The state Colorado can’t afford one dollar of new spending, as recent budget troubles have shown. Yet any health care reform that emerges from Congress could dramatically add to the state’s financial obligations.
Early, back-of-the-envelope estimates show Colorado’s Medicaid costs could soar under the bills being merged in conference committee.
The Senate’s expansion of Medicaid coverage to those at 133 percent of the federal of poverty level and below would add roughly 266,000 Coloradans to the rolls, The Denver Post’s Burt Hubbard showed us as he sifted through Census data.
Based on the average payment the state makes for the 481,720 Coloradans already on the rolls, those newcomers would add a staggering $687 million to the state’s costs each year. (The more generous House bill could expand Colorado’s costs by roughly $1.2 billion.)
Compare that to a state general fund of $7.5 billion, and there’s reason for immense concern.
State officials won’t speculate as to how much health care reform could cost Colorado in terms of extra Medicaid expenses. Medicaid is an enormously complex program with many moving pieces, and Congress is most likely to increase the amount of federal taxpayer dollars that go to offset state costs.
But even if Colorado’s obligations to Medicaid increase by 10 percent (or $68 million) of our admittedly rough estimates, the state, which faces a total $1.5 billion budget deficit through the next fiscal year, would be in trouble.
The goal of reforming health care can’t simply be the laudable one of universal coverage. Costs must come down — or at least stabilize — for businesses and ratepayers.
Yes, some new taxes will be inevitable. The House version would add a 5.4 percent surtax on those who make $500,000 or more. The Senate would add an excise tax on the so-called “Cadillac” health insurance plans. Besides generating needed money, the idea is that the tax would encourage policyholders to consider less expensive plans, helping drive down costs.
The House bill provides a public option that the Senate has dropped, and is unlikely to find its way back into a final bill. But the Senate bill includes a provision that would create a national insurance plan to be run as a nonprofit that would be offered in the insurance exchanges both bills would create. Such a plan could help drive down costs and ought to be considered, even though we supported the public option.
The House would offer a national insurance exchange, the Senate a state-by-state system. It would seem more likely that a national exchange would create the kind of competition needed to drive down costs.
So far, the process has been poisoned by concessions and perks meant to hold lobbyists at bay and to win votes. If these transformational reforms are to be of real value, lawmakers have a lot of work left to do.
But as of now, we’re not optimistic.
