Colorado Goes over the Health Care Cliff

Supreme Court associate justice Louis Brandeis famously urged the states to become “laboratories of democracy” (New State Ice Co. v. Liebmann, 1932) by testing new, alternative ideas of governance. Colorado is heeding his advice. Under their Governor Jared Polis’ leadership, the 2019 Colorado Legislative Session passed a number of bills that increase state control of healthcare.

The purpose of Governor Polis’ reforms is clear from his Executive Order to establish the “Office of Saving People Money on Health Care.” Will his plan, called the Colorado Affordable Health Care Option or CAHCO, save money for consumers? Will it reduce state spending? What will be the effect on access to care?

CAHCO has financial controls similar to federal Medicare-for-All bill, H.R. 1384, and could be called Medicare-for-All “Lite.”  HB 1174 puts caps on Emergency Room charges. HB 1216 places price controls on insulin and potentially other medications. SB 5 allows government to undercut American drug manufacturers by purchasing pharmaceuticals from Canada. HB 1168 creates a re-insurance fund to pay insurance companies when patients have very expensive claims. SB 238 increases payments to home health workers, assuming the state can squeeze money from Washington. And there is HB 1004.

Colorado’s HB 1004 creates a public insurance option and claims it will “compete in the market against private plans.” This public option produces an uneven playing field, pitting an insurance company backed by taxpayer dollars with commercial enterprises that must balance their budgets from premiums paid by ratepayers.

Colorado passed other healthcare bills dealing with mental health, substance abuse, transparency, as well as a study committee to create a single-payer structure for Colorado.

Colorado’s takeover of healthcare is less complete than H.R. 1384, and thus, it is a Lite version of Medicare-for-All. For contrast, H.R. 1384 creates a national healthcare budget board that oversees all healthcare revenue and payments. H.R. 1384 overtly eschews personal responsibility (Section 202) and prohibits competition by the private sector (Section 107). Colorado is more covert in its suppression of free market forces.

Because of its price controls, CAHCO will “sav[e] people money on health care” at the point of service. It is highly doubtful that their plan will reduce overall state spending on healthcare because of the cost of bureaucracy.

Based on past experience, government control of healthcare increases spending on administration, bureaucracy, regulations, mandates, compliance, and oversight. Despite former President Obama’s assertion that he would bend down our “unsustainable” healthcare spending curve, his namesake healthcare law, ObamaCare, increased spending by $1.76 trillion. Projections of additional spending for Medicare-for-All are $32.6 trillion per Professor Charles Blahous and “as much as $40 trillion” according to Senator Bernie Sanders. Forty trillion dollars represents nearly half the combined productivity of all nations on planet Earth.

The primary purpose of any healthcare system is not to save money -- it is to provide readily accessible, timely, high-quality care to Americans. Based on this metric, both the Colorado’s Lite version as well as full Medicare-for-All (single payer) fail. This assertion is based on past experience with the use of price controls in healthcare.

The now-defunct USSR implemented price controls for everything, including health care. The result was low quality, shortages of everything, and blocks-long waiting lines for medical care.  The U.S. currently has a single-payer system, Veterans Administration Healthcare. According to an internal audit performed by the VA Office of the Inspector General, “47,000 veterans may have died” waiting in line for care.

Price controls are a central feature of H.R. 1384. A 2019 analysis of this Medicare-for-All bill concluded, “Access to care will decline, spending will rise, taxes will double, and personal freedom will be traded for entitlement.”

President Obama named his healthcare reform the Affordable Care Act. After passage, he admitted that his namesake law was focused on reforming health insurance. Like the ACA, the Centennial State plan is called the Colorado Affordable Health Care Option. Yet even before its passage, Polis made clear by his executive order, that his first priority is saving money, not providing care.

For more than five decades, Washington has been claiming to reform healthcare with its one-size-fits-all, top-down approach. The failing system we have now is the result of their multiple “fixes.” We need to remove the federal government from healthcare and Colorado appears to have taken a first step. Appearances can be deceiving.

For more than three years, in both articles and books, this author has been advocating a bottom-up approach called StatesCare. With StatesCare, the people of each state, or group of states, decide the healthcare they believe will work best for their specific needs and resources. With StatesCare, there is no role for Washington, thus restoring the intent of the Tenth Amendment to the Constitution.  By removing Washington, more than a trillion “healthcare” dollars a year currently wasted on federal bureaucracy can be repurposed for patient care.

StatesCare does not support a top-down imposition of healthcare structure by government on its residents, state or federal. Rather, the plan envisions state referenda about what healthcare the people choose, not what politicians tell us what is best for us.

If the people of Colorado want the CAHCO system that their legislature just passed, that would be consistent with StatesCare. However, if their “Medicare-for-All Lite” is not the people’s choice, then what happened in the Centennial State is simply changing tyrannies, from federal to state. That is not a "model" to fix healthcare.    

Deane Waldman, MD MBA, is Professor Emeritus of Pediatric, Pathology, and Decision Science; former Director of Center for Healthcare Policy at Texas Public Policy Foundation; and author of “Curing the Cancer in U.S. Healthcare: StatesCare and Market-Based Medicine.”  

Supreme Court associate justice Louis Brandeis famously urged the states to become “laboratories of democracy” (New State Ice Co. v. Liebmann, 1932) by testing new, alternative ideas of governance. Colorado is heeding his advice. Under their Governor Jared Polis’ leadership, the 2019 Colorado Legislative Session passed a number of bills that increase state control of healthcare.

The purpose of Governor Polis’ reforms is clear from his Executive Order to establish the “Office of Saving People Money on Health Care.” Will his plan, called the Colorado Affordable Health Care Option or CAHCO, save money for consumers? Will it reduce state spending? What will be the effect on access to care?

CAHCO has financial controls similar to federal Medicare-for-All bill, H.R. 1384, and could be called Medicare-for-All “Lite.”  HB 1174 puts caps on Emergency Room charges. HB 1216 places price controls on insulin and potentially other medications. SB 5 allows government to undercut American drug manufacturers by purchasing pharmaceuticals from Canada. HB 1168 creates a re-insurance fund to pay insurance companies when patients have very expensive claims. SB 238 increases payments to home health workers, assuming the state can squeeze money from Washington. And there is HB 1004.

Colorado’s HB 1004 creates a public insurance option and claims it will “compete in the market against private plans.” This public option produces an uneven playing field, pitting an insurance company backed by taxpayer dollars with commercial enterprises that must balance their budgets from premiums paid by ratepayers.

Colorado passed other healthcare bills dealing with mental health, substance abuse, transparency, as well as a study committee to create a single-payer structure for Colorado.

Colorado’s takeover of healthcare is less complete than H.R. 1384, and thus, it is a Lite version of Medicare-for-All. For contrast, H.R. 1384 creates a national healthcare budget board that oversees all healthcare revenue and payments. H.R. 1384 overtly eschews personal responsibility (Section 202) and prohibits competition by the private sector (Section 107). Colorado is more covert in its suppression of free market forces.

Because of its price controls, CAHCO will “sav[e] people money on health care” at the point of service. It is highly doubtful that their plan will reduce overall state spending on healthcare because of the cost of bureaucracy.

Based on past experience, government control of healthcare increases spending on administration, bureaucracy, regulations, mandates, compliance, and oversight. Despite former President Obama’s assertion that he would bend down our “unsustainable” healthcare spending curve, his namesake healthcare law, ObamaCare, increased spending by $1.76 trillion. Projections of additional spending for Medicare-for-All are $32.6 trillion per Professor Charles Blahous and “as much as $40 trillion” according to Senator Bernie Sanders. Forty trillion dollars represents nearly half the combined productivity of all nations on planet Earth.

The primary purpose of any healthcare system is not to save money -- it is to provide readily accessible, timely, high-quality care to Americans. Based on this metric, both the Colorado’s Lite version as well as full Medicare-for-All (single payer) fail. This assertion is based on past experience with the use of price controls in healthcare.

The now-defunct USSR implemented price controls for everything, including health care. The result was low quality, shortages of everything, and blocks-long waiting lines for medical care.  The U.S. currently has a single-payer system, Veterans Administration Healthcare. According to an internal audit performed by the VA Office of the Inspector General, “47,000 veterans may have died” waiting in line for care.

Price controls are a central feature of H.R. 1384. A 2019 analysis of this Medicare-for-All bill concluded, “Access to care will decline, spending will rise, taxes will double, and personal freedom will be traded for entitlement.”

President Obama named his healthcare reform the Affordable Care Act. After passage, he admitted that his namesake law was focused on reforming health insurance. Like the ACA, the Centennial State plan is called the Colorado Affordable Health Care Option. Yet even before its passage, Polis made clear by his executive order, that his first priority is saving money, not providing care.

For more than five decades, Washington has been claiming to reform healthcare with its one-size-fits-all, top-down approach. The failing system we have now is the result of their multiple “fixes.” We need to remove the federal government from healthcare and Colorado appears to have taken a first step. Appearances can be deceiving.

For more than three years, in both articles and books, this author has been advocating a bottom-up approach called StatesCare. With StatesCare, the people of each state, or group of states, decide the healthcare they believe will work best for their specific needs and resources. With StatesCare, there is no role for Washington, thus restoring the intent of the Tenth Amendment to the Constitution.  By removing Washington, more than a trillion “healthcare” dollars a year currently wasted on federal bureaucracy can be repurposed for patient care.

StatesCare does not support a top-down imposition of healthcare structure by government on its residents, state or federal. Rather, the plan envisions state referenda about what healthcare the people choose, not what politicians tell us what is best for us.

If the people of Colorado want the CAHCO system that their legislature just passed, that would be consistent with StatesCare. However, if their “Medicare-for-All Lite” is not the people’s choice, then what happened in the Centennial State is simply changing tyrannies, from federal to state. That is not a "model" to fix healthcare.    

Deane Waldman, MD MBA, is Professor Emeritus of Pediatric, Pathology, and Decision Science; former Director of Center for Healthcare Policy at Texas Public Policy Foundation; and author of “Curing the Cancer in U.S. Healthcare: StatesCare and Market-Based Medicine.”