpayers and ColoradoCare would go away.
There’s uncertainty in how private health insurance would be replaced with a single-payer system. It’s possible that individuals and employers would need to contact their insurance companies to get out of their plans, or they could get stuck with two bills – the tax and their existing insurance premium.
There’s also the risk of a gap in coverage. If ColoradoCare passes in November, insurance companies could pull out of the market. That would leave at least two years before ColoradoCare goes fully operational, during which time consumers would be left without a provider.
Sabados said that scenario is unlikely, stating, “Let’s say tomorrow the government said let’s transition to all electric vehicles by 2019. I don’t think Exxon would say we’re going to stop pumping gas because in two years we won’t have any money. They’ll stay to the end.”
Opponents, however, say there are too many risks to take the gamble.
“The reality here and the challenge is that this is a first-of-its-kind, never-been-tested, state-level approach to universal health care, so there’s no model to look to,” Belzley said. “The big scary part for me in Amendment 69 is just the vast number of unknowns and uncertainty. The proponents are basically saying give us $25 billion and trust us.”