by Jack Westfall, MD
Primary Care Physician and Former Chief Medical Officer of the Colorado HealthOP
I am proud to support Amendment 69, Colorado’s ballot initiative to provide universal healthcare for everyone in the state. Amendment 69 changes the way health care is paid for and provided. While there are plenty of negative stories and reports, editorials and advertisements about how this new Universal health care system will bankrupt the state and ruin our economy, those are just scare tactics from the folks who benefit from the current dysfunctional system: profiteers, stockbrokers, shareholders, and high paid executives.
As a primary care physician, I know the impact that access to primary care can have on improving health. As a former non-profit insurance chief medical officer, I understand the insurance industry, how to save money while providing excellent care, and just how broken the current system is.
Most of all, I support Amendment 69 because I value the idea that everyone should have access to health care. Everyone in Colorado deserves the chance to see a primary care provider, visit with a counselor, see their specialist, obtain necessary medications for their illness, and take their kids to get immunizations or antibiotics for strep throat. Amendment 69 is the first chance I have to vote for this value that I hold dearly.
There are some issues with Amendment 69 that need more honest conversation rather than fear mongering and political shenanigans.
It is disingenuous to claim that Amendment 69 adds $25 billion of costs to Colorado. It is simply not true. Amendment 69 shifts the way health care is paid for. Yes, an employment tax will be taken from just about everyone who gets a paycheck in Colorado. But, the employer and employee won’t have insurance premiums to pay for. For many folks, they will actually pay less than they do now. Some folks with higher incomes may pay more. But we all pay extra health insurance costs right now to cover the exorbitant insurance executive salaries, profits that are sent to shareholders on Wall Street, and to pay for ER and hospital costs for people who don’t have insurance and primary care. The Kaiser Family Foundation reported the average cost of health insurance in Colorado this year is $5,800 for a single employee; over $13,000 for a family, plus the vast majority of employer insurance has another $1,000 deductible you must pay. So you will be paying for health insurance and health care one way or the other. Amendment 69 changes how health care is paid for so that everyone in the state gets covered.
The Colorado Health Institute recently conducted a study on the financial impact of Amendment 69 on Colorado health care costs. While the CHI report has significant flaws in their assumptions and analyses, the interpretation of their findings is where their published report makes the most errors. The big headline from their analysis should have been that ColoradoCare would save $2.7 billion over the next 10 years. That’s right, the CHI analysis found that a conservative estimate of ColoradoCare results in a big savings in health care. In year one, CHI’s analysis found that Colorado would spend $700 million less while at the same time covering everyone in the state including the current 6.7% who are uninsured. That’s a headline. By the way, this is the same finding the Colorado Blue Ribbon Commission for Health Care Reform (the 208 Commission) discovered back in 2008; single payer health insurance saves money.
The CHI report’s focus on the revenue side of the equation is misplaced. Their headline that ColoradoCare will fall short of funds is incomplete. The current system also has revenue requirements. CHI projects the revenue requirements of the current system will grow substantially more than the revenue requirements for ColoradoCare. The current system will outspend ColoradoCare by billions of dollars and still leave hundreds of thousands of Coloradoans without care.
Here is a bit of wonky health care policy. The Colorado Health Institute analysis assumes 14% administrative costs and profits for Colorado insurance companies. They get this number from a World Health Organization (WHO) report on data that is a decade old. This 14% has a disclaimer by it that states it is based on a System of Health Accounts (SHA) data stating, “Reserve payments, taxes, fees, commissions, and profits are not explicitly captured by this SHA/NHA activity-based definition.” So this 14% was the average of multiple studies that found variation from 5-40%, and may or may not include all of the profits and administrative costs spent by private insurance companies. A more accurate number might come from The Affordable Care Act that requires insurance companies spend 80% of their premium dollars on actual health care for their individual policy patients (85% for large group insurance). The National Association of Insurance Commissioners found that in 2013, nearly 7 million Americans received a rebate because their private insurance company did not meet these minimal requirements. In the same report, the WHO found that public insurance administrative costs in the United States were 2-6%. In 2015, United Healthcare, one of the largest for-profit health insurance companies in Colorado and the United States reported they spent 81% of their premium revenue on patient care; 19% on administrative costs and profits. That year their profit climbed 29% in the first quarter, totaling more than $1.4 billion in profit. UnitedHealth’s revenue increased 13% and their first-quarter earnings per share were $1.46, beating Wall Street’s prediction of $1.35.
In a more realistic and “most plausible” analysis, the 14% administrative costs used in the CHI calculation are well below the actual administrative costs currently spent in Colorado. Correcting these numbers in the Colorado Amendment 69 analysis will provide additional evidence of the significant cost savings for this universal health care system.
Several arguments in the CHI report actually support the need for Amendment 69. They point out on page 10 that “high deductible plans discourage use.” This discouraged use has a serious negative impact on the health of our state. When people can’t afford their healthcare, their health suffers, they suffer, and when they finally do get care, they have to get it in the emergency room and hospital, much more expensive than the primary care or specialist’s office. Lockton reports a growing number of Colorado insurance companies include a high deductible. Amendment 69 changes that disincentive. Under Amendment 69’s universal care plan, Coloradoans may go to their primary care doctor for free, receiving the necessary preventive care, early diagnosis, and evidence-based treatments available in the United States.
In their analysis, CHI assumes 4-4.5% annual increase in tax revenue. However a recent report by the Colorado Office of State Planning and Budgeting project a 5-5.5% increase in wage and salary income. As CHI states in their introduction, “small changes in assumptions can produce big changes in the projected bottom line.” This most plausible tax revenue scenario supports the financial security of ColoradoCare.
A key component of ColoradoCare is the focus on primary care and preventive services that will dramatically decrease the long-term healthcare expenditures. Universal coverage provides primary care services to all. And access to primary care has been shown in innumerable studies to improve health outcomes and lower costs. By providing access to primary care for everyone, ColoradoCare provides a solution to the unsustainable increases in health care costs. Secondly, the report states that 4.5 million members in ColoradoCare are not enough to obtain discounts and negotiate lower costs for services. This is totally unfounded. As the CMO for the Colorado HealthOP, I helped negotiate significant savings for our 80,000 members. From pharmaceuticals to devices to procedures, we were able to negotiate national and local discounts of 10, 20, even 50%. Having the bulk of the Colorado market will allow for substantial influence on costs of drugs, devices, and procedures. But here we run into the real problem. Negotiating discounts cuts into somebody’s profit. ColoradoCare will pay providers what they deserve; good pay for quality care. There is no decrease in payments to the doctors and nurses who deliver care. However, unfettered profits to for-profit hospitals, stockbrokers, and shareholders will be decreased.
Here is one last thought about Amendment 69. The opponents say it costs too much. It will cost too much to provide health care to hundreds of thousands of uninsured Coloradoans. Amendment 69 will cost too much to make sure every child has access to primary care and preventive healthcare. It costs too much to provide medications to thousands of patients with diabetes and arthritis and cystic fibrosis and cancer. It just costs too much to care for everyone in the state. Well, I am not prepared to tell my friends and neighbors, colleagues and co-workers, the people who clean our offices, pick our peaches, empty our trash, and build our bridges, or even strangers that their health just costs too much. I won’t tell them I chose to vote against their access to health care.
ColoradoCare, created when Colorado passes Amendment 69, will cover everyone, pay doctors and nurses and care providers good pay for good care, and save Colorado billions of dollars. For the first time in my life I get to vote for universal healthcare. I can’t wait.
Jack Westfall is a family doctor and serves on the Board of the Colorado Foundation for Universal Health Care.